Cyclone
24-02-2006, 19:21
I just happen to be looking into NI rates and income tax boundaries (since i've got a new job and like to check that i'm being taxed correctly).
I hadn't realise that the boundaries for where income tax rises to 40% and national insurance contributions drop from 11% to 1% happen to almost exactly coincide.
So in the past i'd always assumed that when your income finally goes over that magic boundary into the 40% bracket that your takehome went up by <50% of any subsequent payrise.
But it's not as bad as it seems. Income tax goes up by 18%, but NI goes down by 10%, so overall you're only 8p in the pound worse of above the boundary than you are below it.
So there you go, now we know.
I hadn't realise that the boundaries for where income tax rises to 40% and national insurance contributions drop from 11% to 1% happen to almost exactly coincide.
So in the past i'd always assumed that when your income finally goes over that magic boundary into the 40% bracket that your takehome went up by <50% of any subsequent payrise.
But it's not as bad as it seems. Income tax goes up by 18%, but NI goes down by 10%, so overall you're only 8p in the pound worse of above the boundary than you are below it.
So there you go, now we know.