Threshold for 40% tax

[RedHinge]

I'm struggling to find a clear answer on this.
If you work for the NHS and have employee pension contributions deducted is the "taxable pay" before or after the pension is deducted?

It's after pension deductions, and given they're pretty hefty you can actually earn a decent amount above 50k before having to repay child benefit.

Thanks Pippi. It's DS who I'm asking for. His salary has just gone over £50K and I had an idea that pension came off first, it's not obvious from a payslip. So he won't be paying at 40% just yet.

The 40% rate is TAXABLE (so after pensions deducted assuming they're paid on a salary sacrifice basis - check P60 to be sure) salaries above £45k (not £50k as you posted).

@titchy I thought over £377001 was taxable 40%? That's £50271 after personal allowance? That's where I got the £50k from.

Pension deduction is about 12% so if that comes off before tax as PP said then he would not be into the 40% bracket.

At £57k a 12% salary sacrifice is knocking about £6900 off bringing it back to £50k taxable income

No idea what the £45k relates to in terms of thresholds in earlier post

Unless in Scotland of course.

How does student loan impact this or does it not?

There is no 40% rate in Scotland is there?

Good point about student loan. The interest rate is capped once you earn over £49K I think. Not sure if the repayments are calculated from gross or taxable pay.

@wobytide Absolutely! 42% now I think and kicking in at a much lower level.

@wobytide they're definitely is. My husband is £150 a month worse off because we live in Scotland than he would be if we lived in England.

*there

There is definitely no 40% rate.

There's a 42% and a 47% rate which distinguishes this query was about English or Welsh tax rates seemingly

It’s often a good plan to up pension contributions to keep below the higher tax rate.

I use something like this every year: https://www.uktaxcalculators.co.uk/ I increase my Pension AVC until I am paying no higher rate tax.

@Waspie I wonder if you can help. I'm trying to use this calculator to work out how much extra DH should pay into his pension to avoid high rate tax. I'm going round in circles getting numbers mixed up! He earns £44580, is about to get bonus of £4727 and currently pays 7% into his pension. I think he might need to up it to 11.5% for the rest of the tax year to avoid paying 42% tax on any of his income. He is paye. Grateful for any help!

£44580+£4727= £49307

Unless he has a very reduced personal allowance he's £1000 below the threshold even before his existing pension contributions are taken off the figures

@waspie oops sorry I meant to say we are in scotland so 42% tax kicks in at £43663.

Sorry missed the 42%.

It's probably slightly more than 11.5% if he paid a 7% contribution in April already? The 11.5% looks to work if you had paid that on all the money he earns for the whole year now.

Or he could sacrifice all the bonus into the pension and reduce his contribution as another option

Thank you, I've asked him to look into sacrificing the bonus into the pension instead of increasing it through monthly salary. Thanks for the advice, tax can be a minefield and we don't want to give hmrc any more than we need to.