Tax Help

[rickmcfc]

When does the 40% tax kick into effect? Does it kick in when you’ve accumulated the £50k, or is it worked out on a monthly basis? For example if you earn £20,000 a year, but one month did £4000 in overtime and bonus’ this months take home pay would easily put you into the 40% tax bracket if this matched for a year. So do you pay the 40% on anything above the average salary for a £50k job, or do you still pay the 20% for everything accumulated over a year regardless of you have a mega month, until you hit the £50k, then 40% after this?

 

[city2]

You only pay the extra on whatever you go over.

 

[ell]

When does the 40% tax kick into effect? Does it kick in when you’ve accumulated the £50k, or is it worked out on a monthly basis? For example if you earn £20,000 a year, but one month did £4000 in overtime and bonus’ this months take home pay would easily put you into the 40% tax bracket if this matched for a year. So do you pay the 40% on anything above the average salary for a £50k job, or do you still pay the 20% for everything accumulated over a year regardless of you have a mega month, until you hit the £50k, then 40% after this?

I think you will pay the higher rate for the month you did 4k then when it averages out over the tax year and you come in at the lower rate they will send you a rebate.

 

[Blue Mist]

I assume you work for a company rather than self employed. If so the computer your pay dept. should have ! will recalculate each month. The idea being you don't suddenly get a huge drop in wages when you hit the 40% mark towards the end of the year.

 

[Blue Mist]

I think you will pay the higher rate for the month you did 4k then when it averages out over the tax year and you come in at the lower rate they will send you a rebate.

No. See my reply. For starters the tax man won't send out rebates unless you go on self assessment and trust me, you don't want to do that.

 

[Kompany Car]

When does the 40% tax kick into effect? Does it kick in when you’ve accumulated the £50k, or is it worked out on a monthly basis? For example if you earn £20,000 a year, but one month did £4000 in overtime and bonus’ this months take home pay would easily put you into the 40% tax bracket if this matched for a year. So do you pay the 40% on anything above the average salary for a £50k job, or do you still pay the 20% for everything accumulated over a year regardless of you have a mega month, until you hit the £50k, then 40% after this?

You will be taxed at a higher rate for that month but can reclaim it either as a one off payment from HMRC or via a change in your tax code for next year.
Your tax code is set at the begining of the year based on expected earnings so assuming you are PAYE then it will be corrected at the end of the tax year via a P800.
Remember however you dont pay the higher rate on the whole salary just what you earn over the 50k threshold.

PAYE tax refunds | Low Incomes Tax Reform Group

This page looks at what to do if you have paid too much tax on your employment or pension income. It also looks at what to do if you want to claim a

www.litrg.org.uk

 

[Citizen of Legoland]

No. See my reply. For starters the tax man won't send out rebates unless you go on self assessment and trust me, you don't want to do that.

They check everybody’s tax at the end of every tax year then send out any rebates* right around this time of year but you don’t necessarily need to do an SA.

*Or they’ll adjust your tax code.

 

[ganganvince]

The payroll system looks basically at the point in the tax year,your tax code and your cumulative pay for the year there is then an amount of tax that should have been paid for the year, tax already paid is then deducted and that is your bill for the period. So if you are not on target with your average to hit the 50k you won't pay 40% also if you have a good month early in the tax year that tips you over this will even out if you have lower months following.

 

[pee dubya]

No. See my reply. For starters the tax man won't send out rebates unless you go on self assessment and trust me, you don't want to do that.

Just got a rebate for last year, didn't do anything. Spent it on empire biscuits this morning.

 

[Blue Mist]

Just got a rebate for last year, didn't do anything. Spent it on empire biscuits this morning.

Then corrected I stand. I thought they did it through your tax code. When I was on a company payroll that's how they did it with us.