Overtime 40% tax Threshold

Nowherefast

Hello all I am Currently going to be going over the 40% tax Threshold for this year if I carry on doing overtime .

Now I dont know wether to kerb the Overtime so I dont go into that threshold and stay under the £50,270 or just carry on .

I know the 40% tax only applies to the proportion earned over the £50,270 .

But say in new tax year the Overtime is not available does HMRC assume I will be earning similar again and then will be taxed higher or does it level out later on ?

From what I understand its the Ni contributions that is hit more at 40% ?

Current tax code is 1269L

TIA

El_Torro

HMRC probably will assume that your income next year will be similar to this year. However if you know you’ll be doing less overtime you can tell HMRC what you do expect to earn so that you’re on the right tax code.

Regarding National Insurance, you only pay 2% on the part that is taxed at 40%.

Up to you whether you do the overtime. 58% of something is better than 0% of nothing though. If you want to stay in the 20% tax bracket you can also put the extra amount into a pension.

Woodstok2000

The above is good advice. Also consider that if you're claiming child benefit that will start to taper down if you earn over £60k.

LeafGreen

Also, the Personal Savings Allowance goes from £1000 to £500 if you are a higher rate tax payer.

Nowherefast

https://forums.moneysavingexpert.com/discussion/comment/81919060#Comment_81919060

Ah yes , I guess not for a ISA though?

penners324

Or put the extra in your pension

penners324

Hmrc salary assumptions only really matter or impact your tax code when you get to an additional rate tax payer.

Ie your wages are above £100k