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Posted Tue, 25 Jun 2024 15:03:43 GMT by Joseph
I pay income tax at the basic rate, but my earnings are near the top of the band. My Personal Allowance has been reduced this year due to unpaid tax from a previous year. Does the reduction in Personal Allowance have any impact on the threshold of the higher rate tax band for me, or would the threshold remain static at £50,271? For example, if my Personal Allowance was reduced by £500 to 12070, would the threshold at which my earnings are taxed at the higher rate also be £500 lower, i.e. £49,771? Thank you for any clarification you can provide on this.
Posted Wed, 10 Jul 2024 10:29:41 GMT by HMRC Admin 8 Response
Hi,
Tax is paid on the amount of taxable income remaining after allowances have been deducted.
The basic rate band is £1 - £37,700 - 20%. For example, if your income is £50,271, your personal allowance (from your example) of £12,070, would be deducted from this leaving £38,201. £37,700 would be taxed at 20% leaving the remaing £501 taxed at 40%.
Thankyou.

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