Tax bands on earnings >£125000

[Epictantrum]

Hi
I'm confused about the loss of personal allowance which is tapered down between £100000 and £125000. If you have completely lost the personal allowance due to earning more than £125141, is the first £12570 of earnings taxed at 20% or 40% or 45%?
I'm sure it's a stupid question but I'm struggling to find the answer. Thanks

Its a fact

I was shocked to learn that quiet a few years ago when one of children was saying not everyone on paye get tax allowance as we debated tax - I even lost a bet with them

you get zreo over 125 as you said its "tapered 100k t 125k

This is for someone earning above the £125,141
Basic rate 20% — Up to £37,700
Higher rate 40% — £37,701 to £125,140
Additional rate 45% — Over £125,141

I think it's taxed at 40% OP

OK, thanks. I had assumed the other bracket thresholds wouldn't change so it would be taxed as basic, but actually as you say it is taxed at 40%.
I'm slowly getting there!

Isn't it strange that it doesn't state this anywhere on the hmrc website? I can't find it at any rate.

Because they are robbing git’s who want to confuse us.

Because of the loss of personal allowance, you actually end up paying just over 60% tax on anything between 100k and 125k.

But officially, if you earn over £100k you pay
20% on £0 to £50k
40% from £50k-£125k

Try living in Scotland where we would pay do much more than they thanks to SNP!

Basically it's a tricky wage point! Dp puts enough into his pension to push his income below that threshold

I was wondering this as well the other day - I assumed would be taxed at basic rate on the lost PA.

We have an electric car lease salary sacrifice scheme at work. I need a new car and was going to buy a petrol one but given I am just about to hit the £100k taxable income I think it makes sense to just get a lease one. I won't own it but the cost will be lower for a new car than paying a loan on an older car!

My DH put £20k and £18k in to our pensions currently to go under the 100k threshold so we get the 30 hours free child care.

If your company does AVCs then they are a good option to bring your taxable earnings down.

That is different to the figures quoted by Mangolover123; where have you got your information from LaNuitPorteConseil?

The effective tax rate for those earnings is 60%. More if you lose tax free childcare which is why it makes sense to put earnings over £100k up to the annual allowance into a pension if possible.

www.unbiased.co.uk/discover/pensions-retirement/managing-a-pension/what-is-the-60-tax-trap-and-how-can-you-legally-avoid-it

This isn’t correct, 40% bracket starts at £50k, 45% then kicks in at £125,140.

The bit between £100k and £125k is essentially 60% taxed because you’ve already paid 20% on it and then pay 40% on the amount of personal allowance lost!

Pension pension and pension!

Thank you all for trying to help!!😃

You've quoted as if the whole personal allowance is available (12570 + 37700 = 50270)
From https://www.gov.uk/income-tax-rates
This will work if your total earnings are less than £100k
However if you earn over ££125,140,, the personal allowance is £0 and 20% is paid between 0 and 37700, 40% between £37701 and £125,140.
Confirmed here
https://www.gov.uk/government/publications/rates-and-allowances-income-tax/income-tax-rates-and-allowances-current-and-past#tax-rates-and-bands

But you are right about the taper of the pa after £100k which is just painful at 60%

That's the table I was after! thanks