TAX ?!?!

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Soldato
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Quick thread, my friend reckons you don't pay a certain amount of tax for the first job you go into.

e.g. £12k salary, dont pay tax on the first £4k you earn, after that you start paying tax


Is this true?
Cheers
 
True in a sense yes, but it's not "the first £££ earnt", it's pro-rated as an average over the year.

And it's not just your first job, it is every job..
 
Tax-free allowances

Nearly everyone who is resident in the UK for tax purposes receives a 'Personal Allowance', which is an amount of taxable income you're allowed to earn or receive each year tax-free.

This tax year (2012-13) the basic Personal Allowance - or tax-free amount - is £8,105. You may be entitled to a higher Personal Allowance if you're 65 or over.

If you're registered blind, or are unable to perform any work for which eyesight is essential, you can also claim the tax-free Blind Person's Allowance.

Income Tax is only due on taxable income that's above your tax-free allowances.
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http://www.hmrc.gov.uk/incometax/basics.htm#2
 
Theophany said:
Personal allowance. ~£8000?

If you earn over a hundy large you lose £1 for every £2 earned, iirc.
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Over 150k there is a 50% tax rate (£1 tax for £2 earned) but that only applies to earnings over 150k, you still have the tax free allowance, the 20% band and the 40% band.

YarwoodUK said:
Quick thread, my friend reckons you don't pay a certain amount of tax for the first job you go into.

e.g. £12k salary, dont pay tax on the first £4k you earn, after that you start paying tax


Is this true?
Cheers
Click to expand...

Yes and no, they will look at your pay and say "he won't earn 8k if he carries on like this" and thus you wouldn't pay anything (but national insurance).

If however you would earn over 8k if you earned that same pay packet each week/month then they will assume that is exactly what you will do and deduct tax as required.

Put some numbers into http://www.listentotaxman.com/ and have a play.
 
Telescopi said:
Over 150k there is a 50% tax rate (£1 tax for £2 earned) but that only applies to earnings over 150k, you still have the tax free allowance, the 22% band and the 40% band.
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You lose your personal allowance at a rate of 2:1 when earning above £100,000. Around £116,000 your personal allowance is gone.

Unless they removed that in the last budget?
 
Theophany said:
You lose your personal allowance at a rate of 2:1 when earning above £100,000. Around £116,000 your personal allowance is gone.

Unless they removed that in the last budget?
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What a ridiculously complicated and obtuse way of doing things, I shouldn't be surprised but it makes me wonder that the point is.
 
Telescopi said:
What a ridiculously complicated and obtuse way of doing things, I shouldn't be surprised but it makes me wonder that the point is.
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Hehe. Sneaky buggers, aren't they? :p

Effectively, if you earn £100,000, your earnings above it face a marginal tax rate of 61.5%, according to Grant Thornton's accountants. It was initiated by Alistair Darling, though Gideon has not seen fit to repeal it.
 
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Telescopi said:
Over 150k there is a 50% tax rate (£1 tax for £2 earned) but that only applies to earnings over 150k, you still have the tax free allowance, the 20% band and the 40% band.
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Remember there's also National Insurance which is an extra 12% (I think) tax. All told, you're looking at well over 50% tax rate when earning salaries like that, and that's before paying VAT and other taxes on everything you buy with the remainder.
 
SlyReaper said:
Remember there's also National Insurance which is an extra 12% (I think) tax. All told, you're looking at well over 50% tax rate when earning salaries like that, and that's before paying VAT and other taxes on everything you buy with the remainder.
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The NI rate drops to 2% for earnings over £42k or so, so total IT + NI never goes too far over 50%.

Still way too much to be taxing anyone though no matter what they earn.
 
Theophany said:
Hehe. Sneaky buggers, aren't they? :p

Effectively, if you earn £100,000, your earnings above it face a marginal tax rate of 61.5%, according to Grant Thornton's accountants. It was initiated by Alistair Darling, though Gideon has not seen fit to repeal it.
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If you earn roughly under £920,000 per year, give or take.. You will keep more than 50% of it..

At least this is correct as of now.

NI drops to what 2% once over 40k? and thus you are @ 52% tax over 150k, and you need to get up to 920k before the government gets more than you.

So no, its not that bad
 
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amigafan2003 said:
£116k leaves £70k which equals 39% total tax liability (including NI).

Doesn't seem so bad to me?
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Seems pretty bad to me on the basis that the first £8k should be tax free, you should only be taxed 20% up to £35k and 40% up to £150,000. To be hit at near enough 40% for your entire income is not in the spirit of the system, it's a **** take.

platinum87 said:
If you earn roughly under £920,000 per year, give or take.. You will keep more than 50% of it..

At least this is correct as of now.

NI drops to what 2% once over 40k? and thus you are @ 52% tax over 150k, and you need to get up to 920k before the government gets more than you.

So no, its not that bad
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You're talking about people who earn ridiculous sums of money - they can afford the tax rates. I'm talking about households on £100-150k p/a. These aren't the super rich. These aren't people living in Monaco. They're not non-doms or tax exiles. Get your head out of your ass. :rolleyes:
 
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