Higher rate tax band - things to be aware of?

CapitalOne said:
Lobbing it into a pre-tax pension makes a lot of sense (obv. there is a limit and not all companies offer this)
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That's what a lot of people do. A lot of HR depts/companies wouldn't have issue with it as I think it helps them out too in terms of costs? Or is that only up to a point?

I'm pension focused at the moment, 25% goes into it at the moment for me. Probably too much but it seems tax efficient for me.
 
NotAGolf said:
I'm due to start a new job soon which will push me into the higher rate tax band.

There's a few things I've stumbled across recently that I didn't know previously, so was wondering if anyone else had any advice regarding tips, or anything else to be aware of? The things I recently learned are:

- I will likely need to complete a self assessment tax form to claim for the additional 20% tax relief on my pension contributions (a salary sacrifice scheme is not available)

- I need to opt out of child benefit, as the amount I will earn is above the threshold

- I no longer qualify for marriage allowance

In case it makes a difference. I'm full time employed and will pay via PAYE.
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Do you plan on keeping your adjusted net income below £100k? (retain childcare benefits?)

Get yourself a HRMC tax account if so, and when your firm/HMRC decide your expected pay for the year, you are able to go in and change it back down to 100k.

Maccapacca said:
I need to also look at wfh benefit as well this year both me and the missus have been at home for the past two years.
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HMRC made it crazy simple. If you don't do self-assessment you can just use the wizard they've created on your HMRC account. If you do do self assessment it is a tick box IIRC. You get 2019 for free as well IIRC, so you should get a decent refund (3 years total potentially).
 
Maccapacca said:
If someone offered you a £30k payrise from 95k to 125k you’d think it’d change your life. It’s like £50 a day take home. Ridiculous.

I need to also look at wfh benefit as well this year both me and the missus have been at home for the past two years.
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Its such a stupid system, unless you going to be making 200k plus its easier to work less and keep your adjusted income to under 100k, this is even more so if you have a child aged 3 to 5 as then you don't get 30h free child care or the 20% discount on child care when you make over £100k.

The best way is to make £140k, put £40k in a sipp each year, pay tax on £100k which will give you a take-home pay of around £5.5k per month in the last financial year
 
Hades said:
Yes you will be asked to complete a self assessment each year. So make sure you keep records of salary, benefits, profits from shares, bank interest, etc.

For self assessment make sure you complete it by 31st Dec so any further tax can be taken by tax code. If you wait until the deadline of 31st Jan you may need to pay it as a lump sum.
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You need a tax return on 100k plus. Not 40% tax bracket
 
Simon said:
You need a tax return on 100k plus. Not 40% tax bracket
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I was first asked to complete one when I hit 40%. Then a few years later they wrote to me again to say no more need. Then after a few more years they asked again.
 
Earning between 50 and 60k is an enormous marginal tax rate. 40% PAYE, 3.25% NI, something like 11% child benefit claw back on the first child and another 7% on any additional kids, and potentially 9% student loan.

As a result, anything to reduce that is worth a think about. Pension contributions help. I'll be buying a bike on cyclescheme: effective cost is around £400 for a £1000 bike. Make sure to claim WFH allowance on your tax return.
 
Don't forget to record all gift aid donations you may make, this will increase your basic rate tax band. No requirement to file a self assessment until your income is 100k plus. Pension contributions will also increase your basic rate tax band. If your income is 60k plus, you will need to repay all child benefit (sliding scale between 50k - 60k). It still may be worth claiming however, as it keeps your child in the national insurance system moving forward, I believe. Finally, look at how you supply your services as beyond a certain level it may be beneficial to set up as a Ltd Co, although IR35 rules will need to be a consideration.
 
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