£100k earnings, tax free childcare, 30 hours free and bonus
Discussion
Hello, in the fortunate position that I now earn more than £100k. This makes me ineligible for the tax free childcare (£2k per annum) where you can get up to £500 every 3 months (up to £2,000 a year) for each of your children. I am also now ineligible for the 30 free hours.
From the gov.uk website:
If you or your partner have an expected ‘adjusted net income’ over £100,000 in the current tax year you will not be eligible. This includes any bonuses you expect to get.
Daughter is 3.5 years old. Birthday in late September means she will still be at nursery for another 1.5years.
My question is what do I need to do to become eligible?
Can I put additional contributions into my salary sacrifice pension to get under the £100k limit?
I also get a bonus once per year. I don’t know the exact amount until around a month before (normally £25kish).
So say I earn £106k + £25k bonus. £131k total. Do I need to plan to put an additional £31k into my pension? What if my bonus is higher? I have seen people mention a SIPP. So just put £6k into pension and then bonus into SIPP?
Also how do salary sacrifice car payments impact this?
Thanks In advance - not much online as they clearly don’t want people trying to get around this.
From the gov.uk website:
If you or your partner have an expected ‘adjusted net income’ over £100,000 in the current tax year you will not be eligible. This includes any bonuses you expect to get.
Daughter is 3.5 years old. Birthday in late September means she will still be at nursery for another 1.5years.
My question is what do I need to do to become eligible?
Can I put additional contributions into my salary sacrifice pension to get under the £100k limit?
I also get a bonus once per year. I don’t know the exact amount until around a month before (normally £25kish).
So say I earn £106k + £25k bonus. £131k total. Do I need to plan to put an additional £31k into my pension? What if my bonus is higher? I have seen people mention a SIPP. So just put £6k into pension and then bonus into SIPP?
Also how do salary sacrifice car payments impact this?
Thanks In advance - not much online as they clearly don’t want people trying to get around this.
Edited by Diplomatico on Tuesday 22 March 18:52
Adjusted net income is here: https://www.gov.uk/guidance/adjusted-net-income
Charitable donations and pension contributions are the most obvious.
Maximum pension contributions (including those made by your employer) is 40K at that income level, and you can use previous years if you didn't use it all. (If you total income goes above £200K, the maximum pension contributions starts to decrease).
Charitable donations and pension contributions are the most obvious.
Maximum pension contributions (including those made by your employer) is 40K at that income level, and you can use previous years if you didn't use it all. (If you total income goes above £200K, the maximum pension contributions starts to decrease).
HRL said:
What next? Tips on tax dodging?
You can clearly afford childcare, yet you still want to rinse the system instead? Baffling and immoral IMO, but entirely up to you I suppose.
He's paying a literal fortune in tax, making up the 10% of the UK population that supports the 90% and yet he's rinsing the system? Do you know how ridiculous that sounds? You can clearly afford childcare, yet you still want to rinse the system instead? Baffling and immoral IMO, but entirely up to you I suppose.
The difference between a household bringing in 120k and a household bringing in 30k is farfar closer than you obviously realise.
Sure no one on 120k is going to starve, but neither do they take home enough to stop worrying about money (until later in life if they are lucky enough to pay off their mortgage maybe)
Certainly on 120k in the south east you aren't sending your kids to private school without a mahoosive bursary.
To couple, anyone earning that money will also have worked their arses off to get there.
The one area I hate about this country is the petty, stupid people who believe that successful people are only successful because they've cheated.
PugwasHDJ80 said:
The difference between a household bringing in 120k and a household bringing in 30k is farfar closer than you obviously realise.
(Snip)
The one area I hate about this country is the petty, stupid people who believe that successful people are only successful because they've cheated.
Oh feck off. Until last year I was a higher tax payer, my wife still is, but neither of us have tried to rinse the system. (Snip)
The one area I hate about this country is the petty, stupid people who believe that successful people are only successful because they've cheated.
We’re now on a single salary between us and could do with more money but we still don’t play the system.
I’ll step down from my soap box now but to claim it’s morally acceptable or the right thing to do is utter BS.
Probably very tax efficient to make additional pension contributions to work or setup a SIPP as you say.
You’ll need to do a SA return.
Remember the marginal tax rate between 100-125k is jokes (60%), so whapping it all into a pension, if you want to do that, makes a lot of sense.
Remember you only get pension relief on 40k a year.
(You can track back to previous years too if you didn’t put 40k in those, I don’t think that would affect your earnings this year though, but check that)
We’ll done - good future planning and efficient use of income it you’re wanting to invest in pension
Good luck!
You’ll need to do a SA return.
Remember the marginal tax rate between 100-125k is jokes (60%), so whapping it all into a pension, if you want to do that, makes a lot of sense.
Remember you only get pension relief on 40k a year.
(You can track back to previous years too if you didn’t put 40k in those, I don’t think that would affect your earnings this year though, but check that)
We’ll done - good future planning and efficient use of income it you’re wanting to invest in pension
Good luck!
HRL said:
PugwasHDJ80 said:
The difference between a household bringing in 120k and a household bringing in 30k is farfar closer than you obviously realise.
(Snip)
The one area I hate about this country is the petty, stupid people who believe that successful people are only successful because they've cheated.
Oh feck off. Until last year I was a higher tax payer, my wife still is, but neither of us have tried to rinse the system. (Snip)
The one area I hate about this country is the petty, stupid people who believe that successful people are only successful because they've cheated.
We’re now on a single salary between us and could do with more money but we still don’t play the system.
I’ll step down from my soap box now but to claim it’s morally acceptable or the right thing to do is utter BS.
I'm playing the system.
Not on such a high salary, but I'm putting everything into my pension above £50k because I'm 55 and at 60, I intend to take 25% of my pension in a tax free lump sum, and retire.
Much earlier in my career, I put everything above £25k into pension, so that my kids got EMA in sixth form and a full grant at university which opened the doors to tax free bursaries for them.
My spreadsheet working it all out was impressively inaccurate.
Not on such a high salary, but I'm putting everything into my pension above £50k because I'm 55 and at 60, I intend to take 25% of my pension in a tax free lump sum, and retire.
Much earlier in my career, I put everything above £25k into pension, so that my kids got EMA in sixth form and a full grant at university which opened the doors to tax free bursaries for them.
My spreadsheet working it all out was impressively inaccurate.
stuthe
said:
said: Probably very tax efficient to make additional pension contributions to work or setup a SIPP as you say.
You’ll need to do a SA return.
Remember the marginal tax rate between 100-125k is jokes (60%), so whapping it all into a pension, if you want to do that, makes a lot of sense.
Remember you only get pension relief on 40k a year.
(You can track back to previous years too if you didn’t put 40k in those, I don’t think that would affect your earnings this year though, but check that)
We’ll done - good future planning and efficient use of income it you’re wanting to invest in pension
Good luck!
It’s actually 62% and for the next tax year it will be 63.25%You’ll need to do a SA return.
Remember the marginal tax rate between 100-125k is jokes (60%), so whapping it all into a pension, if you want to do that, makes a lot of sense.
Remember you only get pension relief on 40k a year.
(You can track back to previous years too if you didn’t put 40k in those, I don’t think that would affect your earnings this year though, but check that)
We’ll done - good future planning and efficient use of income it you’re wanting to invest in pension
Good luck!
40%+20% loss of tax free allowance + 3.25% NI =63.35%
Drop it into your pension. Drop the whole £40k into it and do it every year. This benefit will go at some point likely sooner than later so max out now (I am for this very reason).
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