Print

Please login or register.
1 Hour 1 Day 1 Week 1 Month Forever
Login with username, password and session length

[matt-sboro]

im now about to start paying the higher rate of tax due to my earnings so far this year.

is there any exceptions to stop me paying the higher rate of tax?

i have gone into this bracket due to the overtime i have done so far this year but only due to the fact that i need the extra money to support a wife and 2 kids and taking another 20% off of me is going to kill me.

the mrs does not work (just had a baby)

also i read somewhere but dont quite understand that if i am in a civil partnership then i can increase the figure at which i start paying tax. is this correct?

any help on this matter is much needed so thanks in advance

[Golfbuddy]

I think this is what you are looking for.

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

No married man's allowance I'm afraid, that was abolished many years ago, unless you are really old.

Don't forget, you'll only pay higher rate tax on earnings over £34,800 but there is no way of getting out of it if you are on PAYE. The only thing you could do is check if anything you have to buy to do your job could be offset against tax. For instance, if you have to use your own vehicle for work, you could claim the increase in insurance premium and if your employer pays you less than 40p per mile then you can claim the difference against income tax.

HTH

[matt-sboro]

so next year it looks like the amount you can ean is increasing - that helps a little bit.

so far my taxable income is £31,693.14

does this mean that after i have earnt £34,600 (probabley after next pay check) i will suddenly have 40% of my money each month taken off me?

or do i add on the 6k that i am not taxed on before this happens?

i have everything supplied to me so i cant claim anything back that way

[Golfbuddy]

so next year it looks like the amount you can ean is increasing - that helps a little bit.

so far my taxable income is £31,693.14

does this mean that after i have earnt £34,600 (probabley after next pay check) i will suddenly have 40% of my money each month taken off me?

or do i add on the 6k that i am not taxed on before this happens?

i have everything supplied to me so i cant claim anything back that way

Not quite. To the best of my knowledge, your personal allowance will be split through the year. You may well have been taxed at 40% already if your monthly earnings are likely to take you over the higher rate limit.

The best and easiest way to find out is to speak to your wages department. They will receive a coding notice from your local HMRC office. Mrs Golfbuddy, who deals with all these things is at college tonight or I could have asked her. If no one comes back with a definitive answer in the meantime, I'll ask her on her return.

Don't forget though, if you have used up your personal allowance and you do have to pay at 40%, that won't be the end of it as you will also have national insurance deducted so you could lose 50+% of your earnings before you see any of it.

Isn't taxation just great.

[jjleonard]

IIRC you only pay 40% on any income earned OVER the £34,600 ceiling.

The tax allowance is deducted from your taxable income prior to paying tax but the £34,600 ceiling applies.

so - forgive me if this isn't calcuated correctly but:

assuming a £6000 allowance and £37,000 earned:

£34,600 (the 20% limit) minus the £6000 allowance = £28,600

20% of £28,600 = £5,720 in tax

£37,000 earned minus £34,600 (20% limit) = £2,400

40% of £2,400 = £960

So total tax = £5720+£960 = £6680.

I think that's right! hope that helps - undoubtedly someone will correct me on here if it's wrong. I've been paying significant chunks of 40% tax for some time now and have long since stopped thinking about how much it costs - I pay more in tax now than I used to earn about 10 years ago...  

EDIT: That last line wasn't meant to be smug. I've been fortunate in the opportunities offered to me in the last two years.

[matt-sboro]

im just more concerned about what will happen to my monthly wage - i cant afford to have another 20% taken off of me when i have 3 other mouths to feed, clothe and keep a roof over.

i was wrong about what i have earnt so far - i've already hit £36,754.67 taxable gross

last month i was taxed £1,696.68.


when you say that they may have already been taking 40% already - my annual salary is only £28,909 so when would they have started to take more?

[STMO123]

Try this matey:

http://www.pru.co.uk/home/calculator/income_tax/

[STMO123]

And this:

http://www.adviceguide.org.uk/index/life/tax/income_tax_rates.htm

[Allenm]

Don;t Panic!  You only get 40% on what is earned over the higher tax bracket.  You will not suddenly get another 20% taken off your monthly wage.  Once you go over the threshold (or it is calculated that over the year you will.) for every 1 pound over you lose 40p of it to tax.  but you still get the extra 60p!

[jjleonard]

Don;t Panic!  You only get 40% on what is earned over the higher tax bracket.  You will not suddenly get another 20% taken off your monthly wage.  Once you go over the threshold (or it is calculated that over the year you will.) for every 1 pound over you lose 40p of it to tax.  but you still get the extra 60p!

That's what I meant to say - you've managed it in a far easier to understand way.  

[Andy B]

.....
 - i've already hit £36,754.67 taxable gross

last month i was taxed £1,696.68. ........

Lucky you! You have to earn it to pay tax on it, 40% higher rate tax band is a long & distant memory for me now.  

[Golfbuddy]

im just more concerned about what will happen to my monthly wage - i cant afford to have another 20% taken off of me when i have 3 other mouths to feed, clothe and keep a roof over.

i was wrong about what i have earnt so far - i've already hit £36,754.67 taxable gross

last month i was taxed £1,696.68.


when you say that they may have already been taking 40% already - my annual salary is only £28,909 so when would they have started to take more?

OK. To the best of my knowledge this is how it works:

You get an annual tax free allowance of £6,035.

Based on this, HMRC send your employer a tax code to work out how much tax you must pay.

In round figures, the first £500 you earn each month (i.e. £6,035/12) therefore is not taxed.

Once you have earned in excess of this amount, the next £2,900 you earn each month (i.e.£34,800/12) is taxed at 22%, i.e. the basic rate.

Everything you earn each month over that is taxed at 40%. So, every month you earned more than £3,400 gross you would have paid income tax at 40%. From looking at your old wage slips you should be able to work out how many months you have paid tax at the higher rate. But, as I said before, don't forget about the biggest stealth tax of all, that is NI.

[Andy B]

If your wage dept haven't been on the ball and not taken enough tax from you when you hit the higher tax threshold, then come April/new tax year you'll owe the tax man. There is a figure somewhere  :-? that if you're below it, the tax man will take what you've under paid this tax year a bit at a time next tax year. Been there .... done that.  

[STMO123]

FFS. I've posted two links that a monkey could understand.

[Golfbuddy]

FFS. I've posted two links that a monkey could understand.

FFS!!! They don't answer the rather question though.

Love Martin