40% tax?

jarv81178

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

TadleyBaggie

What is your Personal Allowance? Add that to £37701 and you have your answer.

molerat

From £37701 of taxable income on top of your personal allowance so £12570 + £37701 = £50271

jarv81178

what is personal allowance?

lisyloo

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

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_

Your personal allowance will be based on your tax code which is on your payslip, just add a 0 to the end of it.

Band	Taxable income	Tax rate
Personal Allowance	Up to £12,570	0%
Basic rate	£12,571 to £50,270	20%
Higher rate	£50,271 to £150,000	40%

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

so basically, if you are on 50k and you are offered a pay rise, say "no, I'm ok on 50k thanks!" 

theoretica

jarv81178 said:

so basically, if you are on 50k and you are offered a pay rise, say "no, I'm ok on 50k thanks!" 

You only pay 40% on the bit above 50271, not on the whole lot. 

Marcon

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

Grumpy_chap

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.