40% tax bracket

Soldato
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I have a new job, plus money i make from other business activities...well, I'm concerned it'll push me in to that bracket. Are they combined? I'll pop an email to my accountant later, but he can sometimes take a while to reply.
 
Caporegime
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They're both right. The HMRC site isn't making things entirely clear in terms of your personal allowance. You have a £5,435 personal allowance on which you pay no tax, then the next £36,000 is taxed at 20% up to a total of £41,435, then you pay 40% above that.

</tax adviser>
 
Soldato
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Got ya! So, once i go over £41,435 THEN i am taxed 40% on how much I surpass that number - and that's due to the initial allowance of ~£5k?

I've emailed the same question to my guy so will post back here with his response.

Thanks all.
 

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Soldato
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Assuming your personal allowance is £5,435 and not different due to other benefits, pension etc. Check a payslip to make sure - a tax code of 543L would mean an allowance of £5,435.
 
Associate
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So after tax someone on a salary of 70k will only get 10k more than someone on a salary of 40K?

What a joke
 
Caporegime
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So after tax someone on a salary of 70k will only get 10k more than someone on a salary of 40K?

What a joke

Not sure what maths you're doing... They'll be taxed 40% on that extra 30k so they'll take home another 18k on top of the guy earning 40k.

I'm ignoring NI for these purposes, but it's only 1% by the time you get to that point.
 
Soldato
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So after tax someone on a salary of 70k will only get 10k more than someone on a salary of 40K?

What a joke

No.

Someone on 40k would be taxed 20% on their income over ~£5000, so ~£7k per year.

Someone on 70k would be taxed 20% on their income from ~5K to ~41k, then 40% on their income from 41k to 70k. So total annual tax of roughly 7.2+11.6=18.8k.

So, 70k guy takes home 18.2k more than 40k guy.
 
Man of Honour
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Christ, you learn something new every day.
I always thought the 36k figure was where it kicked in, not 36+free allowance.

Means I need to bump up my guesses of how much some people I know are earning a few grand!
 
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