Payrise and tax question
Discussion
I have gone through the relevent tax websites but the answer isnt clear to me..
I am currently on 35k which keeps me just under the 40% tax bracket so i should only be paying 20%.
I have just been told i have a £800 payrise which now puts me over the 20% mark.
My question is, am i going to get 40% tax on the 800 that i earn or will the whole 35.8k be subject to the 40% tax?
I am currently on 35k which keeps me just under the 40% tax bracket so i should only be paying 20%.
I have just been told i have a £800 payrise which now puts me over the 20% mark.
My question is, am i going to get 40% tax on the 800 that i earn or will the whole 35.8k be subject to the 40% tax?
The calculator on
http://www.i-resign.com/uk/financialcentre/tax_cal...
Will let you play around with different figures and calculate your tax
http://www.i-resign.com/uk/financialcentre/tax_cal...
Will let you play around with different figures and calculate your tax
Eric Mc said:
Is that increase £800 for the year or £800 per month?
You only get taxed at the higher tax rate on that part of your income that exceeds the higher rate threshold. For tax year 2011/12, that threshold is £42,475.
Not sure if it helps but if you pay more into your pension (assuming you have one) then this may bring you below the 40% threshold as pension payments come out before you are taxed.You only get taxed at the higher tax rate on that part of your income that exceeds the higher rate threshold. For tax year 2011/12, that threshold is £42,475.
I hope the above is true, I'm sure someone will correct me if I'm wrong.
Diablos-666 said:
Not sure if it helps but if you pay more into your pension (assuming you have one) then this may bring you below the 40% threshold as pension payments come out before you are taxed.
I hope the above is true, I'm sure someone will correct me if I'm wrong.
I doubt many people do this. It is often capped (maximum payments) so would only reduce it ever so slightly. Interesting one...I hope the above is true, I'm sure someone will correct me if I'm wrong.
Diablos-666 said:
mph1977 said:
this worries me immensely , someone (claiming to be) earning at around the threshold not knowing how income tax works ...
Why should that worry YOU?!these kind of questions are why employers complain about the yoof of today not knowing basic things ...
Diablos-666 said:
mph1977 said:
this worries me immensely , someone (claiming to be) earning at around the threshold not knowing how income tax works ...
Why should that worry YOU?!When I was in school in Ireland back in the 70s, way before I even thought about accountancy as a career, we were given a very quick tutorial on how taxes worked. The idea was that those of us who were going into employment within a few months would be able to check our own wages payslips.
Eric Mc said:
To be honest, it does surprise me when people do ask this question as it means that they don't even know the most basic principle of how their tax is calculated. Given that 90% of taxpayers in the country don't have any form of professional advisers, then having a litle bit of knowledge might not be such a bad thing.
When I was in school in Ireland back in the 70s, way before I even thought about accountancy as a career, we were given a very quick tutorial on how taxes worked. The idea was that those of us who were going into employment within a few months would be able to check our own wages payslips.
Now I just look at mysalarycalculator or whatever to check it is correct. When I was in school in Ireland back in the 70s, way before I even thought about accountancy as a career, we were given a very quick tutorial on how taxes worked. The idea was that those of us who were going into employment within a few months would be able to check our own wages payslips.
P.S - ~2.3%, Stingy gits!
Eric Mc said:
When I was in school in Ireland back in the 70s, way before I even thought about accountancy as a career, we were given a very quick tutorial on how taxes worked. The idea was that those of us who were going into employment within a few months would be able to check our own wages payslips.
Wouldn't surprise me if it's not on the syllabus for any exam (with the possible exception of something like economics), so it doesn't get taught.mph1977 said:
this worries me immensely , someone (claiming to be) earning at around the threshold not knowing how income tax works ...
+1000000!It means the OP thinks it's possible that someone on £35k is better off than someone on £40k after tax!
Why would the company give you a pay rise that made you worse off?
It would be lose lose for them and you.
mph1977 said:
worries in a 'facepalm' way rather than disturbing my sleep because I think the world will end ...
these kind of questions are why employers complain about the yoof of today not knowing basic things ...
I know what you were getting at but the guy wasn't sure so asked the question. At least he is willing to ask and find out rather than say nothing and let it go over his head, which I would say is more worrying.these kind of questions are why employers complain about the yoof of today not knowing basic things ...
Hope you don't think I'm being rude or trying to start an argument.
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