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confused about when 40% tax kicks in

(10 Posts)
runningLou Sat 23-Apr-16 11:12:15

DH just got HMRC letter re tax code. It says his personal allowance is £10422, but I thought it was meant to be going up from April 2016. Also very concerned that it says you pay 40% tax on income from £32k ?? I thought it was 40k, and rising soon??
DH has never been a higher rate tax payer but this would make him one. Is this right??

Mrsmorton Sat 23-Apr-16 11:19:32

You don't say how much he earns so it's impossible to say whether he'd pay at higher rate. There are some excellent websites which break it all down.

Nan0second Sat 23-Apr-16 11:21:58

So first 10.4k = tax free
Next 32k = 20%
Then 40%... ie at 42.4k...

IceMaiden73 Sat 23-Apr-16 11:25:20

It looks like he has some other income that his tax code has been amended for, or maybe some benefits from his employer

Mrsmorton Sat 23-Apr-16 11:27:20

nano that's not how it works. First 10k or whatever isn't taxed, then everything between that and 32k (or whatever the limit is) is taxed at 20% and everything over that is taxed at 40% up to 100k when it changes again.

Mrsmorton Sat 23-Apr-16 11:29:20

Oh, I've misread your post sorry. You're right that he will pay 20% tax on 32k as the higher rate kicks in at 43k.

kath6144 Sun 24-Apr-16 09:21:50

Op

Hope link below works, you are correct, from April 16, the start of the 40% tax band has gone up to 43001, it seems. So it looks like nano is generally correct, first 11K tax free, next 32K at basic rate.

www.gov.uk/income-tax-rates/current-rates-and-allowances

Emeralda Thu 09-Jun-16 17:42:58

I thought it usually says on the back of the tax code letter why it has been adjusted if it has. Does he have any benefits from his employer worth £578? Private health insurance? His P11D from last year (15-16) might give you a clue.

BarbaraofSeville Fri 10-Jun-16 12:37:07

Does he having a lot of money in savings? Since the introduction of the tax free savings allowances, some people have had their tax codes adjusted to take into account expected savings interest above the new allowances (£1000 pa for a normal rate tax payer, £500 for a higher rate).

Or does he have taxable benefits from his employer (car, gym membership, etc)?

BarbaraofSeville Fri 10-Jun-16 12:38:08

Or could he have underpaid tax in previous years and now they are taking this back by adjusting his tax code?

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