40% tax bracket

newcastle_1986

Hi All
probably a silly question and i apologise if it is
if earn above £50,000 which this year im estimated to make £56,000
will i only see the extra tax deductions on my last 2 payslips once i hit the 50k or does it average out over the 12months im a bit lost
Tax Code: 1282L Cumulative Tax Period: 2020 / 10 is my current tax code

newcastle_1986

my current details on payslip for january
Total gross 47,337.15
Taxable pay 47,463.05
Tax paid 8,458.80
 Employee NIC 4,158.14

[Deleted User]

It is averaged out over the whole year. January is month 10 and any earnings above 41940 at that point since the start of the tax year (10/12 x50329) would be charged at 40%. So, you have already had earnings of 5523 which had tax deducted at 40% rate. Your personal allowances appear to be 12829 which, added to the basic rate band of 37500, equates to 50329, the amount that you can earn in this tax year without having any deducted at 40%.

Strange that your taxable pay, which I have used, exceeds your gross pay?

El_Torro

By my rough calculation you're going to pay about £11,400 in income tax this year (assuming you earn £56k). So over the next two months you're going to pay about £1,500 per month in tax. So almost double what you've paid in the last 10 months.

Is your monthly salary a steady amount? Did your employer know at the start of this tax year that you were going to earn £56k this year? This might explain why you won't have paid the same amount of tax each month. 

It might be worth putting £4,800 (£6,000 gross) into a pension, if you can afford. Then you can claim back the higher rate tax you've paid.

newcastle_1986

ah great so my next 2 payslips should still be the same? im not going to see a crazy tax figure for my last 2 months am i?

[Deleted User]

You have been paying higher rate tax all along! If your salary of the next two months is the same as for January, the tax will be the same.

newcastle_1986

my pay is different every month due to my job and most pay is from bonus
that makes sense now, so if i have £1500 tax to pay it will be £750 a month for the next 2 months which is what i usually pay
thanks for the help guys!

[Deleted User]

El_Torro said:

By my rough calculation you're going to pay about £11,400 in income tax this year (assuming you earn £56k). So over the next two months you're going to pay about £1,500 per month in tax. So almost double what you've paid in the last 10 months.

Is your monthly salary a steady amount? Did your employer know at the start of this tax year that you were going to earn £56k this year? This might explain why you won't have paid the same amount of tax each month. 

It might be worth putting £4,800 (£6,000 gross) into a pension, if you can afford. Then you can claim back the higher rate tax you've paid.

Very rough🤔 - you are about £1700 out. I make it 9768 tax due on 56k.

El_Torro

[Deleted User] said:

Very rough🤔 - you are about £1700 out. I make it 9768 tax due on 56k.

Looks like I need to brush up on my "back of a fag packet" calculations. I think I might have double counted somewhere. Anyway, at least there were others here to provide the correct information