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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
MsVisual · 26/02/2025 20:37

There should be a tax on those posting click bait bollocks

Cookiesandcandies · 26/02/2025 20:36

NewJobityJob · 26/02/2025 20:33

Thanks, always thought 40% kicked in at £50k, I never realised that a reduction in my tax code would reduce this.

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Ahhh it doesn’t!

Contrary to what PPs have said, you have the full personal allowance of £12,500 and you only pay 40% on income over £50k. But you’re ignoring that your medical insurance is also income, the thresholds look at your total income (eg investment income, salary, rental income, benefits all added together) not just your salary.

throwaway25 · 26/02/2025 20:36

Thanks, always thought 40% kicked in at £50k, I never realised that a reduction in my tax code would reduce this.

Which - topically to this thread - is probably exactly why the misunderstood HMRC explanation is written as it is. Personal allowance, then the next £37k odd at 20%. So if your personal allowance is reduced, you will understand that the 40% will kick in earlier than £50k.

ClarabelleRose · 26/02/2025 20:36

Merryoldgoat · 26/02/2025 19:53

I honestly don’t understand how people can be believing this shit.

It’s very worrying!

Morph22010 · 26/02/2025 20:36

YourFlawIsLava · 26/02/2025 20:32

@NewJobityJob I recently had the same misunderstanding as my tax code has been obliterated to pay for my company car due to an error by my company and then a delay by HMRC. I was fuming that I would now be paying tax on something I shouldn't be because of other people's stupidity. HMRC explained to me exactly as @Cookiesandcandies has explained. I don't think that this is a misunderstanding because we are thick but because of the way it is initially explained.

You won’t be paying more tax though, you will be paying the same in total as you would have paid just some of it would have been paid earlier if your tax code was correct

tilypu · 26/02/2025 20:34

NewJobityJob · 26/02/2025 20:33

Thanks, always thought 40% kicked in at £50k, I never realised that a reduction in my tax code would reduce this.

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It does kick in at 50k.

Your medical insurance effectively takes your earnings to that level.

NewJobityJob · 26/02/2025 20:34

Merryoldgoat · 26/02/2025 20:33

Why? You need to think of it like there being £37k at 20% AFTER whatever your tax free amount.

So if you have full personal allowance you’d get 12570 tax free then 37k at 20% and THEN the 40% kicks in once you’ve earned 50k

So essentially the 40% rate can kick it at anything from £37k (where you have 0 personal allowance) to £50k where you get the full personal allowance.

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Yes I see that now, but I didn’t know that previously and the first person that replied to my post thought the same as me.

throwaway25 · 26/02/2025 20:34

totally get the £5k reduction and paying 20% on that part.
What I didn’t understand is that I would pay 40% before reaching £50k (it’s brought that down to £45kish)

But if you look at it in reverse, if it wasn't like this, you'd effectively have a larger band you were only paying 20% in than everyone else.

berksandbeyond · 26/02/2025 20:33

This reply has been deleted

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

Yes. And yet they think they're higher rate tax payers. Worrying that people can earn anywhere near that amount when they can't read and understand a simple sentence in English

AlexandrinaH · 26/02/2025 20:33

VivienneDelacroix · 26/02/2025 20:16

But bizarre that so many people seem to lack basic comprehension. It really is a worry.

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I bet you feel really big and clever right now.

NewJobityJob · 26/02/2025 20:33

YourFlawIsLava · 26/02/2025 20:32

@NewJobityJob I recently had the same misunderstanding as my tax code has been obliterated to pay for my company car due to an error by my company and then a delay by HMRC. I was fuming that I would now be paying tax on something I shouldn't be because of other people's stupidity. HMRC explained to me exactly as @Cookiesandcandies has explained. I don't think that this is a misunderstanding because we are thick but because of the way it is initially explained.

Thanks, always thought 40% kicked in at £50k, I never realised that a reduction in my tax code would reduce this.

Merryoldgoat · 26/02/2025 20:33

NewJobityJob · 26/02/2025 20:28

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

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Why? You need to think of it like there being £37k at 20% AFTER whatever your tax free amount.

So if you have full personal allowance you’d get 12570 tax free then 37k at 20% and THEN the 40% kicks in once you’ve earned 50k

So essentially the 40% rate can kick it at anything from £37k (where you have 0 personal allowance) to £50k where you get the full personal allowance.

Ginmonkeyagain · 26/02/2025 20:33

Oh mate ......

Cookiesandcandies · 26/02/2025 20:33

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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We may be saying the same thing in different ways! You haven’t earned £45k though - you’ve earned £45k PLUS ~£5k medical insurance, so you’ve earned over £50k therefore in the 40% tax bracket. The medical insurance is just taxed like income so yes it does use up some of your available bands/allowances but it doesn’t change that between £12,570 and £37,700 you pay tax at 20%, and after that at 40%.

valder · 26/02/2025 20:32

Merryoldgoat · 26/02/2025 20:28

Did you click on the screenshot? It’s extremely clear.

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Yes I did. I don't agree that it is extremely clear, otherwise there wouldn't be so much confusion around. But we can agree to differ!

NewJobityJob · 26/02/2025 20:32

Reallybadidea · 26/02/2025 20:28

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

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I totally get the £5k reduction and paying 20% on that part.
What I didn’t understand is that I would pay 40% before reaching £50k (it’s brought that down to £45kish)

YourFlawIsLava · 26/02/2025 20:32

@NewJobityJob I recently had the same misunderstanding as my tax code has been obliterated to pay for my company car due to an error by my company and then a delay by HMRC. I was fuming that I would now be paying tax on something I shouldn't be because of other people's stupidity. HMRC explained to me exactly as @Cookiesandcandies has explained. I don't think that this is a misunderstanding because we are thick but because of the way it is initially explained.

LittleBearPad · 26/02/2025 20:32

Justbrowsing2024 · 26/02/2025 20:29

I'm not on Facebook anymore. I was told at work

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Did you look at a newspaper? The BBC news?

Maybe numpty colleagues aren’t the best source of news.

Original poster
Justbrowsing2024 · 26/02/2025 20:31

PieCorner · 26/02/2025 20:05

"It’s not a misunderstanding. It’s either rage-bait or an inability to think clearly before posting utter tripe."

Exactly this, so we can all lose our shit at the bastard government. Critical thinking is a dying art.

No, sorry to disappoint. Just a genuine misunderstanding. It happens. I am human after all

OP posts:
LittleBearPad · 26/02/2025 20:30

NewJobityJob · 26/02/2025 20:28

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

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You were wrong. The 40% threshold isn’t set in stone. It flexes depending on your personal allowance.

B1indEye · 26/02/2025 20:30

Justbrowsing2024 · 26/02/2025 20:29

I'm not on Facebook anymore. I was told at work

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The person who told you might have believed some social media nonsense

tilypu · 26/02/2025 20:30

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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That's because you owe tax on the medical insurance benefit that you get. They can't tax that directly, so they reduce your tax allowance instead.

Basically you have a benefit that is classed as income. Add that on to your salary and you will see that it takes you into the 40% bracket.

PandoraSox · 26/02/2025 20:29

Justbrowsing2024 · 26/02/2025 20:27

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

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Didn't any of you think it odd there was no mention in the media of a massive tax hike?

Original poster
Justbrowsing2024 · 26/02/2025 20:29

ScrambledEggs12 · 26/02/2025 19:50

Are you talking about the fake news posts on Facebook?

I'm not on Facebook anymore. I was told at work

OP posts:
Merryoldgoat · 26/02/2025 20:28

valder · 26/02/2025 20:25

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.

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Did you click on the screenshot? It’s extremely clear.