Income Tax

ShandyAndy_2

Afternoon all

Just been trying to make sense of income tax brackets, I live in England, so am I correct in thinking if I earn 36,000 I would be on 20% tax, and if I earned £37500 40% tax?

so actually earning just under the £37,500 would be better off than earning just over £37,500?

General_Grant

ShandyAndy_2 said:

Afternoon all

Just been trying to make sense of income tax brackets, I live in England, so am I correct in thinking if I earn 36,000 I would be on 20% tax, and if I earned £37500 40% tax?

so actually earning just under the £37,500 would be better off than earning just over £37,500?

If you move into the next tax bracket (40%) you only pay at that rate for the amount that falls beyond the tax free and 20% amount, not on the whole lot.

Dazed_and_C0nfused

You don't pay 40% tax until you have taxable income of at least £50,000.

£12,500 Personal Allowance plus £37,500 basic rate tax band

ratechaser

Although worth also considering the smoothing effect of NI dropping to the 2% level, so taking income tax and NI together, you'd only be losing an additional 10% of your income above the 50k mark.

ShandyAndy_2

Learnt something, thanks all