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PAYE Thresholds

PAYE Thresholds

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Hi Accountingweb,

According to this link (https://www.gov.uk/income-tax-rates) the Basic to Higher rate tax bands are when earnings pass £43,000, thus..

Income Tax rates and bands

Basic rate     £11,001 to £43,000      20%
Higher rate   £43,001 to £150,000      40%

According to this link (https://www.gov.uk/guidance/rates-and-thresholds-for-employers-2016-to-2017) the Basic to Higher rate tax bands are when earnings pass £32,000, thus..

Tax thresholds, rates and codes

Basic tax rate     20% on annual earnings above the PAYE tax threshold and up to £32,000
Higher tax rate    40% on annual earnings from £32,001 to £150,000

Does anyone know authoritatively, which is correct?

Thanks in advance,

Bob

Replies (11)

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By Tim Vane
12th Oct 2016 12:13

They are the same thing.

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By craig preece
12th Oct 2016 12:29

As long as your earnings are less than £100K

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By TBro4iuABEW6Qmh74nRteQz3
12th Oct 2016 12:33

Hi Tim,

Cheers for your prompt response. Just for my notes, can you explain how

"20% on annual earnings above the PAYE tax threshold (£11,001) and up to £32,000"

is the same as

"Basic rate £11,001 to £43,000 20%"

Thanks a mil,

Bob

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By SteLacca
12th Oct 2016 13:10

They first is wrong. The second is right.

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Replying to SteLacca:
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By TBro4iuABEW6Qmh74nRteQz3
12th Oct 2016 13:29

Cool, so north of £32,000.00 gross salary and you are paying tax at 40%)?

For example, for a salary of £35,000.00 on a standard code of 1100L, the breakdown is this..

(£35,000-£32,0001) = £2,999.00 x 40% = £1,199.60
(£32,000-£11,000) = £21,000.00 x 20% = £4,200.60
(£11,000 - £0.00) = £11,000 x 0% = 0

Total = £1,199.60+ £4,200.60 = £5,400.20

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Replying to TBro4iuABEW6Qmh74nRteQz3:
By The Highlander
12th Oct 2016 13:58

Dammit, nice one Cheeky!!

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Replying to TBro4iuABEW6Qmh74nRteQz3:
Tom McClelland
By TomMcClelland
13th Oct 2016 11:01

TBro4iuABEW6Qmh74nRteQz3 wrote:

Cool, so north of £32,000.00 gross salary and you are paying tax at 40%)?

For example, for a salary of £35,000.00 on a standard code of 1100L, the breakdown is this..

(£35,000-£32,0001) = £2,999.00 x 40% = £1,199.60
(£32,000-£11,000) = £21,000.00 x 20% = £4,200.60
(£11,000 - £0.00) = £11,000 x 0% = 0

Total = £1,199.60+ £4,200.60 = £5,400.20

No, the 20% band is £32,000 wide, but it doesn't start until you've earned £11,000. So the 40% band doesn't start until earnings reach £43,000.

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By The Highlander
12th Oct 2016 13:11

Because of the personal allowance. The first 11,000 is tax free, the next 32,000 is at 20%.

43000-11000 = 32000

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Tom McClelland
By TomMcClelland
13th Oct 2016 10:52

Part of the confusion here may rest in the fact that personal tax allowance is taken away progressively once your earnings reach £100k, and has entirely dissipated by the time earnings reach £150k. So, bizarrely, both statements about the upper reach of the 40% band are arguably correct even though they appear to be different limits at first glance.

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By Paul Hawes
13th Oct 2016 13:06

That's an interesting username.

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By Manchester_man
14th Oct 2016 01:19

@ OP Maths isn't your strong point is it?

As pointed out above, the difference between the 32,000 and the 43,000 is 11,000, ie., the personal allowance.

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