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40% tax?

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When do I start paying 40% tax? 
I heard it was if I was earning: £50,271 per annum?

I have also read somewhere 
Tax-free amount at 40% on income between £37701 and £150000

I'm a bit confused
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  • TadleyBaggie
    TadleyBaggie Posts: 6,125 Forumite
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    What is your Personal Allowance? Add that to £37701 and you have your answer.
  • molerat
    molerat Posts: 32,182 Forumite
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    edited 8 February 2022 at 1:43PM
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    From £37701 of taxable income on top of your personal allowance so £12570 + £37701 = £50271
  • jarv81178
    jarv81178 Posts: 108 Forumite
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    what is personal allowance?
  • lisyloo
    lisyloo Posts: 29,708 Forumite
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    The standard personal allowance on which you pay 0% tax is £12570.
    however it’s individual so
    for example if you have private medical cover it might be lowered due to the tax you have to pay on that benefit in kind.
    have you had a “notice of coding” letter from HMRC?
    if not then it’s probably £12570 on which you pay 0%.
    then 20% income tax on the next £37700, so you pay 40% after 50,270 THIS tax year

    My tax code is on my payslip.
    do you have a payslip?
  • jarv81178
    jarv81178 Posts: 108 Forumite
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    I still don't get it.... so if I'm on £42k I'll be paying 40% tax
    or
    if I'm on £52k I'll be paying 40% tax?
  • Penguin_
    Penguin_ Posts: 1,256 Forumite
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    edited 8 February 2022 at 4:59PM
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    Your personal allowance will be based on your tax code which is on your payslip, just add a 0 to the end of it.

    BandTaxable incomeTax rate
    Personal AllowanceUp to £12,5700%
    Basic rate£12,571 to £50,27020%
    Higher rate£50,271 to £150,00040%


    So if you earn £60,000 in a tax year, your tax would be as follows (assuming your tax code is 1257)

    First £12570 will be taxed at 0%. So 0 tax
    Next £37700 will be taxed at 20% So £7540 tax
    The remaining £9730 would be taxed at 40% So £3892 tax
  • jarv81178
    jarv81178 Posts: 108 Forumite
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    so basically, if you are on 50k and you are offered a pay rise, say "no, I'm ok on 50k thanks!" 
  • Marcon
    Marcon Posts: 11,188 Forumite
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    jarv81178 said:
    When do I start paying 40% tax? 
    I heard it was if I was earning: £50,271 per annum?

    I have also read somewhere 
    Tax-free amount at 40% on income between £37701 and £150000

    I'm a bit confused
    Useful links and info given when you asked this question in December: https://forums.moneysavingexpert.com/discussion/6317066/tax-40-at-50-245#latest
    Googling on your question might have been both quicker and easier, if you're only after simple facts rather than opinions!  
  • Grumpy_chap
    Grumpy_chap Posts: 15,210 Forumite
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    jarv81178 said:
    so basically, if you are on 50k and you are offered a pay rise, say "no, I'm ok on 50k thanks!" 
    No.
    Take the pay rise.
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