Tax over 100k PAYE?

[plynchy]

Approaching the end of the fiscal year, and i'm nudging the nasty barrier for tax due to a load of o/t worked.

I've got the option of dumping a whack of next months pay into my pension (salary sacrifice) to keep me just under 6 figures, or just over depending what I get paid.

How detrimental is going over 100k by a few £k? From what I've read my allowance will be reduced for the following year as HMRC think this is now what you earn, which isn't always the case obviously.

I realise this is a very much a first world problem, but the less of my earnings I let the Government burn the better IMHO.

[Len Clifton]

Your marginal rate over £100k will be effective tax of 62%, up to £125k, then 47% beyond. (Includes NI)

[worsy]

Len Clifton said:

Your marginal rate over £100k will be effective tax of 62%, up to £125k, then 47% beyond. (Includes NI)

This plus you lose free childcare if that is a thing for you.

[plynchy]

Len Clifton said:

Your marginal rate over £100k will be effective tax of 62%, up to £125k, then 47% beyond. (Includes NI)

Exactly the info I was after, thanks. Looks like pension it is then.

[jinkster]

I wouldn't worry about the following tax year as you can go online and change what you're expecting to earn.

Dont forget too as if your paying pension you might already be below the 100k if your close.

[jinkster]

I wouldn't worry about the following tax year as you can go online and change what you're expecting to earn.

Dont forget too as if your paying pension you might already be below the 100k if your close.

[Stedman]

Sod that. If it’s ’a few £k’ definitely pop it in your pension!

[Cupid-stunt]

Actively manage it so that you don't go over £100k
Throw it into pension to save the govt getting more of it.

[plynchy]

It will be 4-5k over, tops.

Already been on to pensions people, large chunk of March salary will be going in there.

Crazy situation.

[The Leaper]

I have the same tax problem. However, being retired and in my 80s the pension option is not available. I just have to pay the tax at the increased rate, it seems.

Admittedly, "a nice problem".

R.

[Condi]

Cupid-stunt said:

Actively manage it so that you don't go over £100k
Throw it into pension to save the govt getting more of it.

This.

Although you can put money into your pension after you get your P60 at the end of the year, so if you do go above £100k it's not a massive issue to sort out, just a bit more faffing and paperwork than simply asking HR to dump it in directly as salary sacrifice at source.

Obviously you also need to have the money to hand to put into the pension, which is much harder if you've spent it already!

[Wololo]

The Leaper said:

I have the same tax problem. However, being retired and in my 80s the pension option is not available. I just have to pay the tax at the increased rate, it seems.

Admittedly, "a nice problem".

R.

There's gift aid if you want to get that tax bill down...

[The Leaper]

Wololo said:

The Leaper said:

I have the same tax problem. However, being retired and in my 80s the pension option is not available. I just have to pay the tax at the increased rate, it seems.

Admittedly, "a nice problem".

R.

There's gift aid if you want to get that tax bill down...

Yes, doing that.

R.

[POIDH]

plynchy said:

It will be 4-5k over, tops.

Already been on to pensions people, large chunk of March salary will be going in there.

Crazy situation.

Try being in Scotland. I'm happy to be earning £50k. Oh. Wait.

[edition]

Hi - I have a similar issue. Just got told I’m getting a bonus more than usual.

If I were to get paided a total of 110k, to keep within the 40% take range I presume I need to manually transfer 10k to my pension (I missed the deadline to get work to take it direct).

Once I’ve move that money into my pension I think my pension provider automatically add 20%? How do I get the other 40%?

Many thanks and hope you don’t mind me jumping into the thread.

Edited by edition on Wednesday 5th March 20:19

[Condi]

Self assessment tax form.

Although you only get the extra 20% to make 40%, not 20% and then 40%.... that would be nice though.

[Macneil]

edition said:

Hi - I have a similar issue. Just got told I’m getting a bonus more than usual.

If I were to get paided a total of 110k, to keep within the 40% take range I presume I need to manually transfer 10k to my pension (I missed the deadline to get work to take it direct).

Once I’ve move that money into my pension I think my pension provider automatically add 20%? How do I get the other 40%?

Many thanks and hope you don’t mind me jumping into the thread.

Edited by edition on Wednesday 5th March 20:19

The "other" 40% is actually 20%. You get 40% relief, you've had 20 automatically so you're owed 20.

Print a statement from your provider, write a simple letter claiming the relief to the address on the gov site and wait a few weeks.

ETA...HL have a template on their site.

Edited by Macneil on Wednesday 5th March 20:52

[Sheepshanks]

edition said:

If I were to get paided a total of 110k, to keep within the 40% take range I presume I need to manually transfer 10k to my pension (I missed the deadline to get work to take it direct).

As someone pointed out to the OP - have you allowed for any pension you're already paying?

[edition]

Yes I’ve taken my yearly normal pension contributions away from my total income and coming at about 115k after doing that.

So I pay 15k payment into my pension as an overpayment, they automatically put 3k extra (20%) and I can claim another 20% I.e 3k which I will get a cheque or bank payment from hmrc after making a claim.

Apologies for the stupid questions!

[Sheepshanks]

edition said:

Yes I’ve taken my yearly normal pension contributions away from my total income and coming at about 115k after doing that.

So I pay 15k payment into my pension as an overpayment, they automatically put 3k extra (20%) and I can claim another 20% I.e 3k which I will get a cheque or bank payment from hmrc after making a claim.

Apologies for the stupid questions!

If you pay £15K in it gets grossed up to allow for 20% tax so HMRC will add £3750. You claim £18750 on your self assessment and it works out what tax rebate you're due. The rebate should be something like £7K ish if it all falls in the £100K to £125K bracket and you've got a standard tax code, no other taxable benefits etc etc.


ETA: Of course the above means that to drop your £115K to £100K you "only" have to actually pay £12K into your pension as it gets grossed up to £15K.

Edited by Sheepshanks on Wednesday 5th March 22:29