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Original poster

To be annoyed at the new tax brackets?

307 replies

Justbrowsing2024 · 26/02/2025 19:44

Means myself and lots of people I know will need to pay 40% tax. The new thresholds being lowered means we will be worse off at a time when everything is going up. I know it's only on a proportion of salary but it's a proportion that was going towards the increase in mortgage (due to come off an amazing low rate), imminent increase in childcare fees, council tax and everything else.
I know it's affecting so many people but today I have felt really flat.

I'm not anywhere near the top of the threshold (£45500 salary) and unlikely to get a payrise.
I'm sure tomorrow will feel brighter but feel free to join my pity party

OP posts:
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7
LittleBearPad · 26/02/2025 20:28

NewJobityJob · 26/02/2025 20:26

Yes but only £7k tax free, I’ve earnt £45k but paid 40% tax on the last £1.5kish so it’s kicked in £5k before £50k

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Yes because your personal allowance is £5k less than £12.5k

£7k plus £37.7k equals £42.7k.

Everything over £42k you pay 40% tax plus 2% NI.

Reallybadidea · 26/02/2025 20:28

NewJobityJob · 26/02/2025 20:26

Yes but only £7k tax free, I’ve earnt £45k but paid 40% tax on the last £1.5kish so it’s kicked in £5k before £50k

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Because you have £5k worth of health insurance that you need to pay tax on.

If your company gave you that as part of your salary then you'd keep the full personal allowance but you'd still be paying tax at 40% on the portion that took you above £50k

NewJobityJob · 26/02/2025 20:28

Merryoldgoat · 26/02/2025 20:24

@Cookiesandcandies if your tax code is 784L then your personal allowance is £7,840 and not £12,570 for the purpose of calculating tax rate bands. Otherwise what’s the point?

Yes, but I expected to pay 20% on everything between £7840 and £50k, I’ve started paying 40% at £45k

Cookiesandcandies · 26/02/2025 20:28

Merryoldgoat · 26/02/2025 20:24

@Cookiesandcandies if your tax code is 784L then your personal allowance is £7,840 and not £12,570 for the purpose of calculating tax rate bands. Otherwise what’s the point?

No your personal allowance is still £12,570 but you get c £5k of pay not on your payslip that uses that up, so there’s only £7,840 to use against your pay.

Imagine your salary is £37,700 and you also have rental income of £12,570. Your tax code would be £0 (or you could set it up so that it was) and your whole salary would be taxed at 20% and you would pay no extra tax on your rental income.

PP has £5k ish of medical insurance “income” that uses up her personal allowance so she has £7,840 left to use against her salary. Then the next £37,700 is at 20% etc etc.

Skyblue92 · 26/02/2025 20:28

@Justbrowsing2024 I googled lasrt years so 2024-2025 and see if you can find the difference between then and this years

England and Northern Ireland
The standard employee personal allowance for the 2024 to 2025 tax year is:

  • £242 per week
  • £1,048 per month
  • £12,570 per year
PAYE tax rateRate of taxAnnual earnings the rate applies to (above the PAYE threshold) Basic tax rate 20% Up to £37,700 Higher tax rate 40% From £37,701 to £125,140 Additional tax rate 45% Above £125,140

England and Northern Ireland
The standard employee personal allowance for the 2025 to 2026 tax year is:

  • £242 per week
  • £1,048 per month
  • £12,570 per year
PAYE tax rateRate of taxAnnual earnings the rate applies to (above the PAYE threshold) Basic tax rate 20% Up to £37,700 Higher tax rate 40% From £37,701 to £125,140 Additional tax rate 45% Above £125,140

I personally can't see any changes? So please tell us all where you have got the idea that the tax brackets are changing?

AtomicBlondeRose · 26/02/2025 20:28

Put something in a newspaper and nobody will read it…put some bollocks on social
media and everyone sees it and takes it as gospel. It depresses me.

Anothermathstutor · 26/02/2025 20:28

This reply has been deleted

Message deleted by MNHQ. Here's a link to our Talk Guidelines.

this

Original poster
Justbrowsing2024 · 26/02/2025 20:27

PandoraSox · 26/02/2025 20:20

Who told you?

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Work colleagues, quite a few to be honest so they all thought the same. I will be happy to report back

OP posts:
NewJobityJob · 26/02/2025 20:26

LittleBearPad · 26/02/2025 20:25

Yes and £12.5k at 0%

£12.5k plus £37.7k is where 40% kicks in.

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Yes but only £7k tax free, I’ve earnt £45k but paid 40% tax on the last £1.5kish so it’s kicked in £5k before £50k

LittleBearPad · 26/02/2025 20:26

WhyIhatebaylissandharding · 26/02/2025 20:23

No mention though of the shit show of losing tax free allowance over 100k. You could easily think you only pay 40% tax when your marginal rate is 60 %

62% incl NI.

Merryoldgoat · 26/02/2025 20:25

@LittleBearPad 100% 👌🏾

LittleBearPad · 26/02/2025 20:25

Cookiesandcandies · 26/02/2025 20:23

I’m confused - this still says you get £37,700 at 20%?

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Yes and £12.5k at 0%

£12.5k plus £37.7k is where 40% kicks in.

valder · 26/02/2025 20:25

Theimpossiblegirl · 26/02/2025 19:51

I got this and didn't recall hearing about changes beforehand. It's actually pretty shit.

The wording on that screenshot you posted is very bad.

It should emphasise that e.g. tax @20% is on the first 37k AFTER your TFA has been deducted, or something along those civil service speak lines.

Merryoldgoat · 26/02/2025 20:24

@Cookiesandcandies if your tax code is 784L then your personal allowance is £7,840 and not £12,570 for the purpose of calculating tax rate bands. Otherwise what’s the point?

LittleBearPad · 26/02/2025 20:24

NewJobityJob · 26/02/2025 20:18

Which was my understanding but that hasn’t happened and the explanation from payroll is the above. Interested to know if that is incorrect.

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The PP is wrong.

You have a £7.5K or so personal allowance (or close enough)
The next £37k or so is taxed at 20%
Everything about the £7.5k plus £37k is taxed at 40% until you get to £100k where it gets really complicated.

WhyIhatebaylissandharding · 26/02/2025 20:23

No mention though of the shit show of losing tax free allowance over 100k. You could easily think you only pay 40% tax when your marginal rate is 60 %

Cookiesandcandies · 26/02/2025 20:23

NewJobityJob · 26/02/2025 20:18

Which was my understanding but that hasn’t happened and the explanation from payroll is the above. Interested to know if that is incorrect.

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I’m confused - this still says you get £37,700 at 20%?

Original poster
Justbrowsing2024 · 26/02/2025 20:22

Redrosesposies · 26/02/2025 19:52

It's on the Govt website. From 2025 it's 40% on > £37k dropped from £50k

That's what I read. Never have I been so glad to be wrong!

OP posts:
Charcadet · 26/02/2025 20:21

So much faux naïveté. Absolute bot bull 💩

NewJobityJob · 26/02/2025 20:20

@Cookiesandcandies Ive tried to add the image of the explanation but it’s pending review. Hopefully you can see it when it posts.

PandoraSox · 26/02/2025 20:20

Justbrowsing2024 · 26/02/2025 20:19

I haven't received a letter. I looked at the website after being told and it wasn't clear to me

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Who told you?

Original poster
Justbrowsing2024 · 26/02/2025 20:19

LadyEstrellaDellaheugh · 26/02/2025 19:54

I mean....it actually says in the letter "more than your tax free amount..." so the tax free amount then The next £37,000 is at 20%

I haven't received a letter. I looked at the website after being told and it wasn't clear to me

OP posts:
Huckleberries · 26/02/2025 20:18

Justbrowsing2024 · 26/02/2025 20:17

This is what I saw. If I have misunderstood I will be over the moon.

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But what did you see and where?

NewJobityJob · 26/02/2025 20:18

Cookiesandcandies · 26/02/2025 20:17

I think you’ve misunderstood. Your tax code is reduced because of medical insurance, but you still get your full personal allowance (assuming you’re paid less than £100k). Some of the £12,500 is just used up by the medical insurance. It doesn’t change your other thresholds though.

The medical insurance is just another way of getting paid and you’re taxed like you got the cash equivalent to the medical insurance.

Edited
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Which was my understanding but that hasn’t happened and the explanation from payroll is the above. Interested to know if that is incorrect.

To be annoyed at the new tax brackets?
LittleBearPad · 26/02/2025 20:18

Justbrowsing2024 · 26/02/2025 20:17

This is what I saw. If I have misunderstood I will be over the moon.

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You have misunderstood. Nothing has changed

Don’t you think there might have been something in the news if all the tax threshold moved £12k