Tax efficiency help 2023-2024

[RTaylor2208]

I know there are quite a few knowledgeable folks on here when it comes to tax and I need some help keeping me out of the 100-125k tax bracket. First world problems, and I do feel very fortunate to even have this question.

This is effective from April 1st 2023.

Resident in Scotland.
Salary: 100K PAYE
Salary Sacrifice Workplace Pension Personal Contribution: 15k p/a
Bonus Sacrifice to Workspace Pension: 15K p/a
Employer Pension Contribution 9K p/a
Taxable Benefits: £430 p/a
Equity Vesting: £10.4K p/a ( future years it's going to be much more and more of a tax headache, reaching £42K p/a)

If my sums are correct, this should set my taxable income at £85,260 p/a keeping me well under the 100K threshold? It should also keep me within the £40K per annum pension contribution limit, I think.

[Dave350]

RTaylor2208 said:

Bonus Sacrifice to Workspace Pension: 15K p/a
Equity Vesting: £10.4K p/a ( future years it's going to be much more and more of a tax headache, reaching £42K p/a)

If my sums are correct, this should set my taxable income at £85,260 p/a keeping me well under the 100K threshold? It should also keep me within the £40K per annum pension contribution limit, I think.

I'm not a tax expert but have a similar scenario and desire to avoid the £100k taxable limit to avoid losing childcare allowances and a high effective tax rate and hopefully a tax expert can confirm, but wouldn't it be better to not sacrifice the additional £15k bonus into the pension taking you as close as possible to £100k taxable income, meaning that your pension contribution would be circa £25k and leave £15k per annum spare to roll over which e.g. in 3 years time, you could then put your rolled over limit into offsetting the increased equity vesting amount which will be a headache in a few years (You haven't specified the timeline for that so just an assumption)

[RTaylor2208]

That's a good point that I hadn't considered. Currently, I am allocated $50K of equity each year (assuming the company continues to do well), this vests over a 4 year period, in 3 years time that will mean the full $50K vesting each year due to the previous years becoming available to sell, based on todays exchange rates is approx £42K.

I could hold onto the 15K bonus but my feeling is it's better getting the full 15K into the pension plus any growth it may achieve than taking home approx half that after deductions.

As of the end of this tax year I do have approx £40k of unused pension allowance from the previous 3 years that could be used.

[Jockman]

RTaylor2208 said:

As of the end of this tax year I do have approx £40k of unused pension allowance from the previous 3 years that could be used.

You will lose one of those years at the end of this tax year and start a new 3 year cycle. Remember you must fill the current year before going back to the third year.