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So the 40% tax threshold falls once again...
I notice this is a very seldom mentioned topic.
The 40% tax threshold is to fall to just over £32,000
How long before low paid people will fall into this tax bracket?
This along with the increase in the tax allowance is quite obviously a scheme to impose a single tiered tax system, the rate being a blanket 40%.
Thoughts anyone?
The 40% tax threshold is to fall to just over £32,000
How long before low paid people will fall into this tax bracket?
This along with the increase in the tax allowance is quite obviously a scheme to impose a single tiered tax system, the rate being a blanket 40%.
Thoughts anyone?
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What do you understand the word 'obvious' to mean?
I gather that's £32,000 + your allowance? So you have to earn around 40ish before being hit by 40%?
At this point possibly up to 70% of all your income goes in tax.
This is when you add in all the other stealth taxes include council tax, fuel duty, VAT alcohol and tabbaco etc etc.
If you're a graduate on over 40k, chances are you'll be losing 49% at PAYE alone thanks to 9% student loan deductions!
No - it applies as follows
£0 - £9440 is not taxed
£9441 - £32010 is taxed at 20%
£32011 - £150000 is taxed at 40%
£150000 and over is taxed at 45%
The marginal rate is 70% surely. It's not exactly the same, but it's still ****ed up.
That is not correct.
The confusion is because over £100k for every £2 you lose £1 of allowance. Which is why the 150k is a round number.
You get your allowance on top of the 32k
You sure? I'm pretty certain that £32010 is stacked on top of the allowance, meaning only earnings above £41450 (9440+32010) are taxed at 40%.
£41450 is still too low mind. What used to be the higher rate now affects many middle earners.
Where do you get those figures from?
According to the BBC...
In the current tax year, which ends on 5 April, people aged under 65 can earn £8,105 a year before they pay income tax.
Known as the personal allowance, this level will increase to £9,440 for the tax year 2013-14, starting on 6 April.
This level was extended in the Autumn Statement, meaning that more lower-paid workers will not see their income taxed.
The next £32,010 earned will be taxed at 20%, with the 40% tax band starting at £41,451.
Another big change in April is that income of more than £150,000 will face a 45%, rather than 50% tax rate.
http://www.bbc.co.uk/news/business-21672294
I got my figures from the HMRC website.
Can you explain the thinking? What's the 150k number got to do with the reduction of the personal allowance?
It's just the way they phrase it.
This is a bit old but read http://www.taxfix.co.uk/forum/articles/how-much-can-you-earn-before-paying-40-tax.html
You have misunderstood the information. The tax bands are above the personal allowance up to £100k when you start to lose your personal allowance.
http://www.hmrc.gov.uk/rates/it.htm
Well because we all know that the 45% kicks in at exactly 150k. I'm trying to explain why that figure is right, or doesn't require the personal allowance adding to it, but the 32k figure does.
But where you're going wrong is in not adding the basic personal allowance into the other figures.
So £9440 is tax free
Up to £41450 (£9440 + £32010) is taxed at 20% of anything earned over £9440.
So the 40% band only starts when you earn more than £41451.
OK, gotcha.
The only people who will be worse off are those earning £100k - £150k according to the BBC
Yes, you are right. The others are wrong. The £32010 is on top of your allowance so depending on what that is, you are a Higher Rate tax payer at around £42,000. if you have additional taxable work benefits then you could be paying 40% on less money than that.
£42,000 is still a decent amount of money but adjusted for inflation it's a long way below where the upper band used to come in. I think the number of higher rate payers has doubled in the last 10 years or so.
Having read that article by the BBC, it contradicts the HMRC website somewhat.
The BBC suggest the 40% band kicks in £32,011 above the £9440 allowance. The HMRC website suggests however this is at earnings of £32,011.
There is only one poster who got it wrong. Everyone else got it right.
There is no debate here.
The HMRC tables are always without the personal allowance as different people can have different allowances.
See: http://www.hmrc.gov.uk/rates/it.htm
It is 40% on £32,011+ above the starting threshold.
Its discussion as much as debate.
Do you post that in every thread?
The higher rate limit is coming down to pay for the nil rate band going up. I believe it works out to the same amount, so there would be very little difference to you if you were a higher rate tax payer, but not an additional rate taxpayer.