The Why Don't You Get a Job Thread

[Briefcase]

Out of interest with tax, I overheard someone recently say that you pay 40% of tax if you earn over £31,750 and that when they were offered a job they suggested £31,500.

 

Tidy trick but is that actually how much tax is paid in that wage bracket?

[Frankie Crisp]

Out of interest with tax, I overheard someone recently say that you pay 40% of tax if you earn over £31,750 and that when they were offered a job they suggested £31,500.

 

Tidy trick but is that actually how much tax is paid in that wage bracket?

No. The 20% tax threshold is the £31,785 plus your tax-free personal allowance (currently £10,600 for most people) so you pay 40% tax on earnings over £42,385. And remember that last bit; you only pay 40% tax for earnings above that amount, not all of them.

 

So the trick about going for the £31,500 is in no way beneficial.

[Chest Rockwell]

The person that asked for less money is an idiot; his employers must have been pissing themselves at that.

 

You only get taxed more on the money you make over the 31.5k (or whatever the actual figure is). And even that is not including what you get as personal allowance untaxed.

 

So the first 42ish is tasked either not at all or at the lower rate, and then any amount you make above that is the only bit that gets taxed at a higher amount.

[Briefcase]

 

Out of interest with tax, I overheard someone recently say that you pay 40% of tax if you earn over £31,750 and that when they were offered a job they suggested £31,500.

 

Tidy trick but is that actually how much tax is paid in that wage bracket?

No. The 20% tax threshold is the £31,785 plus your tax-free personal allowance (currently £10,600 for most people) so you pay 40% tax on earnings over £42,385. And remember that last bit; you only pay 40% tax for earnings above that amount, not all of them.

 

So the trick about going for the £31,500 is in no way beneficial.

 

 

So at the risk of sounding thick, what if someone were to earn £32,000? Do they not get the £10,600 personal allowance? 

[Chest Rockwell]

Yes, the first 10,600 is still free regardless of what you earn

[GlennCullen]

The person that asked for less money is an idiot; his employers must have been pissing themselves at that.

 

You only get taxed more on the money you make over the 31.5k (or whatever the actual figure is). And even that is not including what you get as personal allowance untaxed.

 

So the first 42ish is tasked either not at all or at the lower rate, and then any amount you make above that is the only bit that gets taxed at a higher amount.

 

I can just imagine them giving an 'all-knowing' wink as they said it, then sitting back smugly. 

[Mr_Danger]

If you're paying that sort of money to someone who thinks like that then you're paying them too much. What job was it, out of interest?

[organizedkaos]

 

 

Out of interest with tax, I overheard someone recently say that you pay 40% of tax if you earn over £31,750 and that when they were offered a job they suggested £31,500.

 

Tidy trick but is that actually how much tax is paid in that wage bracket?

No. The 20% tax threshold is the £31,785 plus your tax-free personal allowance (currently £10,600 for most people) so you pay 40% tax on earnings over £42,385. And remember that last bit; you only pay 40% tax for earnings above that amount, not all of them.

 

So the trick about going for the £31,500 is in no way beneficial.

 

 

So at the risk of sounding thick, what if someone were to earn £32,000? Do they not get the £10,600 personal allowance? 

 

 

Personal allowance is the amount you don't get taxed on. So the first 10,600 you earn you pay no tax. Then for every pound you earn over that you pay 20% (on each pound) as tax. Then if you earn over 10,600 + 31,750 you start paying 40% on each pound after that

So the chap that earns 10,600 + 31,750 + 1 would pay 40p more tax than the guy who earns 10,600 + 31,750 but earn 60p more

 

Personal allowance only starts changing if you earn large amounts

Edited September 8, 2015 by organizedkaos

[Tommy!]

Personal allowance only starts changing if you earn large amounts

The personal allowance will change based on the cash value of benefits in kind declared on a P11D I believe.

 

1060L is the full allowance, you get a reduction for private use of a company car, medical insurance from your employer and so on.

It also gets reduced if you owe small amounts of income tax rather than have you pay them direct.

 

So some people will have 940L for example, where they are taxed 20% on each pound over £9,400, because they get a company car which can't be directly taxed as cash paid so the equivalent is taken as a reduction in tax free allowance.

 

(cars go on new purchase price and emission rating I believe, rather than its cost and emissions now/on acquisition)

Edited September 8, 2015 by Tommy!

[Glenryck Pilchards]

I had a spare moment at work, so I ran UKFF Enterprises payroll for 2015/16. There are five employees earning different amounts £12k, £31.5k, £31.75k, £50k, and £100k you can see the annual figures in this link http://d.pr/i/1iRHh

 

In the example that Briefcase stated the person earning £31750 would pay £80 more in tax and NI but would still earn £170 more than the person earning £31500. I put the three other salaries in their as a comparison for anyone interested.

 

If you are ever lucky enough to earn £121800 a year that is the point where you will have no tax allowance and would pay a flat percentage of tax, but if you were earning that much you either wouldn't care or find a tax avoidance scheme.

 

The crux of it is, never turn down a pay rise as your net pay will always go up!

 

Edit: This was a basic payroll just with tax and NI deductions. There was no additional payments (bonus etc) or deductions (pension contribution etc)

Edited September 9, 2015 by Glenryck Pilchards

[Bus Surfer]

Absolutely. Never turn down a pay rise for fear of paying more tax. It's not gonna be worth your while. Ever.

 

I've worked for HMRC for years and the amount of people who've told me they've turned down higher pay because of this is is crazy, even when I've explained it to them.

[gbacon85]

If no one accepted pay rises, I would be out of a job!!!

[Mr_Danger]

Absolutely. Never turn down a pay rise for fear of paying more tax. It's not gonna be worth your while. Ever.

 

I've worked for HMRC for years and the amount of people who've told me they've turned down higher pay because of this is is crazy, even when I've explained it to them.

 

What about tax credits? There's some voodoo shit that goes on there for sure. I swear we were better off last year when I worked slighlty less hours than I declared for this year.

n

[gbacon85]

 

 

Absolutely. Never turn down a pay rise for fear of paying more tax. It's not gonna be worth your while. Ever.

 

I've worked for HMRC for years and the amount of people who've told me they've turned down higher pay because of this is is crazy, even when I've explained it to them.

What about tax credits? There's some voodoo shit that goes on there for sure. I swear we were better off last year when I worked slighlty less hours than I declared for this year.

n

Same, reckon they just make it up on the fly

[Bus Surfer]

I've been told that pretty much sums up the tax credit system.