Am I a Basic or Higher Rate Tax bracket?

Puddingboy

Hi There,
I have a full time day job and recently took on a second evening job as a cleaner, my gross income is 42,270.00 (tax code-1135L) from my primary job and my my gross income from the evening job is 8,580.00 (tax code BR). this brings my total gross income to 50,850.00, does this put me into the higher rate 40% tax bracket?
what would be the limit for me earnings from a second job to keep me from going over the 20% tax threshold?

Thank you in advance,
Stay safe

MovingForwards

Higher rate, according to this:
https://www.gov.uk/income-tax-rates

Can you increase your first job pension contributions or pay into the pension for your second job as that would bring you down to a basic tax payer.

General_Grant

Puddingboy said:

Hi There,
I have a full time day job and recently took on a second evening job as a cleaner, my gross income is 42,270.00 (tax code-1135L) from my primary job and my my gross income from the evening job is 8,580.00 (tax code BR). this brings my total gross income to 50,850.00, does this put me into the higher rate 40% tax bracket?
what would be the limit for me earnings from a second job to keep me from going over the 20% tax threshold?

Thank you in advance,
Stay safe

Why do you want to avoid earning more than would keep you paying 20% tax only?
You do know that the 40% rate applies only to the amount above the 20% amount not all your taxable pay?

Dazed_and_C0nfused

General_Grant said:

Puddingboy said:

Hi There,
I have a full time day job and recently took on a second evening job as a cleaner, my gross income is 42,270.00 (tax code-1135L) from my primary job and my my gross income from the evening job is 8,580.00 (tax code BR). this brings my total gross income to 50,850.00, does this put me into the higher rate 40% tax bracket?
what would be the limit for me earnings from a second job to keep me from going over the 20% tax threshold?

Thank you in advance,
Stay safe

Why do you want to avoid earning more than would keep you paying 20% tax only?
You do know that the 40% rate applies only to the amount above the 20% amount not all your taxable pay?

There could be a valid reason, for example loss of Marriage Allowance, however the op's tax code shows this doesn't seem relevant so as you say likely to be a misunderstanding of how tax works!

my gross income is 42,270.00 (tax code-1135L) from my primary job

Puddingboy

Hi All,
thank you for the responses and feedback, I totally misunderstood the higher rate bracket,     oh, i pay into BUPA hence the 1135L tax code from my primary employer.

I do have one final question is my total tax calculated individually  1135L and BR
or do they take my total gross income of both jobs and apply the 1135L tax code and forget the BR tax code?

Thank you

liz_bartun

Puddingboy said:

Hi All,
thank you for the responses and feedback, I totally misunderstood the higher rate bracket,     oh, i pay into BUPA hence the 1135L tax code from my primary employer.

I do have one final question is my total tax calculated individually  1135L and BR
or do they take my total gross income of both jobs and apply the 1135L tax code and forget the BR tax code?

Thank you

They are calculated individually. Is the £8580 a full 12 month salary or is that the pro-rated amount from when you started to 5/4/23? You'll probably be issued new tax codes if your total projected income for the year bumps you into the 40% band.

General_Grant

Puddingboy said:

Hi All,
thank you for the responses and feedback, I totally misunderstood the higher rate bracket,     oh, i pay into BUPA hence the 1135L tax code from my primary employer.

I do have one final question is my total tax calculated individually  1135L and BR
or do they take my total gross income of both jobs and apply the 1135L tax code and forget the BR tax code?

Thank you

Your tax-free allowance will all be used up in your primary job.  So the pay from the other job would continue to be taxed as BR.

After the end of the tax year (5 April), HMRC will look at how much you have earned in total and will either ask you to pay any additional tax or adjust your tax code for the new year in order that it is paid over the new year.

You could benefit in relation to your NI contributions as they are worked out for each pay period in each employment separately.

Dazed_and_C0nfused

General_Grant said:

Puddingboy said:

Hi All,
thank you for the responses and feedback, I totally misunderstood the higher rate bracket,     oh, i pay into BUPA hence the 1135L tax code from my primary employer.

I do have one final question is my total tax calculated individually  1135L and BR
or do they take my total gross income of both jobs and apply the 1135L tax code and forget the BR tax code?

Thank you

Your tax-free allowance will all be used up in your primary job.  So the pay from the other job would continue to be taxed as BR.

After the end of the tax year (5 April), HMRC will look at how much you have earned in total and will either ask you to pay any additional tax or adjust your tax code for the new year in order that it is paid over the new year.

You could benefit in relation to your NI contributions as they are worked out for each pay period in each employment separately.

For the avoidance of doubt "new year" in that scenario would be 2024:25, not 2023:24.

Exodi

Puddingboy said:

thank you for the responses and feedback, I totally misunderstood the higher rate bracket,    

Honestly, despite how obvious it seems to us forumgoers, I can not believe how common this misunderstanding is.

I have friends that are exactly the same - that would turn down a payrise from £45k to £55k because they think they'd be worse off (as they think they'd suddenly have to start paying 40% tax on everything).

As I'm sure you're aware, it's only earnings above £50,270 that are taxed at 40%.

However, it may still be worth increasing your pension contributions so you're not paying 40% on anything.

kimwp

Going over the threshold (or £50k, can't remember the exact figure) does have implications for other things - your personal savings allowance halves, child benefit starts to reduce etc.

Exodi

kimwp said:

Going over the threshold (or £50k, can't remember the exact figure) does have implications for other things - your personal savings allowance halves, child benefit starts to reduce etc.

Many of the additional implications are also gradual and not a sudden cliff edge when you salary goes £50k.

I guess my point is that there are very few situations that people should reject payrises!