Income tax question for the accountants and tax people among us

[jetmorgan]

After 20 odd years I have finally been given a pay rise by the bosses. It's an extra £1500 a year, so £125 a month PRE tax. I really don't understand income tax rates etc etc etc so my question is how much of that £125 will I lose in income tax? At the moment I'm getting £24,999 a year PRE tax so the payrise will take it to £26,499.

[Pannier Tank]

After 20 odd years I have finally been given a pay rise by the bosses. It's an extra £1500 a year, so £125 a month PRE tax. I really don't understand income tax rates etc etc etc so my question is how much of that £125 will I lose in income tax? At the moment I'm getting £24,999 a year PRE tax so the payrise will take it to £26,499.

 

Assuming you pay Tax at  20% plus the 12% National Insurance Contributions means your deductions will be £40 so £125 - £40 = £85

[leopardml2341]

Have you seen this website, you want section 1.

 

https://www.gov.uk/government/publications/tax-and-tax-credit-rates-and-thresholds-for-2016-17/tax-and-tax-credit-rates-and-thresholds-for-2016-17

 

I'm not a accountant, but you'll need also to factor in other stoppages as well, e.g. NI contributions and workplace pension as these too will have an effect in the extra 'money in your pocket' which I'm guessing is at the root of your question?

 

i.e. how much more you can spend on trains

 

 

Edit: it really does help to post the link

Edit 2: with all my mucking about editting, I was beaten to it by a few mins.

Edited June 14, 2017 by leopardml2341

[jetmorgan]

Have you seen this website, you want section 1.

 

https://www.gov.uk/government/publications/tax-and-tax-credit-rates-and-thresholds-for-2016-17/tax-and-tax-credit-rates-and-thresholds-for-2016-17

 

I'm not a accountant, but you'll need also to factor in other stoppages as well, e.g. NI contributions and workplace pension as these too will have an effect in the extra 'money in your pocket' which I'm guessing is at the root of your question?

 

i.e. how much more you can spend on trains

 

 

Edit: it really does help to post the link

Edit 2: with all my mucking about editting, I was beaten to it by a few mins.

Thanks for the link I will check that out later....it's more a case of how much I can afford to spend on reducing my overdraft limit, currently at -£1300 at he moment as well as saving a bit more in my ISA account. Although I can't deny I have already been looking on Ebay for potential train treats!!! But I will have to be a very good boy for the next few months and keep my bank manager a happy person.

[Pannier Tank]

Have you seen this website, you want section 1.

 

https://www.gov.uk/government/publications/tax-and-tax-credit-rates-and-thresholds-for-2016-17/tax-and-tax-credit-rates-and-thresholds-for-2016-17

 

We are now in the 2017-18 Tax year!

 

https://www.gov.uk/government/publications/tax-and-tax-credit-rates-and-thresholds-for-2017-18/tax-and-tax-credit-rates-and-thresholds-for-2017-18

[leopardml2341]

We are now in the 2017-18 Tax year!

 

https://www.gov.uk/government/publications/tax-and-tax-credit-rates-and-thresholds-for-2017-18/tax-and-tax-credit-rates-and-thresholds-for-2017-18

True, I'd just pasted that link from my bookmarks.

 

For those of us who have the pleasure (?) of self assessment, that's the relevant link for returns due.

Edited June 14, 2017 by leopardml2341

[Pannier Tank]

For those of us who have the pleasure (?) of self assessment, that's the relevant link for returns due.

 

Thankfully, I no longer have to fill in a self assessment. When I had a Company Car / Car Allowance things were a bit different! 

[Siberian Snooper]

I'd use the ISA to pay off the credit card as the lost interest from the ISA will be a fair bit less than the interest paid on the credit card.

[Horsetan]

....For those of us who have the pleasure (?) of self assessment, that's the relevant link for returns due.

 

I still submit a paper version every October. It's quite sobering to realise how little you've actually earned once expenses are deducted.

[Bernard Lamb]

I still submit a paper version every October. It's quite sobering to realise how little you've actually earned once expenses are deducted.

I now file on line.

However I found out by accident last year that if you file on line you can change or add a paper version of various sections at a later date.

Quite handy if you find the on line system complicated and prefer to make notes on paper.

Bernard

[jjb1970]

https://www.youtube.com/watch?v=RUilUzH5kx8

[The Stationmaster]

I'd use the ISA to pay off the credit card as the lost interest from the ISA will be a fair bit less than the interest paid on the credit card.

 

Exactly so - at the current very low interest rates available for savings it is more financially effective to clear debts (which have much higher interest rates of course) and that has long been the case.  I received a statement for a deposit account a couple of days back and the interest rate is currently 0.05%, way below inflation let alone the sort of rates charged for borrowing. 

[Horsetan]

Yes, there's a total lack of interest in savings nowadays.

[leopardml2341]

Yes, there's a total lack of interest in savings nowadays.

Grrroooaaaannnn button!

[The Lurker]

Exactly so - at the current very low interest rates available for savings it is more financially effective to clear debts (which have much higher interest rates of course) and that has long been the case.  I received a statement for a deposit account a couple of days back and the interest rate is currently 0.05%, way below inflation let alone the sort of rates charged for borrowing. 

Generally this should always be the case. Simplistically, if the bank is letting you earn more interest on a deposit than it charges you on a loan of the same value, it is going to go bust. BCCI springs to mind

[Clearwater]

The only point I'd add around isas is that they are an annual limit and if you don't take it, you can't later recreate its value. Yes rates are low today and clearing debts makes sense but there is an opportunity cost in not being able to shield more of your savings from tax in the future.

 

On interest rates, yes, risk=reward. More risk, more reward. However, worth checking if the institution is subject to the financial services contribution scheme and whether your deposit is protected and guaranteed by HMG

 

David

[jjb1970]

On rates of return, each year for the last decade almost I look at my annual pension statements and ask myself why I bother. The only reason for continuing is to keep the employer contributions and the tax benefit as the expected annuity values are risible.

[chris p bacon]

After 20 odd years I have finally been given a pay rise by the bosses. It's an extra £1500 a year, so £125 a month PRE tax. I really don't understand income tax rates etc etc etc so my question is how much of that £125 will I lose in income tax? At the moment I'm getting £24,999 a year PRE tax so the payrise will take it to £26,499.

 

Ask for it in cash.........

[jetmorgan]

Ask for it in cash.........

If only we could but the boss who controls the wages is living in Mexico now and I can't see him flying back once a month to give two of us £125 in readies.

[Horsetan]

....the boss who controls the wages is living in Mexico now.....

 

Not Panama?

[chris p bacon]

If only we could but the boss who controls the wages is living in Mexico now and I can't see him flying back once a month to give two of us £125 in readies.

 

Considering what the largest export from Mexico is, I'd wonder that getting cash isn't such a big problem. 

[jetmorgan]

Not Panama?

 

 

Considering what the largest export from Mexico is, I'd wonder that getting cash isn't such a big problem. 

Thankfully not Panama and when he does fly back to Britain for his once a year visit for our Xmas party in July he does travel with several very large suitcases!!!