40k - good money or not

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Reply 140

Quady

Original post by MrHappy_J

Twice as much as the average salary? Yes please.

Well 50% more gross, 30% more net.

Reply 141

heidi123

I wouldn't say "rich" but it's definitely a really great salary! You shouldn't have any problems on that amount unless you have a ridiculously high shopping habit, loads of debt or lots of kids.

Reply 142

TheNightmare

Original post by ledleyking123

People say earning 40k makes you rich, its very good money etc, is it?

40k is great money!

Reply 143

thegodofgod

Original post by Quady

£40,000 / 365 = £109.58/day

Thats assuming its after tax, nobody quotes their salary after tax.

Its £80 a day after tax (not including student loan repayments or council tax)

Its a decent whack, but £40,000 isn't even enough to put you in the 40% 'higher rate' tax band, let alone the highest income tax band.

It is

£34,370 is the 40% tax threshold - between £34,371 and £150,000 you pay 40p to the £1 back :sad:

HMRC Income Tax Thresholds

Reply 144

Clip

Original post by heidi123

I wouldn't say "rich" but it's definitely a really great salary! You shouldn't have any problems on that amount unless you have a ridiculously high shopping habit, loads of debt or lots of kids.

I can guarantee you without reservation, that it's not "a great salary". It depends entirely on your circumstances.

Reply 145

thegodofgod

Original post by Clip

I can guarantee you without reservation, that it's not "a great salary". It depends entirely on your circumstances.

Honestly, £40,000 is not a salary that I'd want to retire with - I'd want to be above £80,000 - especially after working for 40 odd years, given how the retirement age will most likely rise to 70+ by the time I'm that old :K:

Reply 146

DJKL

Original post by thegodofgod

It is

£34,370 is the 40% tax threshold - between £34,371 and £150,000 you pay 40p to the £1 back :sad:

HMRC Income Tax Thresholds

You have forgotten the personal allowance that reduces your taxable pay before it slots into the bands, circa £7.400. Your marginal tax rate would be 20% on £40,000 plus of course NI at circa 12%, so total marginal 32%. (written without my tax tables so working from my very dodgy memory re current NI rates/bands and current personal allowances, on a computer that is so slow this evening that I can't be bothered looking them up)

Reply 147

thegodofgod

Original post by DJKL

Say I earn £60,000 gross, and let's say £7,500 is the personal allowance limit.

Wouldn't my income tax be:
0 - 7,500 = 7,500 @ 0% = 0
7,500 - 35,000 = 27,500 @ 20% = 5,500
35,000 - 60,000 = 25,000 @ 40% = 10,000

= 0 + 5,500 + 10,000
= £15,500 tax

= £44,500 net (ignoring NICs for simplicity :colondollar:

)

Reply 148

DJKL

Original post by thegodofgod

)

No

Gross 60,000
PA 7,500
Taxable52,500

35,000@20% =£7,000
17,250@40%= £6,900
Tax £13,900

Net £46,100 ignoring NI and using the PA/bands you used.

The basic rate band applies to taxable income after the personal allowance is applied, the allowance does not use up part of this band, to pay at 40% using your PA/bands it is only gross income over £42,500 that falls into the 40% band.

Trust this makes sense.

Reply 149

thegodofgod

Original post by DJKL

- didn't know that's how it worked.

I was taught the method I used by my previous maths teacher who's got a degree in accountancy - may be he oversimplified it :s-smilie:

I'll look at my mum's P60 from last year and try to work it out (tomorrow :colondollar:

)

Reply 150

DJKL

Original post by thegodofgod

- didn't know that's how it worked.

I was taught the method I used by my previous maths teacher who's got a degree in accountancy - may be he oversimplified it :s-smilie:

I'll look at my mum's P60 from last year and try to work it out (tomorrow :colondollar:

)

Following link gives a narrative overview.

http://www.adviceguide.org.uk/index/your_money/tax_index_ew/income_tax.htm

I suspect your Maths teacher either never worked in practice as an Accountant, so never actually calculated anyone's tax ,or, as you say, simplified it for you/your class.

I used to have to do these calculations manually back in the early 1990's, now I just need to punch them into a bespoke software package and it does all the hard work. (I work as an Accountant both in industry and running a part time private practice)

Reply 151

Quady

Original post by thegodofgod

It is

£34,370 is the 40% tax threshold - between £34,371 and £150,000 you pay 40p to the £1 back :sad:

HMRC Income Tax Thresholds

I think you'll find you've forgotten about the personal allowance of £8,105.
http://www.hmrc.gov.uk/rates/it.htm#1

Thats £34,371 of taxable earnings (for 12/13 - actually we are in 11/12 now), ie when you're earning over £42,476.

Reply 152

thegodofgod

Original post by Quady

I realised :colondollar:

Reply 153

Clip

Don't forget student loan/fee repayments deducted at source.

Reply 154

GQ.

It's not going to make you rich but I sure as hell would like to be earning £40K instead of £16K per year.

Reply 155

Kerpal

It hugely depends on where you live, your friends and your desired lifestyle.

I earn a little bit more than 40k p.a. and to be honest I currently don't save any money. Instead I choose to live in a lovely area in Central London and go out to eat at nice restaurants etc.

So while some families might survive on an income of this amount, I, as an individual, fail to.

Reply 156

GQ.

Original post by Kerpal

What's your job?

Reply 157

Kerpal

Original post by GQ.

What's your job?

I work as a trader in the city. I actually also write a blog about it which you can follow via my profile!

Reply 158

BLineDisaster

on the subject of tax,

My personal allowance for 2012/13 will be £8105

Im currently earning a £20k salary as part of a sandwich year at university, which subsequently ends in september this year (when I go back to uni for my final year of study).

Given that by september I wouldn't have had my full annual allowance of £8105 (and then stopped earning any income), would the remainder of my personal allowance for the year come as a rebate in April 2013?

(Am i right in assuming that the personall allowance is divided into months and tax isnt paid on income until the personal allowance is exceeded?)

Many thanks.

Reply 159

Quady

Original post by Jack7Richards

This really needs to go in a new thread or the tax thread but hey.

Your maths is a tad faulty, there are five months between April and September, so you'll have used all your tax free allowance (assuming the allowance next year will be £8,105, we'll find out tomorrow).

You'll be able to claim a refund in April '13 yes.

No its not devided into months and your employer will assume you won't be leaving in September, your net pay will be the same as that of a regular employee.