To be annoyed at the new tax brackets?

[Justbrowsing2024]

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

this

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.

@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?

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.

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

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

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.

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

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

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

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.

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

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

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

Did you look at a newspaper? The BBC news?

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

@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.

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)

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!

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%.

Oh mate ......

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.

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

I bet you feel really big and clever right now.

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

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.