[News] Do you pay more than the basic rate of Income Tax?

[KZNSeagull]

Used to before I emigrated. I suspect I now earn less than the tax I paid in the year before we left!

 

[The Antikythera Mechanism]

I only earn £8k a year according to my accountant,

 

[schmunk]

I only earn £8k a year according to my accountant,

Remind him to up it this year for the change in NI bands.

 

[beorhthelm]

...

 

[FamilyGuy]

No, not a Monopoly question, do you earn over the HMRC threshold for an increased rate of income tax?

https://www.bbc.co.uk/news/business-61996117

Higher rate taxpayers paying 40% earn £43,663 or over in Scotland and £50,271 in England, Northern Ireland and Wales. They do not pay tax on the first £12,570 of earnings covered by the personal allowance.

I used to. But I retired a couple of years ago.

 

[Bold Seagull]

6.1m higher rate payers, about 25% of workers.

UK workforce was 32.7m as of April 2022.

 

[beorhthelm]

UK workforce was 32.7m as of April 2022.

workforce is not the same as workers. or number for those receiving income as corrected earlier. i was just surprised how many are higher rate payers.

 

[Harry Wilson's tackle]

Yes, have two jobs (self employment plus PAYE for my Hourly Paid Lectureship at a London University) plus a Pension from my time working in the Chemical Industry which is also taxed of course - something I find repellent as I paid income tax the first time around.

I used to think that, but a workplace pension is not an entitlement. It is an investment. Many employers facilitate this to mke the job more appealing. The University pension was a good example. It has been sliced to bits in the last 10 years, unfortunately, making the academic life so much less appealing to the young. But it is no less immune to tax than the food and petrol we buy using our salaries - that have already been subjected to tax.

 

[GT49er]

No. Retired now, but never got anywhere near paying the higher rate anyway. But - given the Government's current needs to pay for everything post Covid, with Ukraine and all that going on - and yes,short term economic shotfalls from Brexit - without borrowing us into an even worse state of affairs, I'd happily accept a rise of a penny or two in the pound on the basic rate - provided that the 40% rate went up 1% too. Better than increasing VAT or cutting benefits every day of the week!

 

[Silverhatch]

Taxation. Toxic word. Old Testament biblical. Outdated and divisive for a (human) race facing existential threats. Ban the word. Replace it with contribution. Make it GOOD to contribute more, especially if you CAN afford it. No faith in this or the next generational political/commercial class to get anywhere near this subject. It’ll take the real threat of an extinction level event to rid us all of dinosaur beliefs… Too Deep?

Yep - higher tax threshold.

 

[Bodian]

Never been remotely close to doing so - and never will be.

 

[nwgull]

I only earn £8k a year according to my accountant,

You still pay income tax on your dividends though.

 

[The Antikythera Mechanism]

You still pay income tax on your dividends though.

Corporation tax, yes.

 

[Icy Gull]

Corporation tax, yes.

Nope, they should be on your yearly tax return and you do get taxed on them but don’t pay NI is my understanding

Corporation tax is paid on your company’s net profits and has nothing to do with personal earnings, no?

 

[The Antikythera Mechanism]

Nope, they should be on your yearly tax return and you do get taxed on them but don’t pay NI is my understanding

Corporation tax is paid on your company’s net profits and has nothing to do with personal earnings, no?

I’m the sole employee so I’m just looking at my nett income after all deductions.

 

[Icy Gull]

I’m the sole employee so I’m just looking at my nett income after all deductions.

Fair enough, i am looking at it from a limited company perspective and have no idea how it works as a sole employee

 

[zefarelly]

No, I've bubbled under the threshold since 2009.

same, got close but haven't had a real wage increase for 20 years so stayed under. Engineering is not lucrative.

 

[schmunk]

You still pay income tax on your dividends though.

Corporation tax, yes.

I’m the sole employee so I’m just looking at my nett income after all deductions.

If you are operating through a Personal Service Company, normally:

• you pay yourself a minimal wage as an employee (just enough to kiss the bottom of the NI threshold, but not actually pay any NI) - this is your £8k.
  
• The balance of company profit is subject to Corp Tax at 19%.
  
• Dividends can then be paid out to you from this taxed profit.
  
• You pay personal income tax, but not NI, on the distributed dividends. Anything over £2,000 needs to be reported on a tax return.

 

[Seagull on the Hill]

What’s income tax…oh sorry ..nah i pay someone a few grand so i dont pay any

It's all cash in hand in your line of work, isn't it?

 

[zefarelly]

If you are operating through a Personal Service Company, normally:

• you pay yourself a minimal wage as an employee (just enough to kiss the bottom of the NI threshold, but not actually pay any NI) - this is your £8k.
  
• The balance of company profit is subject to Corp Tax at 19%.
  
• Dividends can then be paid out to you from this taxed profit.
  
• You pay personal income tax, but not NI, on the distributed dividends. Anything over £2,000 needs to be reported on a tax return.

I earnt slightly more than bugger all running my own business, virtually nothing in income tax. . . but always paid my NI, as a matter of principal

tax dodging is bad but swerving NI contributions should see you left in the gutter.