Keeping Net Adjusted Income under 100k
Discussion
Sorry for posting this, I know some people get annoyed when posts like this appear as it appears I am super rich, when in fact, I live in the south east and am far from rich.
So in March my net adjusted income is going to tick over 100k because of a bonus. I am not going to be able to put the bonus into pension at source (already spoken to payroll and they have ruled it out), so once I am paid it, can I pay the amount of money that takes me over 100k straight into something else to bring my net adjusted income below 100k? Basically I don't want to lose the 30 free hours childcare we get.
Any help appreciated.
So in March my net adjusted income is going to tick over 100k because of a bonus. I am not going to be able to put the bonus into pension at source (already spoken to payroll and they have ruled it out), so once I am paid it, can I pay the amount of money that takes me over 100k straight into something else to bring my net adjusted income below 100k? Basically I don't want to lose the 30 free hours childcare we get.
Any help appreciated.
MrSmith901 said:
Basically I don't want to lose the 30 free hours childcare we get
This might be the issue. I am not a tax expert (and it may be worth speaking to one) but I have done a bit of research into this.The only ways I could find to get around it were a) pay it directly into your pension (which has been ruled out), b) pay it into a SIPP and then claim the tax back on your self assessment (and I don't know how this would work for Childcare threshold calcs) or c) find another salary sacrifice option (eg. car, charitable giving, railcards - whatever you can find on your employer's benefits system) and use that over the course of a year to try and offset your bonus.
The whole thing is ridiculous really as it removes any real incentive to try and progress.
Good luck!
Edited by LennyM1984 on Friday 26th January 10:43
Thanks for your replies all.
I will look into the SIPP option.
Problem is my yearly bonus is an unknown amount so trying to plan for it is problematic.
Also, because I have never gone over £100k before, I have never had to do a self assessment, so that is going to be another ball ache to deal with.
I will look into the SIPP option.
Problem is my yearly bonus is an unknown amount so trying to plan for it is problematic.
Also, because I have never gone over £100k before, I have never had to do a self assessment, so that is going to be another ball ache to deal with.
You can pay into the sipp right up until end of financial year so from whenever last payroll is in March is plenty time to get rid of the surplus earnings, self assessment takes 15minutes & you have to do one once you earn over 100k anyway.
Edited by Edible Roadkill on Friday 26th January 16:39
Edible Roadkill said:
You can pay into the sipp right up until end of financial year so from whenever last payroll is in March is plenty time to get rid of the surplus earnings, self assessment takes 15minutes & you have to do one once you earn over 100k anyway.
Also my understanding (I'm not a tax advisor) is as long as a SIPP Year has been opened with even £1 contribution in the tax year, you can then use the allowance from those year sif in a future year you have more than the future years allowance. i.e. you can backdate SIPP contributions but only if you have an open year to backdate it to. Hence even in lean years I make sure to put say £100 into my SIPP.Edited by Edible Roadkill on Friday 26th January 16:39
I woudl push back on your payroll department, take it higher if need be, can't see any reason why they coudln't contribute at source unless your employee contract forbids it or it's a company wide policy in writing somewhere that they can point to. I would want a very robust reason, not just a "no", if I was going to lose 30 hours free childcare because of it OR a payrise equal to 30 hours childcare to cover the loss!
In fairness, they are:
MrSmith901 said:
Sorry for posting this, I know some people get annoyed when posts like this appear as it appears I am super rich, when in fact, I live in the south east and am far from rich.
But earning over £100k doesn't automatically mean you're rich. The staggering reality nowadays is that £100k, whilst very, very good, is not a huge wage.r44flyer said:
GT03ROB said:
They aren’t.
Though you may wish to define what you think is rich.
It can never be done. Everyone's opinion is different and everyone has different outgoings and a different standard of living. Though you may wish to define what you think is rich.
..
r44flyer said:
GT03ROB said:
They aren’t.
Though you may wish to define what you think is rich.
It can never be done. Everyone's opinion is different and everyone has different outgoings and a different standard of living. Though you may wish to define what you think is rich.
He does earn more than 96% of the population though...
BoRED S2upid said:
r44flyer said:
GT03ROB said:
They aren’t.
Though you may wish to define what you think is rich.
It can never be done. Everyone's opinion is different and everyone has different outgoings and a different standard of living. Though you may wish to define what you think is rich.
He does earn more than 96% of the population though...
BoRED S2upid said:
And shouldn’t really need free childcare.
But why not claim it? Lord knows enough tax is paid to want something back...OP - can you adjust your pension amount month-on-month? If so, max your pension contributions from your regular salaried income to wipe out the bonus before year end. You can contribute as much as keeps you above the minimum wage.
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