40% tax bracket

Associate
Joined
23 May 2004
Posts
2,178
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.

thanks, I thought the 40% tax was on all your earnings.
 
Man of Honour
Joined
25 Oct 2002
Posts
31,707
Location
Hampshire
No it's more like 60-70% on all your earnings, Tax that is by the time you add in NI, VAT, Poll Tax, Road Tax, Insurance Premium Tax, Tax on Beer, Wines & Spirits, Tax on Petrol & Diesel.........

God I'm depressing myself here :(

The thing is, some of those taxes are not income dependent, or not directly relevent to an individual. If you don't drink or drive, then you don't (directly) pay road tax, Tax on Beer, Wines & Spirits, Tax on Petrol & Diesel, Road Tax. You might not be paying Council tax (unlikely for someone paying the high rate of income tax, but possible) or have any Insurance.

Someone earning £70k would take home around £47.2k assuming no other deductions, so they'd need to lose another ~£20k (over 40% of take home) in additional tax somewhere to get down to your ~60% level.
 
Associate
Joined
7 Jun 2005
Posts
2,495
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.

Can believe that's made nobody else curious :p
 
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