Tax query...

[bloodline76]

Could someone explain please

Basic tax rate
20% on annual earnings above the PAYE tax threshold and up to £31,865

Higher tax rate
40% on annual earnings from £31,866 to £150,000

Does this include the £10,500 tax free part so essentially I would have to earn £41k before the 40% kicks in? Or am I taxed after £31,865 at 40%?

Thanks

 

[Destination]

http://www.moneysavingexpert.com/tax-calculator/

 

[[FnG]magnolia]

40% on annual earnings from £31,866 to £150,000

 

[GAC]

use this its very handy.

http://listentotaxman.com/

 

[mollymoo]

I don't think it will £10,500 until April 2015.

So from 06 April 2014 you can earn £10,000 tax free the next £21,865 are taxed at 20% then you hit the 40% threshold on anything over £31,865 and under £150,000 then its the big 45%.

 

[bloodline76]

What about this quote: Budget 2014: Osborne Raises 40p Tax Threshold to £41,865

That suggests you have to earn £41k?

 

[GAC]

just use that site i posted and slap in your pay details. top left you can flip it to 2014/15 taxation rates as well. and it will tell you the difference from the current rates.

 

[SpeedFreak]

What about this quote: Budget 2014: Osborne Raises 40p Tax Threshold to £41,865

That suggests you have to earn £41k?

Which is correct.

0-10k 0%
10k-41k 20%
41k-150k 40%

 

[Amp34]

Could someone explain please

Basic tax rate
20% on annual earnings above the PAYE tax threshold and up to £31,865

Higher tax rate
40% on annual earnings from £31,866 to £150,000

Does this include the £10,500 tax free part so essentially I would have to earn £41k before the 40% kicks in? Or am I taxed after £31,865 at 40%?

Thanks

No, you're taxed at 40% on earnings over about £41k and taxed at 20% on earnings of ~10k to 41k.

The way its worded is hellishly confusing and makes little actual sense. Why they don't include the tax free limit into those numbers I never understand. It's not like the 20% and 40% bands don't change separately to the tax free limit.

 

[bloodline76]

Ok thanks. That's how I understood it just wanted to make sure.

thanks All!

 

[Spook187]

I am paying 20% and i have earned 43k up to now, i know guys i work with have earned 48k and still paying 20%

 

[Shure]

I am paying 20% and i have earned 43k up to now, i know guys i work with have earned 48k and still paying 20%

Pensions and possibly child care vouchers etc can reduce your taxable salary.

 

[dowie]

Could someone explain please

Basic tax rate
20% on annual earnings above the PAYE tax threshold and up to £31,865

Higher tax rate
40% on annual earnings from £31,866 to £150,000

Does this include the £10,500 tax free part so essentially I would have to earn £41k before the 40% kicks in? Or am I taxed after £31,865 at 40%?

Thanks

Yes to the 41k-ish... tax rates apply to earnings above your personal allowance which is circa 10k give or take a bit for any deductions etc..

Until you hit a just above six figures and get the 60% rate as your personal allowance is eroded...

 

[ci_newman]

I am paying 20% and i have earned 43k up to now, i know guys i work with have earned 48k and still paying 20%

Pensions and possibly child care vouchers etc can reduce your taxable salary.

What he said, salary sacrifice from things such as pension and childcare vouchers aren't included in tax calculations

 

[estebanrey]

Also the tax free allowance fades out after £100k at a rate of £1 for every £2 over. So someone on (20014/2015) £120k has no tax free allowance and pays 20% on all of their earnings up to the 40% limit. Likewise someone on £110k would get a tax free allowance of £5k.

 

[Storm3y]

- You pay 0% tax on the first £10,000
- 20% tax on £10,001 to £31,865
- 40% tax on £31,866 to £150,000

 

[estebanrey]

- You pay 0% tax on the first £10,000
- 20% tax on £10,001 to £31,865
- 40% tax on £31,866 to £150,000

So what so you pay between £10,000.01 and £10,000.99?

 

[cheesyboy]

No, you're taxed at 40% on earnings over about £41k and taxed at 20% on earnings of ~10k to 41k.

The way its worded is hellishly confusing and makes little actual sense. Why they don't include the tax free limit into those numbers I never understand. It's not like the 20% and 40% bands don't change separately to the tax free limit.

The brackets are all "taxable earnings". Your first £10k is not taxable, so it's not included in the numbers

 

[estebanrey]

The brackets are all "taxable earnings". Your first £10k is not taxable, so it's not included in the numbers

It is if you earn over £100k

 

[Ace Modder]

- You pay 0% tax on the first £10,000
- 20% tax on £10,001 to £31,865
- 40% tax on £31,866 to £150,000

Nope, doesnt the 40% tax not kick in till you earn £41500