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By (user no longer on site) OP
over a year ago
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Ok, so this may be a senior moment....but if I get a cost of living increase this year, I am officially a couple of quid into the next tax bracket..... Sooooo.... Do I pay 40% of everything over the limit only..... Or am I just about to lose a chunk of income....??? |
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By *abioMan
over a year ago
Newcastle and Gateshead |
"Ok, so this may be a senior moment....but if I get a cost of living increase this year, I am officially a couple of quid into the next tax bracket..... Sooooo.... Do I pay 40% of everything over the limit only..... Or am I just about to lose a chunk of income....???"
oooh... my wheelhouse....
single persons tax allowence for this year is 9440....
20% tax band is then between 0 and 32010
you don't start paying on the 40% until you reach 41,450...
you only pay 40% on the income over 41450 |
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By (user no longer on site)
over a year ago
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So am I right saying my car allowance paid into my salary is classes as income? Therefore I get taxed on it? That's just screwed me over at work if that's true |
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"Ok, so this may be a senior moment....but if I get a cost of living increase this year, I am officially a couple of quid into the next tax bracket..... Sooooo.... Do I pay 40% of everything over the limit only..... Or am I just about to lose a chunk of income....???"
Dream on...off everything!  |
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"So am I right saying my car allowance paid into my salary is classes as income? Therefore I get taxed on it? That's just screwed me over at work if that's true "
If you get a car allowance, the whole allowance is taxable income, but you can offset against tax the actual costs of running your own car (or the Inland Revenue's standard allowances for running your own car, whichever is better for you).
If you get a company car, the Inland Revenue calculated taxable benefit is subject to tax as if it's income.
Your circumstances will determine whether it's better to take the company car or not, but if the allowance is a fair one it's probably worth having the car if you do LOADS of personal mileage, but not worth it if you do hardly any personal mileage.
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Hi, financial adviser here  think of it like a bucket you are pouring sand into. The first £9440 is tax free. Then the next £32,010 is taxed at 20%. Therefore you earnings poured into said bucket need to be £41,450 before any excess of this is taxed at 40% |
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By (user no longer on site) OP
over a year ago
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"Hi, financial adviser here think of it like a bucket you are pouring sand into. The first £9440 is tax free. Then the next £32,010 is taxed at 20%. Therefore you earnings poured into said bucket need to be £41,450 before any excess of this is taxed at 40% "
Pwoarrr... A good figure, good with figures.... Can I put you on my bucket list.... 
Thanks All, I feel somewhat reassured.... |
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"wooohooo I still pay 20% lol "
while you are correct, it is also misleading. (and errors in the following about tax bands etc are deliberate for the purposes of simplicity)
1/ say you lose 20% of your income to tax... you're down to 80% of your income
that's great, but you need to spend money to live, and everything you buy is taxed too, even if it is "only" 20% VAT
2/ so with the 80% of your income left you buy something VATable at 20%, suddenly you're down to 64% of your income going on the goods you purchased, and the other 36% being tax.
3/ In the case of fuel...
xhttp://www.petrolprices.com/the-price-of-fuel.html
assuming diesel at 137.5 a litre...
56.97 is the fuel itself, shipping costs, profit margins etc, and the remaining 80.53 is taxes
but if the 137.5 you actually pay is paid out of your income after a 20% tax cut, in gross salary terms that litre is costing you 171.875 pence a litre of your gross, eg you hourly rate as advertised in a jobcentre ad..
So if 171.875 pence of your gross earnings goes to buy a litre of diesel that costs 56.97 pence a litre, then the ACTUAL TAX RATE is 300.69% |
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By (user no longer on site)
over a year ago
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"it is 40% of your entire salary"
The Tax Allowances for 2013/14 are
20% £0 to £32,010
40% £32,011 to £150,00
45% Over £150,000
You will not pay 40% on all your salary, but only the salary over £34,370 |
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By (user no longer on site)
over a year ago
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"Tax free allowance: £9,440
Basic rate tax: £0-£32,010
Higher rate: £32,011- £150,000
One in 6 will be paying the higher rate by the end of this Government "
Paid higher rate with the previous Government  |
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By *abioMan
over a year ago
Newcastle and Gateshead |
"it is 40% of your entire salary
The Tax Allowances for 2013/14 are
20% £0 to £32,010
40% £32,011 to £150,00
45% Over £150,000
You will not pay 40% on all your salary, but only the salary over £34,370"
that is slightly incorrect...
you have a single persons tax allowance of 9440..... so you need to add that to the 32010... which is where the figure of £41,450 comes from.... |
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By (user no longer on site)
over a year ago
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"Ok, so this may be a senior moment....but if I get a cost of living increase this year, I am officially a couple of quid into the next tax bracket..... Sooooo.... Do I pay 40% of everything over the limit only..... Or am I just about to lose a chunk of income....???"
40% of that's which is over the limit ...there are various ways to avoid it though |
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By (user no longer on site)
over a year ago
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I am on Paye and get my main bonus in month 1 and a further bonus in month 12, so at the end and beginning of the year, my wages are all over the place. I did not realise till reading this that I had breached the 40% mark. I thought it was closer to £55k and I was safe  |
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Hi im a director of payroll services for a very large european company. Its interesting to see the different answers people have given here , some right some well off the mark. Full credit though goes to ..... Fabio Totally correct well layed out and explained. Oh did any mention that the higher rate is only 45% this tax year ? |
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cheers
