What tax bracket will I be in?

GH1982

I am currently in a job which takes me into the 40% tax bracket but I am due to change jobs in October. My new job is just below the level for the 40% but because I have been doing a lot of overtime my total for this financial year, when it finishes, will be over the 40% threshold.

Does this mean I will be paying the 40% tax when I start my new job? 

chrisbur

Without actual figures it is impossible to be very specific on this; but on the details you have given....
You are currently earning enough to pay some 40% tax and will at the year end have earnings high enough to be paying some 40% tax so when you move to your new employer your tax paid to date will include some 40% tax.  You say that the payments from your new employer will be below the 40% tax threshold so when you are paid by them each month there will be an adjustment whereby a bit of your 40% tax in your tax paid to date will be converted to 20% tax.  In this way when you get to the tax year end you will have paid the correct amount of 40% tax on your total year's earnings.

This assumes that all runs smoothly but that is not always the case.  Sometimes the P45 figures are late getting to the new employer so that delays the process and adjustments happen after you have been with the new employer a little while.  Sometimes there may be a change in pay dates that result in you having 11 or 13 paydays in the tax year which can alter things quite a lot.

Whatever happens so long as the new employer gets the tax code, pay, and tax details in time for the last salary before the tax year end at the latest the tax you pay should be correct unless affected by anything you have not mentioned.

GH1982

Thanks for your reply chrisbur.

As for the figures, I have currently earned £28,678 to date (pay period 5). My new salary is £43300, which is roughly £3600 a month before tax. If you add 7 of these payments, which is £25200, that gives £53878. I live in Scotland so I'm 41% over £43662, which will be £10216.

Does this mean I will have to pay 41% of £10216? I've obviously already been paying some for the first 5 months of the tax year. I just wasn't sure if it was calculated on a month to month basis i.e. the current allowance is £43,662/12 = £3638 a month roughly and because my new monthly wage will be £3600 a month I am then under the monthly threshold so will only pay 21%.

Im taking a bit of a drop in wages so I'm just trying to get an estimate of my new monthly take home pay. I've had a look at the salary calculators online but they only take in to account what your salary is for the year and not changing jobs in between 

chrisbur

The following is rough figures as assuming tax code of S1257L and I am not well acquainted with Scottish calculations.
The tax due at 41% at the end of the tax year on combined earnings of the two jobs will be a bit lower than the tax you have already paid at 41% while in your old job.  If all goes without any problems or complications on my assumed figures the tax difference between 41% paid at mth 5 and 41% due to be paid at mth 12 is about £112  which will be used to reduce the normal tax for the 7 months pay in your new job. So your new tax will be about £16 less than normal each month.  In this way the tax you pay at the end of the tax year will be correct ( always assuming your tax code is correct.)

As I said before occasionally things happen that can affect this.  Occasionally someone changes jobs and due to a change in the date they are paid they end the tax year getting either 11 or 13 paydays instead of 12.  You can check if this has happened on your first new job payslip, your last payslip was month 5 and your next should be month 6.  

GH1982

That's brilliant, thanks very much for your help chrisbur 👍 I honestly don't have a clue with taxes so I'm glad you do!