Dream Weaver

Just doing my accounts for the IR.

Can anyone tell me if the 22%/40% tax bracket is applied to gross income before expenses/deductions or if its applied after you've deducted your allowance and expenditure.

fast bloke

Take all your expenses and costs out first. Then subtract your tax free allowance. You pay 10% on the next £1000, 22% for the next bit (27k or something) and 40% of the rest.

Dream Weaver

Thanks, thats good news then

Is the 40% bracket £30,500 now or something?

fast bloke

zero band = 4615
10% on next 1960
22% from 1961 to 30500
40% thereafter

remember to take NI contributions and pension contributions out as well as costs and expenses

Dream Weaver

I didnt think you could put NI down as an expense. Good reminder on the pension though. I have an accountant, but he seems to have disappeared, so I will be getting another one, this is just for me to estimate my tax bill.

Thanks for your help again.