mj.scuba Posted January 31, 2011 Share Posted January 31, 2011 From 5th April 2011, anybody earning over £35k falls within the Higher Rate 40% Income Tax band. Link to comment Share on other sites More sharing options...
Alex C. Posted January 31, 2011 Share Posted January 31, 2011 Have we abolished the concept of tax bands then? Link to comment Share on other sites More sharing options...
vinyl Posted January 31, 2011 Share Posted January 31, 2011 From 5th April 2011, anybody earning over £35k will pay the Higher Rate 40% Income Tax. 40% income tax on £35k is £14k, leaving the worker with £21k before other deductions. A worker earning £26k pays £5,200 (20%) also leaving around £21k (£20,800). So under the new rules, a person earning £35k will roughly have the same take home pay (around £21k) as somebody earning £26k, possibly less after paying NI. A person earning £34k paying Basic Rate will come out with £27,200 before other deductions though. A Higher Rate payer would have to be on £45k to come out with the same after income tax. I wonder how many people earning just above £35k will be volunteering for a paycut to £34,999, and does this fall within the realms of tax avoidance? I suggest you let anybody know that's on £35-£45k, it may be worth them taking the pay cut. Maths clearly isn't your subject. Link to comment Share on other sites More sharing options...
truman Posted January 31, 2011 Share Posted January 31, 2011 Doesn't the higher tax only apply to the amount over the threshold? So if you earned 35,500 you'd only pay 40% on the extra 500? (which was already being taxed at 20% anyway) Link to comment Share on other sites More sharing options...
mj.scuba Posted January 31, 2011 Author Share Posted January 31, 2011 Maths clearly isn't your subject. Could you ellaborate? Link to comment Share on other sites More sharing options...
Flowersfade Posted January 31, 2011 Share Posted January 31, 2011 This seems really unfair.People would be better off on benefits at this rate,I am so glad that I am emigrating at the end of the year. Link to comment Share on other sites More sharing options...
mj.scuba Posted January 31, 2011 Author Share Posted January 31, 2011 Doesn't the higher tax only apply to the amount over the threshold? So if you earned 35,500 you'd only pay 40% on the extra 500? (which was already being taxed at 20% anyway) I thought it was the whole amount? Link to comment Share on other sites More sharing options...
truman Posted January 31, 2011 Share Posted January 31, 2011 I thought it was the whole amount? Not unless things have changed greatly...AFAIK the higher band only applies to the amount over the threshold ( as it's always done)..I'm willing to be corrected though... Link to comment Share on other sites More sharing options...
Alex C. Posted January 31, 2011 Share Posted January 31, 2011 I thought it was the whole amount? We've always used tax bands. The current system is something along the lines of 0-7k = 0% tax, 7k-40k = 20% tax 40k-100k = 40% tax 100k + = 50% tax but the tax is progressive - if you earn 60k you would be taxed 7k at 0%, 33k at 20% and 20k at 40%. Not 40% on the total. (figures are approx) Link to comment Share on other sites More sharing options...
truman Posted January 31, 2011 Share Posted January 31, 2011 mj - you don't pay 40% on the whole lot, you pay 40% on the amount over the threshold. So to make it easy, if you earn £40k and the threshold for 40% is £35k, you only pay 40% of £5000 It's still quite a jump though..a thousand pounds a year... Link to comment Share on other sites More sharing options...
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