Tax

Printer

When do you pay higher tax on your earnings? Is it at £31,000 or has it changed? If some one could give me a breakdown of what and when including pensions too..

Thanks

jem16

You need to earn £41,435 before you will pay higher rate tax at 40%.

http://www.hmrc.gov.uk/rates/it.htm

Printer

Sorry don't see that on that page...how do you calculate that?

Is it the £34,600 the limit?

jem16

Printer wrote: »

Sorry don't see that on that page...how do you calculate that?

40% rate starts at £36,000 of taxable income. You add your tax-free allowance of £5435 to that and you get £41,435

Is it the £34,600 the limit?

That's last year's taxable income starting point for 40% rate. Add to that last year's tax-free allowance of £5225 and you get £39,825 for 07/08.

Printer

Sorry i'm thick at this.

I've been offered a new job and trying to work out the best deal. There HR guy says rather than cars etc....have an allowence.

what they are offering 33k plus 2k car allowence 3% pension

Was trying to work out tax pitfall but i don' get it.

jem16

Printer wrote: »

Sorry i'm thick at this.

I've been offered a new job and trying to work out the best deal. There HR guy says rather than cars etc....have an allowence.

Basically if you have a company car this is a taxable benefit and you lose part of your tax-free allowance which is £5435 this tax year, so you will pay more tax. Instead of a car they will give you a £2k allowance which will increase your tax-free allowances so you pay less tax - around £400.

what they are offering 33k plus 2k car allowence 3% pension

With a salary of £33k you will be paying 20% tax not 40%. The £2k car allowance I have explained above. They are also going to make a contribution of 3% to your pension which is £990.

Was trying to work out tax pitfall but i don' get it.

There is no tax pitfall.

Printer

Thanks! That helpful