Tax rates

chrisd80

Can anyone tell me how tax is worked out is it on your yearly code/salary.
Or is it how much per month.

Example if you was on 20000 per annum 20%. Say for example you got a lot of overtime and bank holidays or whatever in and it took it above the monthly equivalent for the 40% would you pay 40% tax for that month 

[Deleted User]

You have the first 12500 free of tax. The NEXT 37500 is taxed at 20%. The amount above that, and only the amount above that, is taxed at 40%. You would have to earn 50000 before anything additional is taxed at 40%. If you earn, for example, 51000 you would pay 37500 at 20% and 1000 at 10%. 

The personal allowance and 20% band is spread over the whole year. This is month 10 - you would have to have earned 41667 by this stage to pay any at 40%. As an extreme example - if you had earned 20000 since last April and earned another 30000 in the next two months, you would not pay any tax at 40%.

chrisd80

purdyoaten2 said:

You have the first 12500 free of tax. The NEXT 37500 is taxed at 20%. The amount above that, and only the amount above that, is taxed at 40%. You would have to earn 50000 before anything additional is taxed at 40%. If you earn, for example, 51000 you would pay 37500 at 20% and 1000 at 10%. 

The personal allowance and 20% band is spread over the whole year. This is month 10 - you would have to have earned 41667 by this stage to pay any at 40%. As an extreme example - if you had earned 20000 since last April and earned another 30000 in the next two months, you would not pay any tax at 40%.

Cheers