Any working individual are fond of increments, salary hikes, or even bonuses and usually waits for this delightful announcement. All these aspects inspire them and makes them happy as well, including their family. But on the other side, a sudden thought of paying more tax is also bothers them, especially, if your comprehensive salary is near to 40% tax bracket. But, are you well-versed with this tax bracket and its impact on your income? If not, then this article will furnish specific guidance about 40 tax bracket 2024. Read the complete article to get the relevant information.
What is the 40% tax bracket?
A 40% tax bracket or a ‘higher rate’ of the income tax band are developed for those individuals who earn between £50,271 – £125,140. This sort of tax bracket is usually considered in the UK. All individuals are liable to pay the tax whose income comes under the category of 40 tax bracket.
In the UK, there are four income tax rates and their names are mentioned below-
· Personal Allowance
· Basic Rate
· Higher Rate
· Additional Rate
Here is the list of tax brackets for different countries. Have a glance at it.
Income tax rates for England, Wales, and Northern Ireland for the year 2023/24 & 2024/25
| Tax rate | 2023/24 Tax Rate Threshold | 2024/25 Tax Rate Threshold |
| Personal allowance: How much income you can earn before you start to pay income tax. No tax on this income. | £0 – £12,570 | £0 – £12,570 |
| Basic rate income tax: 20% tax on the proportion of income that falls into this tax bracket. | £12,571 – £50,270 20% | £12,571 – £50,270 20% |
| Higher rate income tax: The part of your income that falls into this tax band is taxed at 40% | £50,271 – £125,140 40% | £50,271 – £125,140 40% |
| Additional rate income tax: This is the highest rate. The income you earn above this threshold is subject to tax at 45% | £125,140 upwards 45% | £125,140 upwards 45% |
Now, you can easily compare the 40 tax threshold in different countries and how much you have to pay when your overall income comes under this category.
Criteria to remain in the 40% tax bracket
If a tax payer wants to remain in the 40% tax bracket, then their total income for the current tax year is needed to surpass the basic rate of their income. Moreover, if their income surpasses £125,140, then they will be move to an ‘Additional rate’ bracket and will be taxed at a 45% rate.
It is a common query whether the 40% tax bracket ever change? Yes, it may change, depending on the Government’s decisions in the segment of the yearly budget. However, it is impossible to be changed anytime soon as the current personal tax-free allowances and bands are imposed till 2028.
Is this necessary to pay 40% tax on all incomes?
Is it mandatory to pay 40% tax on all income? Most tax payers face this doubt daily. The relishing news is that – NO. You are not bound to pay 40% tax on all your income. It is a common misconception that once you fall under in this tax band, you are liable to pay the new tax rate on every income you earn, but in reality, this does not happen.
