Confused about paying 40% income tax

ahfat41

I thought you have to earn above £50,000 to pay higher rate income tax. Why is it in my tax code letter, there is a reference of. Will be above £37,500 due to getting half of late husband pension. Does not seem right if I will be charged 40%. Thanks

PAYE tax rate	Rate of tax	Annual earnings the rate applies to (above the PAYE threshold)
Basic tax rate	20%	Up to £37,700
Higher tax rate	40%	From £37,701 to £125,140
Additional tax rate	45%	Above £125,140

DullGreyGuy

Add on your tax free allowance.

Flugelhorn

it is 12570 + 37700 before you pay 40%

[Deleted User]

ahfat41 said:

I thought you have to earn above £50,000 to pay higher rate income tax. Why is it in my tax code letter, there is a reference of. Will be above £37,500 due to getting half of late husband pension. Does not seem right if I will be charged 40%. Thanks

PAYE tax rate	Rate of tax	Annual earnings the rate applies to (above the PAYE threshold)
Basic tax rate	20%	Up to £37,700
Higher tax rate	40%	From £37,701 to £125,140
Additional tax rate	45%	Above £125,140

It clearly states:

Annual earnings the rate applies to
(above the PAYE threshold)

400ixl

Been a few threads on this recently due to some government website confusing people.

The tax brackets have not changed.

SacredStephan

The tax bands and rates are different in Scotland.

molerat

400ixl said:

Been a few threads on this recently due to some government website confusing people.

The tax brackets have not changed.

I don't think any .gov websites have put it any differently to how they have always done it but some social media influencers have found it and posted it as a change.  And of course if it is on social media it must be true !

ahfat41

Looks like will be paying 40% tax on some of my pensions. Get approx £20,000 nhs pension, £13,000 late husband nhs and £14,000+ state pension. Am I correct? Thanks

Dazed_and_C0nfused

ahfat41 said:

Looks like will be paying 40% tax on some of my pensions. Get approx £20,000 nhs pension, £13,000 late husband nhs and £14,000+ state pension. Am I correct? Thanks

Yes.

You can reduce the 40% payable a little bit making some relief at source pension contributions to a SIPP.

But given your income is only ever going to increase getting money out without them paying 40% tax on 75% will be difficult!

TadleyBaggie

ahfat41 said:

Looks like will be paying 40% tax on some of my pensions. Get approx £20,000 nhs pension, £13,000 late husband nhs and £14,000+ state pension. Am I correct? Thanks

Which adds up to around £47K, so no, you will not be paying 40% tax.

SiliconChip

Dazed_and_C0nfused said:

ahfat41 said:

Looks like will be paying 40% tax on some of my pensions. Get approx £20,000 nhs pension, £13,000 late husband nhs and £14,000+ state pension. Am I correct? Thanks

Yes.

You can reduce the 40% payable a little bit making some relief at source pension contributions to a SIPP.

But given your income is only ever going to increase getting money out without them paying 40% tax on 75% will be difficult!

You're going to have to show us the working that led you to this conclusion, because as @TadleyBaggie says the total of those pensions is below the higher rate limit unless you know something that we don't about the OP's tax code.