Help needed with explanation of tax rates?

Question

i am confused on the tax band rates since we got rid of the 10% tax.

I know it used to be the first £2150 @10%, the next £31150@ 22% and finally anything above £33300 would be taxed at 40%.

But since the 10% has gone, what are the band rates? i.e how much gets taxed at 20% and how much at 40%??????

Answer 1

You can currently earn £5435 before paying tax. After that, you pay 20% on the next £36000, and then 40%.

From September this will change, and the changes will be retrospective back to 6th April. The personal tax-free allowance goes up to £6035. The next £34800 will be taxed at 20%, and thereafter at 40%. Higher rate taxpayers will see no change, most people will be better off (or at least not pay more tax than they did last year).

You can see the details on www.hmrc.gov.uk/rates.

Answer 2

You will receive your tax allowance first based on your tax code, then the following tax bands apply from the 18th May 2008 backdated to the 6th April 2008

Upto £36,000 20%

Over £36,000 40%

Answer 3

Since 6 April 2008 the 10% band has been abolished so this means that now income over the personal allowance (5435) will be taxed firstly 20% up to 34800 and 40% over this.

There was such uproar about this due to the fact many people on lower incomes were worse off. The PM has now decided that from September 08 the personal allowance will be incresed to 6035 and the higher rate upped to 36000. So the new rates from September will be 20% upto 36000 and 40% above that. Your tax office will make the change automatically in September so you should notice less tax being deducted from then til April.