Tax bands

[B1pbop]

Can someone check this for me please?

Thinking about going for a job. It’s been advertised internally at £42k+, and externally at £60-70k. (Grr. But that’s another thread).

So wondering what salary to negotiate and obv those two figures straddle the basic/higher rate tax bands.

so…

Personal allowance = £12,570

20% basic rate:
if gross = £50,270
net = £42,730

40% higher rate:
if gross = £50,271
net = £35,190.60

So to make it worthwhile earning a salary on a higher rate tax band, the net would need to = £42,731
Which would make the gross = £62,838

So there’s literally no point earning £50,271 to £62,838 as I’d be worse off than being on the basic rate tax? Is that right? (As in factually correct, not morally!) Just seems a really big jump.

Eh? You only pay the higher rate on the income over threshold, not all of it.

Correct, think you've got confused OP

I think the 40% would only apply to the bit of the salary that hits and goes over that tax band. The 20% would still apply to the rest below that, except for the 12ishk that is not taxed.

Ohhh right - that makes much more sense! That isn’t clear on the gov website. Thank you!

Here www.moneysavingexpert.com/tax-calculator/

Use this tax and NI calculator

listentotaxman.com/

It will give you a much better idea. You also need to consider child benefit. Once you start earning over £50k you have to start paying back some of the child benefit. Once you hit £60k you have to pay it all back.

You could put any excess above the basic rate into your pension. Not only will you not pay tax on it, but the government will top it up by an extra 20%...
Even better, if you are a higher rate tax payer the government top up into your pension will be an extra 40%.

It isn’t?!

Thanks very much for the tips and links everyone, appreciate it.