[KS Cleaning]

So if my turnover for the year is 47 k, minus my expenses, lets say 8k which leaves a profit of 39 k, minus 10k allowence equals a total of 29k taxable figure at the lower rate of 20 % ??

first 10K tax free
                  10K- 31 865@20%
                  31 866-39K@40%

That is correct but it's not what Trippy is proposing!! 

Oops my figures are wrong, it should be
            first 10K tax free
                   10K- 41 865@20%
                   41 866- 150K@40%
So Trippy is correct.

[Martin Lane]

That's a marginal tax rate of 60%. This means that there's suddenly an extra tax band created for anyone earning between £100,000 and around £113,000.

The UK tax bands now go:

Income Band Effective Tax Rate
£0 up to the personal allowance: 0%
Personal allowance up to £37,400:   20%
£37,400 up to £100,000: 40%
£100,000 up to £112,950: 60%
£112,950 up to £150,000: 40%
£150,000 and above: 50%

[ChumBucket]

So if my turnover for the year is 47 k, minus my expenses, lets say 8k which leaves a profit of 39 k, minus 10k allowence equals a total of 29k taxable figure at the lower rate of 20 % ??

first 10K tax free
                  10K- 31 865@20%
                  31 866-39K@40%

That is correct but it's not what Trippy is proposing!! 

Oops my figures are wrong, it should be
            first 10K tax free
                   10K- 41 865@20%
                   41 866- 150K@40%
So Trippy is correct.

Crikey!! I don't care about the figures, the theory is correct. However, Trippy thinks he can use 10k of tax relief to bring his profits below a higher tax band!!!

[SeanK]

If you earn under £100000 then you get the personal tax allowance so don't go up to 40%
until your profits hit £41866 or above, if you earn more than £100000 you don't get the personal allowance
and pay the higher rate after £31866.

[PoleKing]

So if my turnover for the year is 47 k, minus my expenses, lets say 8k which leaves a profit of 39 k, minus 10k allowence equals a total of 29k taxable figure at the lower rate of 20 % ??

Yeah, but don't forget your National Insurance.
That's another 9%

I found that not much after £50k was better to be limited rather than sole trader.

I strongly suggest you both get an accountant!!

Me?

I have got an accountant.
I've mentioned them in this thread.

What do you mean?

It seems you are agreeing (as you reply "yeah" to the question) that trippy can knock 10k (tax relief) off his overall profit to bring his taxable profits value below the 40% threshold?

The way he's written it could be understood to be incorrect. But he's not.
47
-8
-10
=29

£29k is taxed & NI'd @ 29%

Very rough, but he's not far off.

[PoleKing]

That's a marginal tax rate of 60%. This means that there's suddenly an extra tax band created for anyone earning between £100,000 and around £113,000.

The UK tax bands now go:

Income Band Effective Tax Rate
£0 up to the personal allowance: 0%
Personal allowance up to £37,400:   20%
£37,400 up to £100,000: 40%
£100,000 up to £112,950: 60%
£112,950 up to £150,000: 40%
£150,000 and above: 50%

Can you post the link please Martin? I couldn't find why your saying on HRMC website.

[ChumBucket]

So if my turnover for the year is 47 k, minus my expenses, lets say 8k which leaves a profit of 39 k, minus 10k allowence equals a total of 29k taxable figure at the lower rate of 20 % ??

Yeah, but don't forget your National Insurance.
That's another 9%

I found that not much after £50k was better to be limited rather than sole trader.

I strongly suggest you both get an accountant!!

Me?

I have got an accountant.
I've mentioned them in this thread.

What do you mean?

It seems you are agreeing (as you reply "yeah" to the question) that trippy can knock 10k (tax relief) off his overall profit to bring his taxable profits value below the 40% threshold?

The way he's written it could be understood to be incorrect. But he's not.
47
-8
-10
=29

£29k is taxed & NI'd @ 29%

Very rough, but he's not far off.

You don't knock 10k off your profits!! You get 10k tax relief on the first 10k of profit! It's tax relief not a gift!! So if the higher bracket was 31k he would be paying some tax at the higher rate as he CAN NOT reduce his profit by 10k- he just gets tax relief on the first 10k.

[Jonny 87]

So if my turnover for the year is 47 k, minus my expenses, lets say 8k which leaves a profit of 39 k, minus 10k allowence equals a total of 29k taxable figure at the lower rate of 20 % ??

Yeah, but don't forget your National Insurance.
That's another 9%

I found that not much after £50k was better to be limited rather than sole trader.

I strongly suggest you both get an accountant!!

Me?

I have got an accountant.
I've mentioned them in this thread.

What do you mean?

It seems you are agreeing (as you reply "yeah" to the question) that trippy can knock 10k (tax relief) off his overall profit to bring his taxable profits value below the 40% threshold?

The way he's written it could be understood to be incorrect. But he's not.
47
-8
-10
=29

£29k is taxed & NI'd @ 29%

Very rough, but he's not far off.

You don't knock 10k off your profits!! You get 10k tax relief on the first 10k of profit! It's tax relief not a gift!! So if the higher bracket was 31k he would be paying some tax at the higher rate as he CAN NOT reduce his profit by 10k- he just gets tax relief on the first 10k.

I'm confused.....lol.

It sounds like your saying the same as Darren.....just wording it in a different way. Whichever way you look at it, it is reducing your taxable profitt as your getting the relief of 10k. Wether you deduct that at the end or the beginning surely it makes little to no difference.

[PoleKing]

So if my turnover for the year is 47 k, minus my expenses, lets say 8k which leaves a profit of 39 k, minus 10k allowence equals a total of 29k taxable figure at the lower rate of 20 % ??

Yeah, but don't forget your National Insurance.
That's another 9%

I found that not much after £50k was better to be limited rather than sole trader.

I strongly suggest you both get an accountant!!

Me?

I have got an accountant.
I've mentioned them in this thread.

What do you mean?

It seems you are agreeing (as you reply "yeah" to the question) that trippy can knock 10k (tax relief) off his overall profit to bring his taxable profits value below the 40% threshold?

The way he's written it could be understood to be incorrect. But he's not.
47
-8
-10
=29

£29k is taxed & NI'd @ 29%

Very rough, but he's not far off.

You don't knock 10k off your profits!! You get 10k tax relief on the first 10k of profit! It's tax relief not a gift!! So if the higher bracket was 31k he would be paying some tax at the higher rate as he CAN NOT reduce his profit by 10k- he just gets tax relief on the first 10k.

I know.
The calculation I've put up is how i understood the original question.
It could be written:
47
-10
-8
=29
but the answer will still be the same
47-turnover
10 personal allowance
8 expenses
29 left to pay.
It is very basic but it works.
I don't think the op was asking CIUers to do his tax return, just wanted a rough idea.

[KS Cleaning]

So if my turnover for the year is 47 k, minus my expenses, lets say 8k which leaves a profit of 39 k, minus 10k allowence equals a total of 29k taxable figure at the lower rate of 20 % ??

Yeah, but don't forget your National Insurance.
That's another 9%

I found that not much after £50k was better to be limited rather than sole trader.

I strongly suggest you both get an accountant!!

Me?

I have got an accountant.
I've mentioned them in this thread.

What do you mean?

It seems you are agreeing (as you reply "yeah" to the question) that trippy can knock 10k (tax relief) off his overall profit to bring his taxable profits value below the 40% threshold?

The way he's written it could be understood to be incorrect. But he's not.
47
-8
-10
=29

£29k is taxed & NI'd @ 29%

Very rough, but he's not far off.

You don't knock 10k off your profits!! You get 10k tax relief on the first 10k of profit! It's tax relief not a gift!! So if the higher bracket was 31k he would be paying some tax at the higher rate as he CAN NOT reduce his profit by 10k- he just gets tax relief on the first 10k.

If you add in the allowance the 40% tax then comes in at 41K not 31K so he would only pay 20%
                  
                
                

[Martin Lane]

Hi in away from my desk at moment out working but if you google 60% income tax loads of pages come up
Cheers

[PoleKing]

Hi in away from my desk at moment out working but if you google 60% income tax loads of pages come up
Cheers

Found some bits.
Its not a 60% tax per se, thats why its not on the HMRC website but to all intents and purposes. It is.
This is from a link:

The 60p rate occurs because those earning between £100,000 and £121,000 lose their tax-free personal allowance which means they pay higher rates of tax on this portion of their income.

It doesn't affect me (or the majority of CIUers i should think) but it is interesting to know.

Thanks Martin

[SeanK]

So if my turnover for the year is 47 k, minus my expenses, lets say 8k which leaves a profit of 39 k, minus 10k allowence equals a total of 29k taxable figure at the lower rate of 20 % ??

Yeah, but don't forget your National Insurance.
That's another 9%

I found that not much after £50k was better to be limited rather than sole trader.

I strongly suggest you both get an accountant!!

Me?

I have got an accountant.
I've mentioned them in this thread.

What do you mean?

It seems you are agreeing (as you reply "yeah" to the question) that trippy can knock 10k (tax relief) off his overall profit to bring his taxable profits value below the 40% threshold?

The way he's written it could be understood to be incorrect. But he's not.
47
-8
-10
=29

£29k is taxed & NI'd @ 29%

Very rough, but he's not far off.

You don't knock 10k off your profits!! You get 10k tax relief on the first 10k of profit! It's tax relief not a gift!! So if the higher bracket was 31k he would be paying some tax at the higher rate as he CAN NOT reduce his profit by 10k- he just gets tax relief on the first 10k.

Its the wording that's confusing you it not a relief, you don't pay any tax on your first 10k of earnings after ten grand you
pay 20% on the next £31865 which brings the total to £41865.
If you earn over £100k then you pay tax on the full amount which means you go up to the 40% after £31865

[Window Lickers]

You lot need to get back to work - sharpish!

[martinw]

Regarding national insurance  9% is payable on all profit over £7956.
Rates are as follows:

Below £5,885 (SEE) (*3)   calss 2 0.00    class 4 0
£5,885 to £7,956 (LPL)   £2.75 per week    class 4 0
£7,956 to £41,865 (UPL)   2.75 per week    class 4 9%
Above £41,865                   2.75                               2%

all rates for current year:
https://www.gov.uk/government/publications/tax-and-tax-credit-rates-and-thresholds-for-2014-15/tax-and-tax-credit-rates-and-thresholds-for-2014-15