[G Griffin]

So let me get this right. Some of you have been working all the way through (nothing wrong with that) but are still going to claim (no problem with that). Do you think this extra income may take you over the 40% threshold, would it be worth claiming if it did now take you over the 40% threshold, would it not mean that for the time you’ve worked and put in a claim you’ve actually worked for peanuts? Or are the ones who are saying they will claim and have still worked are not earning very much anyway?

I’m fairly sure you only pay 40% on the figure over the normal allowance of 50k not your whole income for the year.

Yep you beat me to it. The higher tax bracket only kicks in at £50k and effects earnings over that £50k.

I think Bungle is aware of that, what he’s saying is that it could tip you into the higher tax rate, meaning you could end up paying some or all of the grant back at 40% tax + 9% NI. In Scotland we pay 41% higher rate tax and the threshold is lower at £43 430, so more chance of paying higher rate tax on the grant up here.

It’s a grant, you won’t  pay it back.

60% of £7500 is a lot more than 0% of £7500, which is what you’ll get if you don’t apply/reply when your contacted.

I didn’t say you pay the grant back deeege, what I said was you could end up paying 40% tax on some or all of it, so as an example you get £7500 and that makes your taxable profit for 20/21 55k you would pay £5000 @ 40% and £2500 @ 20% tax. If your taxable profit is over £57 500 you would be taxed at @ 40% for the whole grant. You also pay NI class 4 on the whole of the grant.

You wouldn't because you wouldn't get the grant .
I know what you mean though.

[AuRavelling79]

You would get the grant Griff if it was on £49,000. Because it would be based on the last three years average. It would just add to the 2020/21 tax year and if you had a good year and the grant took you to £57,000 you'd simply pay 40% and NI on the element in the higher tax band when you pay your tax for that tax year.

[G Griffin]

Yeah, I missed the 55k with the grant .
It's all ifs and buts though.

[deeege]

So let me get this right. Some of you have been working all the way through (nothing wrong with that) but are still going to claim (no problem with that). Do you think this extra income may take you over the 40% threshold, would it be worth claiming if it did now take you over the 40% threshold, would it not mean that for the time you’ve worked and put in a claim you’ve actually worked for peanuts? Or are the ones who are saying they will claim and have still worked are not earning very much anyway?

I’m fairly sure you only pay 40% on the figure over the normal allowance of 50k not your whole income for the year.

Yep you beat me to it. The higher tax bracket only kicks in at £50k and effects earnings over that £50k.

I think Bungle is aware of that, what he’s saying is that it could tip you into the higher tax rate, meaning you could end up paying some or all of the grant back at 40% tax + 9% NI. In Scotland we pay 41% higher rate tax and the threshold is lower at £43 430, so more chance of paying higher rate tax on the grant up here.

It’s a grant, you won’t  pay it back.

60% of £7500 is a lot more than 0% of £7500, which is what you’ll get if you don’t apply/reply when your contacted.

I didn’t say you pay the grant back deeege, what I said was you could end up paying 40% tax on some or all of it, so as an example you get £7500 and that makes your taxable profit for 20/21 55k you would pay £5000 @ 40% and £2500 @ 20% tax. If your taxable profit is over £57 500 you would be taxed at @ 40% for the whole grant. You also pay NI class 4 on the whole of the grant.

Agree with all of that KS.

Bungles post implied that you could actually be worse off for accepting the grant, taking into a new tax bracket etc, and that isn’t the case.

I can’t think of a single instance where you will be worse off financially for accepting the grant, which was my point.

[Bungle]

@Deegee, what I’m trying to say is that if you go over the 50k with the grant any jobs you did to take you over the threshold you would have received 60% pay rather than 80%.

Example: 20% on a £20 job = £16 after tax.
40% on a £20 job = £12 after tax.

Some cleaners won’t be anywhere near £50k but lots on here will, so they reckon 😀

[KS Cleaning]

@Deegee, what I’m trying to say is that if you go over the 50k with the grant any jobs you did to take you over the threshold you would have received 60% pay rather than 80%.

Example: 20% on a £20 job = £16 after tax.
40% on a £20 job = £12 after tax.

Some cleaners won’t be anywhere near £50k but lots on here will, so they reckon 😀

You’re forgetting NI Bungle, so a £20 job would be £10.20 in the hipper and not £12, although by the time the tax is due to be paid on the grant in January 22, I suspect it may be even less in the hipper due to a rise in tax and NI.

[KS Cleaning]

So let me get this right. Some of you have been working all the way through (nothing wrong with that) but are still going to claim (no problem with that). Do you think this extra income may take you over the 40% threshold, would it be worth claiming if it did now take you over the 40% threshold, would it not mean that for the time you’ve worked and put in a claim you’ve actually worked for peanuts? Or are the ones who are saying they will claim and have still worked are not earning very much anyway?

I’m fairly sure you only pay 40% on the figure over the normal allowance of 50k not your whole income for the year.

Yep you beat me to it. The higher tax bracket only kicks in at £50k and effects earnings over that £50k.

I think Bungle is aware of that, what he’s saying is that it could tip you into the higher tax rate, meaning you could end up paying some or all of the grant back at 40% tax + 9% NI. In Scotland we pay 41% higher rate tax and the threshold is lower at £43 430, so more chance of paying higher rate tax on the grant up here.

It’s a grant, you won’t  pay it back.

60% of £7500 is a lot more than 0% of £7500, which is what you’ll get if you don’t apply/reply when your contacted.

I didn’t say you pay the grant back deeege, what I said was you could end up paying 40% tax on some or all of it, so as an example you get £7500 and that makes your taxable profit for 20/21 55k you would pay £5000 @ 40% and £2500 @ 20% tax. If your taxable profit is over £57 500 you would be taxed at @ 40% for the whole grant. You also pay NI class 4 on the whole of the grant.

You wouldn't because you wouldn't get the grant .
I know what you mean though.

You would because the grant will be paid out based on your year 17/18/19 returns. Whatever the  amount of grant you receive will then be included in your year 21 returns😉

[G Griffin]

Depending on your average over 17/18/19.
But I agree, I missed the grant taking you up to 55k bit.