Higher rate tax band - things to be aware of?

What really winds me up about the CB stuff is that is both of you earn just under the £50k each, then you get the full amount without having to pay anything back.
If one of earns over £50k and the other nothing, then you start paying back on the sliding scale. Who came up with that idea, ridiculous.
 
Dirk Diggler said:
If you're on salary sacrifice then it will all be taken into account.

Example
- you earn £100k
- you pay £10k into your pension via salary sacrifice
- your P60 will show taxable pay as £90k
- all your payslips will show taxable pay as (pay - salary sacrifice)
- you will enter £0 for pension contributions on the self assessment form
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I thought the salary sacrifice reduced the gross amount? As in HMRC would have no idea what the base salary is. I haven't looked at my payslips for a while so would need to see if that is the case.
 
Semple said:
I thought the salary sacrifice reduced the gross amount? As in HMRC would have no idea what the base salary is. I haven't looked at my payslips for a while so would need to see if that is the case.
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Salary sacrifice is asking your employer to pay you directly 90k, not 100k. They then top up your pension 10k. The benefit is you and your employer save on NI.

Salary sacrifice is different to just paying pension from your gross.
 
Thanks for the responses above... this year is a bit of a mess because of changing jobs mid-way through May so I don't actually have my final payslip (comprising ~half of May) and then my pay at the new place has been a little bit inconsistent because of things like enrolment in the pension not kicking in immediately. I immediately ceased the child benefit after April (my last full month at the previous job) so haven't received any since then - it's the Tax Free Childcare which I'm worried about because we've been making full use of that through the whole year. The threshold for that is a lot higher (great problem to have, I know) but in theory in a "normal" year I would likely be over it by a little bit especially once bonus is factored in - maybe I'll be okay this year due to it only being 10.5 / 12.0 months worked, but I'm not sure and I don't want to get stung
 
uncle_rufus said:
Thanks for the responses above... this year is a bit of a mess because of changing jobs mid-way through May so I don't actually have my final payslip (comprising ~half of May) and then my pay at the new place has been a little bit inconsistent because of things like enrolment in the pension not kicking in immediately. I immediately ceased the child benefit after April (my last full month at the previous job) so haven't received any since then - it's the Tax Free Childcare which I'm worried about because we've been making full use of that through the whole year. The threshold for that is a lot higher (great problem to have, I know) but in theory in a "normal" year I would likely be over it by a little bit especially once bonus is factored in - maybe I'll be okay this year due to it only being 10.5 / 12.0 months worked, but I'm not sure and I don't want to get stung
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Create a tax account with HMRC and you can see all payments and what your current gross is.
 
fullspizz said:
What really winds me up about the CB stuff is that is both of you earn just under the £50k each, then you get the full amount without having to pay anything back.
If one of earns over £50k and the other nothing, then you start paying back on the sliding scale. Who came up with that idea, ridiculous.
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This drives me mad.
Couples at work are bringing in way more money than me between them.
I do over time etc... Earn over 50k as a single earner to provide for our family, then loose my marriage allowance, pay higher tax and loose child benefit.
What a system......
 
dLockers said:
Salary sacrifice is asking your employer to pay you directly 90k, not 100k. They then top up your pension 10k. The benefit is you and your employer save on NI.

Salary sacrifice is different to just paying pension from your gross.
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Yeah I understand that bit, but the number reported to HMRC would be 90k wouldn't it? They wouldn't actually know your base salary was 100k. I'd imagine 90k is too high for any child benefits, but for the sake of the example they would base it on your 90k gross rather than your 100k base salary.
 
Semple said:
Yeah I understand that bit, but the number reported to HMRC would be 90k wouldn't it? They wouldn't actually know your base salary was 100k. I'd imagine 90k is too high for any child benefits, but for the sake of the example they would base it on your 90k gross rather than your 100k base salary.
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In the example Dirk gave though, the person was getting paid 100k gross and then paying 10k into pension. HMRC would see 100k gross pay and 90k 'adjusted net pay'.

You get tax free childcare/2k a year if you earn up to 100k adjusted net. So for e.g. you can earn 170k gross and put 70k into your pension and it's all good. HMRC would see both numbers but benefit is attached to adjusted net.

In a salary sacrifice scenario HMRC would just see gross/adjusted net as the same value.
 
Semple said:
I thought the salary sacrifice reduced the gross amount? As in HMRC would have no idea what the base salary is. I haven't looked at my payslips for a while so would need to see if that is the case.
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Yes, agreed. That's what I meant although it looks like I didn't word it well.

Point 1 - you earn 100k
Point 3 - your P60 will show taxable pay as £90k

HMRC will have no idea whether you contributed 10k or 50k to your pension via salary sacrifice - all they know is that you're liable for tax deductions on 90k.
 
Well now the LTA limit has been increased as well as yearly contributions, now's the time to capitalise on it if you're lucky enough to be in that position.
 
throwaway4372 said:
Even if labour just reverses that change? Isn't that just getting baited into being taxed?
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If you're a higher rate payer now, you're saving tax at a higher rate now, presumably because you're making a substantial income. When you come to draw your pension, you (currently) get the first 25% tax free, but also your total income is more likely to be at a lower level when you come to actually draw the pension. Odds are you will pay tax at a lower rate when you come to draw it, so it's beneficial to pay into a SIPP as a higher rate payer if you can, and also if you don't need access to the money now.
 
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