Higher rate tax

khickey88

Hi I just need a little advice please. So I've recently had a pay rise and worked out my income is going to be £52000 a year which I presume puts me into the higher tax bracket or does it? I also pay £2500 a year into my work base pension so does anyone know if this means I will still be in the basic tax bracket? No other income thank you.

DE_612183

is the £2500 paid in before of after tax?

Is your actual salary £54,500?

khickey88

No my salary is £52000 then pension is 4.8% of that so roughly £2500 so I take it my taxable pay will be £49500

DE_612183

ok, so you are in the 20% tax bracket - providing your tax code is 1257

eskbanker

DE_612183 said:

ok, so you are in the 20% tax bracket - providing your tax code is 1257

Tax codes don't actually determine overall annual income tax liabilities, in that, for example, they're used for collecting tax due from other tax years, and don't recognise non-PAYE income such as savings interest.

OP - do you have any income other than your employment earnings? edit: already answered!

[Deleted User]

eskbanker said:

DE_612183 said:

ok, so you are in the 20% tax bracket - providing your tax code is 1257

Tax codes don't actually determine overall annual income tax liabilities, in that, for example, they're used for collecting tax due from other tax years, and don't recognise non-PAYE income such as savings interest.

OP - do you have any income other than your employment earnings?

No other income per opening post - last line!

khickey88

Nothing unless selling a few bits on eBay counts (£500 max)

Dazed_and_C0nfused

khickey88 said:

No my salary is £52000 then pension is 4.8% of that so roughly £2500 so I take it my taxable pay will be £49500

Not necessarily, it could be £52,000.

It all depends what method is used to make the pension contributions.

You need to find that out to understand the tax position (and if you have to contact HMRC or not).

Relief at source is where the pension company adds 25% to your net contribution
Net pay is where your taxable pay is less than your salary i.e. £52,000 salary less £2,500 net pay contribution = £49,500 taxable pay

You can probably tell which method is used by checking your payslip.

khickey88

Yes looked at my payslip from last April week 52. I've earned £48000 but taxable PAYE was only £46000 and I paid £2000 of pension that year.

[Deleted User]

khickey88 said:

Yes looked at my payslip from last April week 52. I've earned £48000 but taxable PAYE was only £46000 and I paid £2000 of pension that year.

Based on that your taxable gross pay (£52000 less 4.8% pension contribution) is £49816. You are still a basic rate taxpayer. 

However, even a 1% increase would take you over the £50270 figure above which 40% is paid - food for thought!