2021 tax bands

[Pintsizedblondie197]

I have just seen that the 40% tax band has been reduced from £50,001 to £37,701 in the next financial year. Can someone please explain whether personal allowance is included within your wage or on top of it if that makes sense? I am slightly over the new figure for 40% so trying to work out if I will be paying more tax or not. Many thanks.

The basic rate limit is changing from 37500 to 37700. I think you're getting two different concepts mixed up.

I probably am, I don't profess to know much about it which is why I asked if it could be explained. I just saw the 40% tax bracket was being reduced and panicked.

Tax limits are shown after allowances have been deducted (because not everyone is eligible for allowances and there is more than just the personal allowance)

So in 21/22 if you had a full personal allowance you could then earn another £37,700 (taking you up to £50k total income) before you get into higher rate tax territory.

In 20/21 if you had a full personal allowance you could earn another 37500 before you get into higher rate tax territory.

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

Thank you so much for clarifying this for me!