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HMRC says [url= http://www.hmrc.gov.uk/incometax/basics.htm ]£32,011 to £150,000 Higher rate[/url]
BBC saying today [url= http://www.bbc.co.uk/news/uk-politics-26572914 ]There have been calls for a rise in the level at which the rate kicks in, which is currently £41,150[/url]
So what is it?
Isn't the HMRC quoting the amount after your tax free allowance?
Is the HMRC figure after tax free allowance has been taken off?
32 + your 10 tax free
Grr, too slow.
After your allowable expenses and any tax-free allowances have been taken into account, the amount of tax you pay is calculated using different tax rates and a series of tax bands.
Ahh yes, clear as mud by them.
Cheers
Hmrc even tell you on your link....
Haha too slow
HMRC figure of £32011 is [i]taxable [/i]income, excluding the personal allowance of £9440. Add them together you get £41450.
As Brassneck said so £32,011 plus £9,440 2013/14 or £10,000 2014/15
craigxxl...are you an accountant perchance?
Whatever gives you that idea 🙄
Its a shit thats what it is.. 😉
Whatever gives you that idea
🙂 You always seem to have pretty accurate answers on these threads. Just, erm, docking some information for some possible questions. 😉
Hmm wish I was paying 40% tax
Hmm wish I was paying 40% tax
Why?
It's spank.
it's 40% up to £100K and then because of the loss of the personal allowance on a pound for pound basis for the £20K above that effectively becomes a 62% marginal tax rate i.e. for every £2 earned you lose £1 allowance and still pay the 42% tax and NI.
Which is nice work if you can get it but seems a bit bonkers when people on £150k only pay 45% tax on income over that.
Hmm wish I was paying 40% tax
Pitfall of being self employed - one good year and instead of being able to save for a rainy day, they just want to take 40% of it off me 🙁
They didn't give me anything back when I had several bad years after the recession struck.
Can't you setup a limited company and manage your business tax affairs through that ?
Can't really complain if you're earning over £100k, you're not exactly poor.
It's a good way of identifying the champagne socialists. They're the ones who think it should be a higher %age, but only start above what they earn.
Pitfall of being self employed - one good year and instead of being able to save for a rainy day, they just want to take 40% of it off me
Run it as a ltd company and keep the money in the company account rather than your own?
We'll never see the 40% band rise any significant amount for middle incomes, they'll just keep bumping the tax free element and call it a win for 40% tax payers.
Can't you setup a limited company and manage your business tax affairs through that ?
Yes, but general opinion is that you need to earn over around £50k to make the switch beneficial so the occasional (twice in 10 years) foray into higher band suggests it isn't for me just yet.
Pitfall of being self employed - one good year and instead of being able to save for a rainy day, they just want to take 40% of it off meThey didn't give me anything back when I had several bad years after the recession struck.
You should be thinking about going limited and saving quite a bit in taxes. If you're not due to it being a good year then make sure your payments on account reflect that too.
You don't "escape" paying 40% even if you have a Ltd Co 😉
footflaps - Member
Can't really complain if you're earning over £100k, you're not exactly poor.
You're not wrong, but I think robdixon's point is that people earning between £100,000 and £149,000 are paying a lot more tax then people earning £150,000 and over
[quote=bikebouy said]You don't "escape" paying 40% even if you have a Ltd Co
You do if your personal income taken out of the business is set to be below the 40% threshold 🙂
Our joint income wouldn't hit the higher tax bracket 😀
You're not wrong, but I think robdixon's point is that people earning between £100,000 and £149,000 are paying a lot more tax then people earning £150,000 and over
Only at the marginal rate, not overall.
[quote=shermer75 said]footflaps - Member
Can't really complain if you're earning over £100k, you're not exactly poor.
You're not wrong, but I think robdixon's point is that people earning between £100,000 and £149,000 are paying a lot more tax then people earning £150,000 and over
I believe that this is not the case.
Ay thats true, but why leave all that loverly dosh sitting in the Co Bank Account when there are bikes to pay for 😉
Pitfall of being self employed - one good year and instead of being able to save for a rainy day, they just want to take 40% of it off me
No, they want to take 40% of the [b]extra[/b] lovely money you've earned that year, not 40% of [b]all[/b] the money you've earned.
I've tried explaining that your tax rate is really total net earnings over total gross earnings, but people get fixated with the marginal rate at the highest level and think that's their tax rate.
If you have a pension and claim tax relief then you can end up paying a lot less than the tax bracket percentage as you get all the tax back on your pension.
I believe that this is not the case.
Correct, the gap narrows at an increasing rate, but you never pay more (absolute or proportionally) as your salary increases.
[url= 
]Fairly clear way of showing it[/url]
If you have a pension and claim tax relief then you can end up paying a lot less than the tax bracket percentage as you get all the tax back on your pension.
Salary sacrifice share save schemes, Cycle 2 Work and child care vouchers are other good ones, as a sort of tax saving. You don't really see the money in you pocket, or maybe not for a while at least, but it makes something you have to buy more efficient tax wise.
Also useful for child benefit in the > £50K earnings, but that's a whole other thread I'm keeping well out of!
[i]You don't "escape" paying 40% even if you have a Ltd Co [/i]
*Cough* Starbucks *Cough*?
One benefit of being in the 40% tax bracket is getting 40% out of them on my personal pension
One of my colleagues, who is approaching retirement, put his entire salary into his pension one year and lived off his wife's salary. He paid no tax at all even though he's in the 40% bracket....
Salary sacrifice share save schemes
Our share save schemes are done on net salary 🙁
Shares saves (or whatever your company calls them) are out of net salary, share purchase are out of gross (provided held in trust for 5 years)
footflaps - Member
I've tried explaining that your tax rate is really total net earnings over total gross earnings, but people get fixated with the marginal rate at the highest level and think that's their tax rate.
You think that's tricky. Try telling people that a flat tax rate combined with an allowance at lower levels still produces a progressive tax system. We have had some fun with that one on here before!!! 😉
I must admit in my youth I thought it was absolute bands, so if there was a threshold at £100,000, I thought you effectively took home more if you stayed earning £99,999. 😳
MoreCashThanDash - Member
Our joint income wouldn't hit the higher tax bracket
You can't have a lot of dash then.
One of my colleagues, who is approaching retirement, put his entire salary into his pension one year and lived off his wife's salary. He paid no tax at all even though he's in the 40% bracket....
Haven't they clamped down on that now? There's a cap of £40k p.a. for this coming tax year, and a lifetime cap as well.
Sadly, not a problem I need to grapple with.
One of my colleagues, who is approaching retirement, put his entire salary into his pension one year and lived off his wife's salary. He paid no tax at all even though he's in the 40% bracket....
He must have only just been in the 40% bracket then, that's a spot of good fortune!
It was a few years back, before they lowered the limit to £50k.