A Taxing Question

Desert Orchid

Desert Orchid

Senior Jockey
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Aug 2, 2005
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I'm the first to admit I know hee-haw about income tax.

Do the tax bands kick in after deduction of allowances? For example, if the higher tax band (40%) is "above 33,300" (if that's what it is) does that mean after the allowance is taken off (ie they actually earn 33.3K+ their allowance) ?

I ask because "someone I know" has the opportunity to change their job and it would involve an increase in salary but it might not be worth it if they're losing the difference in tax.

To put it more concretely, they currently earn 36kpa and have the chance to earn 38kpa in one job or 42kpa in another but they don't know if it's worth the hassle.
 
The way I read income tax is that you get an allowance - I think this is just over 5 grand on which you pay no tax.

After that there are 3 bands. 10%, 22% and 40%.

10% tax is levied on the next £2150. The next band is 22% which goes from there to £32,400. Any earnings over this are levied at 40% tax. Hope this helps. The payrise would certainly be worth taking.

The allowance is included in the £32400.
 
So the extra £2k pay in the first possibility is really only worth £1200 and the £6k possibility is worth £3600?

Option one might not be worth the hassle if conditions are not as good and the workload substantially greater (£5 per day less NI for tons more work). Option two is probably less unattractive.

I'm inclined to advise them to stay put or hold out for option 2.
 
It will work out at slightly more than 3.6K, DO, as pension contributions would increase and they are deducted before tax is paid.
 
I find it remarkably easy, to be honest. Don't know what all the fuss is about. I pay a bloke £350 and it's all done... norty
 
Originally posted by Desert Orchid@Mar 18 2007, 07:40 PM
To put it more concretely, they currently earn 36kpa and have the chance to earn 38kpa in one job or 42kpa in another but they don't know if it's worth the hassle.
Click to expand...
Surely those are casual rates DO?
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Tom, I think what DO is meaning is that the guy is having difficulty getting time off work to sign on.
 
As Del Boy would say, "It's all epidemic now, Rodney."

They held out for the £42k job but got word this afternoon they came "a very close second" at the interview. No cigar, then. I understand they're getting totally blootered tonight.
 
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