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

Flugelhorn

Just be careful with thresholds on the pension - I once worked a couple of extra sessions and it cost me £1000

Jami74

Flugelhorn said:

Just be careful with thresholds on the pension - I once worked a couple of extra sessions and it cost me £1000

Actually this is where it started, as I was trying to work out if I'm going to take home less by working more. And if I could counteract that by reducing my contracted hours. 

Flugelhorn

Jami74 said:

Flugelhorn said:

Just be careful with thresholds on the pension - I once worked a couple of extra sessions and it cost me £1000

Actually this is where it started, as I was trying to work out if I'm going to take home less by working more. And if I could counteract that by reducing my contracted hours. 

It is quite hard to take home less by working more - literally if you just scrape over a threshold - everything after that is more money in the pocket.
My glitch was the old 1995 when I jumped from 13.5% to 14.5% (or something like that) 

chrisbur

As you recently started this employment HMRC may well issue updated tax details for your employer to operate a cumulative tax code in the near future, if they are aware that this is now your only employment.

penners324

Jami74 said:

Flugelhorn said:

Just be careful with thresholds on the pension - I once worked a couple of extra sessions and it cost me £1000

Actually this is where it started, as I was trying to work out if I'm going to take home less by working more. And if I could counteract that by reducing my contracted hours. 

Why would that happen? If you work more your take home pay inceases

Dazed_and_C0nfused

penners324 said:

Jami74 said:

Flugelhorn said:

Just be careful with thresholds on the pension - I once worked a couple of extra sessions and it cost me £1000

Actually this is where it started, as I was trying to work out if I'm going to take home less by working more. And if I could counteract that by reducing my contracted hours. 

Why would that happen? If you work more your take home pay inceases

With tax there are some horrible cliff edge scenarios.

For example earning the £1 that takes you from being a basic rate to higher rate taxpayer can cost you say ~60% in income tax, NI, pension contributions and student loan repayments.  Or a bit more if you are a Scottish resident.

But that £1 will, for some people, mean you also lose the £252 Marriage Allowance credit 😳.

Not specifically an issue for that payday but the overall impact can be severe.

Flugelhorn

Dazed_and_C0nfused said:

penners324 said:

Jami74 said:

Flugelhorn said:

Just be careful with thresholds on the pension - I once worked a couple of extra sessions and it cost me £1000

Actually this is where it started, as I was trying to work out if I'm going to take home less by working more. And if I could counteract that by reducing my contracted hours. 

Why would that happen? If you work more your take home pay inceases

With tax there are some horrible cliff edge scenarios.

For example earning the £1 that takes you from being a basic rate to higher rate taxpayer can cost you say ~60% in income tax, NI, pension contributions and student loan repayments.  Or a bit more if you are a Scottish resident.

But that £1 will, for some people, mean you also lose the £252 Marriage Allowance credit 😳.

Not specifically an issue for that payday but the overall impact can be severe.

similarly with the NHS pension there are some cliff edged for example hit £62925 and you pay an extra 1.8% on the whole of your pensionable pay = approx £1100  (compared with a pensionable pay of £1 less)

Bookworm105

when will people ever appreciate that tax is not 100%
even the most obvious threshold of losing personal allowance means you still keep 40% of what you earn.

I often wonder if the more you earn the greedier you become.

Jami74

Bookworm105 said:

when will people ever appreciate that tax is not 100%
even the most obvious threshold of losing personal allowance means you still keep 40% of what you earn.

I often wonder if the more you earn the greedier you become.

Are you referring to me as 'people'. As referred to above, there are cliff edges with both NHS pension and tax brackets which, when combined with student loan, I was concerned could potentially result in the deductions being greater than the extra money earned. I have no qualms paying 40% tax, in fact it's a very exciting milestone for me having entered adulthood with no qualifications, in a minimum wage job and on benefits now being in a position to be paying higher rate tax and contributing to a pension. However, time at home with my family has a value too and if breaching certain cliff edges means getting little financial reward for the extra hours worked, then I'd rather go without the extra financial reward. 

SacredStephan

Flugelhorn said

similarly with the NHS pension there are some cliff edged for example hit £62925 and you pay an extra 1.8% on the whole of your pensionable pay = approx £1100  (compared with a pensionable pay of £1 less)

The cliff edges in Scotland are less severe:
https://mypaycalculator.co.uk/nhs#pension