High rate tax

[Gammawolf]

What threshold?

The basic rate band is £37,700, the tax code or personal allowance are irrelevant to that.

They're doing self-assessment, the likelihood is other sources of income.

The other likelihood is (not in this case but in general) if you are paying into a SIPP because you don't like your company scheme then you require self assessment as you don't get automatic relief of 40%, only 20%.

 

[Dirk Diggler]

The other likelihood is (not in this case but in general) if you are paying into a SIPP because you don't like your company scheme then you require self assessment as you don't get automatic relief of 40%, only 20%.

This is a great point to make, because not all companies deduct as salary sacrifice. My company paid into a L&G scheme previously and I had to claim the additional relief via self assessment every year until they switched to their own company scheme which is deducted on salary sacrifice basis.

I can't actually remember how I realised they were deducting in this way (probably a forum post like this), but it was a nice wee lift as I claimed for 5 years backdated the first time I claimed.

 

[ci_newman]

The other likelihood is (not in this case but in general) if you are paying into a SIPP because you don't like your company scheme then you require self assessment as you don't get automatic relief of 40%, only 20%.

Even if you are paying into a pension via your employer, if it's an auto-enrolment pension then you should be doing a self assessment if you're a higher rate tax payer. It is only salary sacrifice schemes that don't need to worry about self assessment IIRC.

 

[throwaway4372]

The problem is it's not always clear what scheme you're in, especially when you're young and don't really understand any of this.

I think I've been on salary sacrifice the whole time, so it's probably okay, but have no idea how to check historical pensions (including pensions I no longer have, and companies which no longer exist) or whether anything could be done if I found one wasn't.

 

[Dirk Diggler]

The problem is it's not always clear what scheme you're in, especially when you're young and don't really understand any of this.

I think I've been on salary sacrifice the whole time, so it's probably okay, but have no idea how to check historical pensions (including pensions I no longer have, and companies which no longer exist) or whether anything could be done if I found one wasn't.

Your payslip will tell you how it's paid. If it's deducted from your top line then it's salary sacrifice and will show as a negative payment in the same group as your earned payments.

 

[Gammawolf]

Even if you are paying into a pension via your employer, if it's an auto-enrolment pension then you should be doing a self assessment if you're a higher rate tax payer. It is only salary sacrifice schemes that don't need to worry about self assessment IIRC.

Yep, probably could have worded it a bit better thats the other half if you're not on SS - Just thought i'd mention the pension aspect as its likely the biggest reason most people would do a self assessment and given inflation and the government’s stealth tax until 2028 its more and more relevant to an increasing amount of people!

 

[Gixer]

I forgot this when I wrote my comment about it being 2 to 3 years before I enter the higher tax band. It'll be way more as my pension is deducted from my monthly gross reducing my taxable pay. I think that is what you're describing as payment by salary sacrifice. So whilst my salary is 47.5k a year my taxable is way lower due to the pension deductions lowering my gross earnings for the year.

 

[Dirk Diggler]

I forgot this when I wrote my comment about it being 2 to 3 years before I enter the higher tax band. It'll be way more as my pension is deducted from my monthly gross reducing my taxable pay. I think that is what you're describing as payment by salary sacrifice. So whilst my salary is 47.5k a year my taxable is way lower due to the pension deductions lowering my gross earnings for the year.

Yep, your taxable pay will be lowered and this is salary sacrifice, and you wouldn't need to think about reclaiming any "lost" allowance for anything below £100k.