Help with understanding income tax 20% or 40%

[deanogtv]

Hi

I'm just looking for a claffication here, my missus is just about the start a new job which will put her pay into the higher tax bracket as she will now be earning £42k a year. Looking at the HMRC web site the 40% tax bracket starts at £34,371. Will she be taxed the flat rate 20% up to this value then 40% their after or is it 40% from the outset????

Another quick question to is that she may opt into the company car scheme, will this mean she has to pay the company car tax for a 20% tax payer or a 40% tax payer???

Excuse my dumdness but I thought I'd ask here as I'm sure someone will know

[0000]

deanogtv said:

Looking at the HMRC web site the 40% tax bracket starts at £34,371. Will she be taxed the flat rate 20% up to this value then 40% their after or is it 40% from the outset????

IANAA.

I think there's the ~10k tax free and the £34k at 20% is on top of that.

[Deva Link]

...and the company car tax will be at 40% as she's *just* on the edge of 40% with her basic pay.

Bear in mind the same applies to any other benefits, such as private health care etc.

[deanogtv]

anonymous said:

[redacted]

I'm guessing you mean the car allowance??? its very small only around £3k a year

[deanogtv]

0000 said:

IANAA.

I think there's the ~10k tax free and the £34k at 20% is on top of that.

so will her tax contributions change throughout the year I'm guessing not. i.e no tax for the first few months, 8 months on 20% then a couple of months on 40%.........if that makes sense

[Deva Link]

Are you her toy boy?

[supersport]

Until April this year:
The first £8105 is tax free
The next £34,370 is 20%
The rest up £100K is 40%

After April
The first £9,440 is tax free
The next £32,010 is 20%
The rest up £100K is 40%

I assume the car allowance counts as income and is taxed as normal:

Income 42,000
Car 3,000
Total 45,000

First: 8105 is Tax is 0
Next : 34370 is 20%
Last : 2525 is 40%

After April there will be £3550 at 40% - bds!

This can be helped out by pension payments in by salary sacrifice and other things.

[Eric Mc]

Is her basic salary of £42,000 inclusive of a car allowance or does she get an additional amount in regards to car allowance?