How do I know if/when I am in the 40% tax bracket?

Jami74

Sorry if it's a really daft question, it's the first time I've ever been close to the higher rate tax bracket.

I have a NONCUM tax code and employed by the NHS. Due to pay rise and back pay in October I believe I will have paid some tax at 40% in my most recent payslip. Next tax year I am certain that I will pay some tax at 40%. I might not this tax year overall as the first few months my salary was less, however I cannot predict how much overtime I will do so it could go either way.

I am keeping records on a spreadsheet, but is there any other way to know? There's only 1 PAYE amount on my payslip and nothing obvious on the gov.uk tax account. How do people know?

Dazed_and_C0nfused

Jami74 said:

Sorry if it's a really daft question, it's the first time I've ever been close to the higher rate tax bracket.

I have a NONCUM tax code and employed by the NHS. Due to pay rise and back pay in October I believe I will have paid some tax at 40% in my most recent payslip. Next tax year I am certain that I will pay some tax at 40%. I might not this tax year overall as the first few months my salary was less, however I cannot predict how much overtime I will do so it could go either way.

I am keeping records on a spreadsheet, but is there any other way to know? There's only 1 PAYE amount on my payslip and nothing obvious on the gov.uk tax account. How do people know?

What other income do you have, over and above the pay which will be on your P60?

Jami74

Dazed_and_C0nfused said:

What other income do you have, over and above the pay which will be on your P60?

A little bit of interest. Was slightly over £1,000 last year, should be slightly under £1,000 this year.

Bookworm105

Jami74 said:

Dazed_and_C0nfused said:

What other income do you have, over and above the pay which will be on your P60?

A little bit of interest. Was slightly over £1,000 last year, should be slightly under £1,000 this year.

add up your total income gross salary + interest = ?
do you receive more than £50,270 before any tax is deducted?
that is the 40% rate threshold as it compromises 12,570 tax free personal allowance plus the next 37,700 taxed at 20%

Jami74

Bookworm105 said:

Jami74 said:

Dazed_and_C0nfused said:

What other income do you have, over and above the pay which will be on your P60?

A little bit of interest. Was slightly over £1,000 last year, should be slightly under £1,000 this year.

add up your total income gross salary + interest = ?
do you receive more than £50,270 before any tax is deducted?
that is the 40% rate threshold as it compromises 12,570 tax free personal allowance plus the next 37,700 taxed at 20%

Thanks, I know how to work it out. I wondered if it was shown anywhere or if it was down to individuals to work out themselves and know if/when they've gone into the next tax bracket. 

Will it show on P60? Does it ever get broken down anywhere? I'm guessing not.

I'm planning to put some of my salary into a SIPP so if/when I get into 40% tax territory I will inform HMRC that I've put money into a SIPP, I wouldn't want to try and claim back more than I should.

Flugelhorn

Jami74 said:

Bookworm105 said:

Jami74 said:

Dazed_and_C0nfused said:

What other income do you have, over and above the pay which will be on your P60?

A little bit of interest. Was slightly over £1,000 last year, should be slightly under £1,000 this year.

add up your total income gross salary + interest = ?
do you receive more than £50,270 before any tax is deducted?
that is the 40% rate threshold as it compromises 12,570 tax free personal allowance plus the next 37,700 taxed at 20%

Thanks, I know how to work it out. I wondered if it was shown anywhere or if it was down to individuals to work out themselves and know if/when they've gone into the next tax bracket. 

Will it show on P60? Does it ever get broken down anywhere? I'm guessing not.

I'm planning to put some of my salary into a SIPP so if/when I get into 40% tax territory I will inform HMRC that I've put money into a SIPP, I wouldn't want to try and claim back more than I should.

it is not shown on the P60 as the employer is just applying the code they are given to the money you are paid. you may have several jobs with different codes.

I see the whole thing laid out when I do self assessment of get a notice of coding 

prowla

Bookworm105 said:

Jami74 said:

Dazed_and_C0nfused said:

What other income do you have, over and above the pay which will be on your P60?

A little bit of interest. Was slightly over £1,000 last year, should be slightly under £1,000 this year.

add up your total income gross salary + interest = ?
do you receive more than £50,270 before any tax is deducted?
that is the 40% rate threshold as it compromises 12,570 tax free personal allowance plus the next 37,700 taxed at 20%

(+ taxable benefits)

Albermarle

Jami74 said:

Bookworm105 said:

Jami74 said:

Dazed_and_C0nfused said:

What other income do you have, over and above the pay which will be on your P60?

A little bit of interest. Was slightly over £1,000 last year, should be slightly under £1,000 this year.

add up your total income gross salary + interest = ?
do you receive more than £50,270 before any tax is deducted?
that is the 40% rate threshold as it compromises 12,570 tax free personal allowance plus the next 37,700 taxed at 20%

Thanks, I know how to work it out. I wondered if it was shown anywhere or if it was down to individuals to work out themselves and know if/when they've gone into the next tax bracket. 

Will it show on P60? Does it ever get broken down anywhere? I'm guessing not.

I'm planning to put some of my salary into a SIPP so if/when I get into 40% tax territory I will inform HMRC that I've put money into a SIPP, I wouldn't want to try and claim back more than I should.

You can not claim more than you should.
You inform HMRC of your gross pension contributions ( so your contribution + the basic rate tax relief added by the SIPP provider.
They will calculate if you are eligible for any higher rate tax relief. If you are you will get a rebate for the appropriate amount.

Jami74

Albermarle said:

Jami74 said:

Bookworm105 said:

Jami74 said:

Dazed_and_C0nfused said:

What other income do you have, over and above the pay which will be on your P60?

A little bit of interest. Was slightly over £1,000 last year, should be slightly under £1,000 this year.

add up your total income gross salary + interest = ?
do you receive more than £50,270 before any tax is deducted?
that is the 40% rate threshold as it compromises 12,570 tax free personal allowance plus the next 37,700 taxed at 20%

Thanks, I know how to work it out. I wondered if it was shown anywhere or if it was down to individuals to work out themselves and know if/when they've gone into the next tax bracket. 

Will it show on P60? Does it ever get broken down anywhere? I'm guessing not.

I'm planning to put some of my salary into a SIPP so if/when I get into 40% tax territory I will inform HMRC that I've put money into a SIPP, I wouldn't want to try and claim back more than I should.

You can not claim more than you should.
You inform HMRC of your gross pension contributions ( so your contribution + the basic rate tax relief added by the SIPP provider.
They will calculate if you are eligible for any higher rate tax relief. If you are you will get a rebate for the appropriate amount.

Thank you so much!
So I don't need to know exact numbers, but will keep my own figures anyway.

chrisbur

Do you know why you are on a non-cumulative tax code?  From what you said earlier you may well have paid some 40% tax which is not due at 40%.  If you remain on the non-cumulative tax code this will not be adjusted until some time after the tax year ends.

Jami74

chrisbur said:

Do you know why you are on a non-cumulative tax code?  From what you said earlier you may well have paid some 40% tax which is not due at 40%.  If you remain on the non-cumulative tax code this will not be adjusted until some time after the tax year ends.

I've recently changed jobs. In my previous job I had a substantive post and a bank post. The substantive post ended but the bank post remained 'live'. I've also recently in my new job gone up a pay point and had a pay rise which included back pay. I assumed it was related to some or all of that. I tend to keep an eye on my tax account and will update the expected earnings if they're going to be very different to what is currently there.

In my previous job the substantive payslip was the same every month and additional shifts paid as bank, but I also had the option to work them for time off in lieu. In my new role extra shifts are on the substantive payslip as overtime, and I can't predict exactly how many hours of overtime I'll do. My pay has been different every month for the last six months.

I'm also very close to the point of paying a higher percentage of pension (NHS. Percentage deducted depends on earnings with higher earners paying a bigger percentage) so have been trying to work out how working the (non optional) overtime affects me. Of course, if more is taken as pension less is taken as tax, but NI and student loan is calculated on gross. The answer I found is that a £250 overtime payment results in a net increase of £50.

If nothing changes then next tax year I will pay some 40% tax and higher pension deductions but will still be better off than if I work less hours. This year, because of all the ups and downs I don't know yet which pension bracket I'll be in overall or how much (if any) 40% tax I'll pay.