Am I in the 40% tax bracket?

lush_walrus

I'm somehow completely confussed regarding how 40% tax is calculated! I know that we are all taxed in stages, with 0% tax rate for an amount, then 10% for £2,000ish then 22% etc, but my question is at what point exactly am I due to start paying 40% tax?

My problem is my salary has always been set at what I take home Eg:My employer pays tax, NI etc on top of what we have negotiated I will be taking home and after recently opening a new account my bank has asked whether I am taxed at the higher rate, to which I stared blankly and promised to get back to them!

I take home every calandar month £2,250, ontop of that I pay £582.00 tax and £259.03 NI. My tax code is 489L.

Does anyone know if this works out that I am paying higher rate tax?

My second question is besides working I am a director of a company, which I do not draw a salary from or withdraw any money at all. IR are aware of this but I just wondered if my employers accountants need to know from a tax point of view. They may well be aware already, but I just wanted to see what you all think!

Thanks guys.

lipidicman

You must earn around £37000 gross pa
Income over around £31,400 is taxed at 40%
So yes you are a higher rate tax payer and your bank interest will be taxed at the higher rate

lush_walrus

lipidicman wrote:

You must earn around £37000 gross pa
Income over around £31,400 is taxed at 40%
So yes you are a higher rate tax payer and your bank interest will be taxed at the higher rate

Yes I think it does calculate at approximately that. For some reason I had thought that my basic tax allowance was added to that, thanks for letting me know!

Matthew2005

I earn £250k a year am I a higher rate tax payer?

lipidicman

If you dont know that, then you dont deserve to be earning £250k!

lush_walrus

Matthew2005 wrote:

I earn £250k a year am I a higher rate tax payer?

Very useful question, thank you!

meclive

Matthew2005 wrote:

I earn £250k a year am I a higher rate tax payer?

If you had bothered to read before you posted...

lipidicman wrote:

Income over around £31,400 is taxed at 40%

:rolleyes: :wall:

lipidicman

I think it was a sarcastic question (for which I recommend italics and a smiley of some sort)

lush_walrus

lipidicman wrote:

I think it was a sarcastic question (for which I recommend italics and a smiley of some sort)

Yep have to agree on that one....Whats the saying about sarcastic and lowest form of wit!!!!

Its that sort of response that I hate to say, makes me wonder why bother on here!!!!

But then you have proved why I should bother, as you have been very helpful in answering my question.

lipidicman

I have my moments, but I can be as sarcastic as the next man. Cheers

Elaine_Wilson

It seems to me that you are not quite in the higher tax bracket.

The national insurance deducted implies a gross monthly earnings figure of £3,091 which is an annual salary of £37,092. Deducting your personal allowance of £4,895 leaves a taxable income of £32,197. Higher rate tax starts at £32,400 so you are just under.

Just as a matter of interest why do the bank want to know? Will they give you some special deal if you pay tax at 40% or is it just that they want to sell you some investment with high charges?

As for your second question - your main employer doesn't need to know anything about the directorship (unless you are breaching your conditions of employment by taking the post). If you do start to receive fees from this just make sure that the company use an appropriate code number, so as to deduct tax at basic or higher rate.

Elaine