Higher rate tax band - things to be aware of?

lnoton said:
Say you put in 1k into the pension a month.
Pension provider gives you £200 (20%) at contribution.

You want the other 20%, so £200x12, from hrmc. So type in £2400.
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Sorry to be picky but £1000 personal contribution into a pension attracts £250 tax relief, not £200.
 
Hades said:
It's taxable income. I can't recall whether the bank already deduct tax when paying it to you. But they certainly don't deduct tax at 40%.
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Ref. Bank interest, higher rate tax payers have a £500 annual tax free interest allowance.

https://www.gov.uk/apply-tax-free-interest-on-savings

Regarding the annual pension contributions limit of £40k gross (employee/employer combined), you can use 3 years carry forward for unused allowances however the cap on this is that it cannot exceed your annual income in that year.

For example if you earn £60k in the financial year and haven't paid in to any pensions for the prior 3 years you are limited to this amount as total gross contributions, despite not having made any contributions in the prior three years (£120k) without triggering a 50% tax charge, from memory.

It's not really a situation many will find themselves in but in particularly lucrative years or where you receive a windfall or inheritance it's a good option to use prior year allowances but just remember there is potentially a lower ceiling capped at annual earnings.
 
BennyC said:
Ref. Bank interest, higher rate tax payers have a £500 annual tax free interest allowance.

https://www.gov.uk/apply-tax-free-interest-on-savings
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Technically you are still taxed on this, as any income earnt from interest is part of the adjusted net income calculation.

E.g. earn £110000, pay £10,001 pension - adjusted net income is £99999

SYKE

You earnt £3.54 in bank account interest, must be declared, income equals £100,002.54. Please pay back your £2k childcare allowance and you lose £1.25 of your tax free allowance so PIF some more tax money too.
 
I sit in the upper ranges of £100k. Sometimes, I have paid more in tax in one month than most earn in 3. That hurts. A lot.... But we got to pay back that COVID relief package somehow right :cry:
 
Question to those having moved into higher rate and no longer able to claim child benefit... what actually is the correct procedure to inform HMRC of the change? I found a form I could fill out to tell them that I no longer want to receive the money, and faced with a "from what date?" I wasn't sure so just put in my start date of my new job (which is next month). But since it's guaranteed our household will still breach the £50k threshold within this tax year I'm worried that they will consider the (one) payment they will have made to me this tax year to be fraudulent, or something. Anyone have any ideas?
 
uncle_rufus said:
Question to those having moved into higher rate and no longer able to claim child benefit... what actually is the correct procedure to inform HMRC of the change? I found a form I could fill out to tell them that I no longer want to receive the money, and faced with a "from what date?" I wasn't sure so just put in my start date of my new job (which is next month). But since it's guaranteed our household will still breach the £50k threshold within this tax year I'm worried that they will consider the (one) payment they will have made to me this tax year to be fraudulent, or something. Anyone have any ideas?
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It's not illegal or fraudulent to claim child benefit when someone in your household has income that exceeds £50k. It's perfectly acceptable to continue to claim it if you so choose.

If someone in the household does have income that exceeds £50k they'll be subject to the High Income Child Benefit charge. This is based on annualised income. So your one child benefit payment may be partially, or completely, clawed back through a tax charge depending on your income.

If you don't want to receive Child Benefit tell the Child Benefit office. You may still want to annually complete the forms if it gives the other partner a qualifying year for their National Insurance record (which impacts certain state benefits).

Tell HMRC after the end of the tax year of any child benefits received. They may ask you to complete a self-assessment, or they may not if they're being helpful and it's not a lot.

HMRC and other government departments aren't great at communicating with each other. HMRC aren't great at communicating internally either. So don't expect the child benefit office and HMRC to actually communicate effectively.
 
uncle_rufus said:
Question to those having moved into higher rate and no longer able to claim child benefit... what actually is the correct procedure to inform HMRC of the change? I found a form I could fill out to tell them that I no longer want to receive the money, and faced with a "from what date?" I wasn't sure so just put in my start date of my new job (which is next month). But since it's guaranteed our household will still breach the £50k threshold within this tax year I'm worried that they will consider the (one) payment they will have made to me this tax year to be fraudulent, or something. Anyone have any ideas?
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They'll automatically re-calc and ask for it back in April next year. Possibly sooner.
 
uncle_rufus said:
Question to those having moved into higher rate and no longer able to claim child benefit... what actually is the correct procedure to inform HMRC of the change? I found a form I could fill out to tell them that I no longer want to receive the money, and faced with a "from what date?" I wasn't sure so just put in my start date of my new job (which is next month). But since it's guaranteed our household will still breach the £50k threshold within this tax year I'm worried that they will consider the (one) payment they will have made to me this tax year to be fraudulent, or something. Anyone have any ideas?
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You don't want to stop receiving the money if you pay will be greater than 50k but less than 60k as you still get some if you are between those levels IIRC.
 
Thanks all, I think it sounds like what I've done is fine. I'm happy to not receive the money anymore as I genuinely don't need it - @OldKitMan it will be above 60k also. So long as I'm not going to get hit with a big fine or something (I think I have to be a lot more careful about the tax free childcare + 30 hours free childcare stuff as I do think if you utilise that when not eligible you do get stung)
 
uncle_rufus said:
Question to those having moved into higher rate and no longer able to claim child benefit... what actually is the correct procedure to inform HMRC of the change? I found a form I could fill out to tell them that I no longer want to receive the money, and faced with a "from what date?" I wasn't sure so just put in my start date of my new job (which is next month). But since it's guaranteed our household will still breach the £50k threshold within this tax year I'm worried that they will consider the (one) payment they will have made to me this tax year to be fraudulent, or something. Anyone have any ideas?
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Just remember it's not household, it's individual.

As someone that went via this a few years ago, We claimed when I was sub 60k, with doing tax returns and paying a percentage back at the end of the tax year.
Once I crossed the 60k threshold, filled in the form on the government gateway to say we no longer want to receive the money (which went into my wife's account), but we still wish to be "registered" or whatever the term is. The reason for this is my wife only works part-time, so she still gets her full NI contribution.

If you're concerned about being fined, just do a self-assessment at the end of the tax year.
 
Does anyone have a decent reliable link to an online calculator that can work out take home pay for 2022-2023?

I'm looking to input 2 potential end of year totals and see what the difference is.

TIA
 
Dirk Diggler said:
Does anyone have a decent reliable link to an online calculator that can work out take home pay for 2022-2023?

I'm looking to input 2 potential end of year totals and see what the difference is.

TIA
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www.thesalarycalculator.co.uk

The Salary Calculator - 2024 / 2025 Tax Calculator

The Salary Calculator tells you monthly take-home, or annual earnings, considering UK Tax, National Insurance and Student Loan. The latest budget information from April 2024 is used to show you exactly what you need to know. Hourly rates, weekly pay and bonuses are also catered for. Why not find...
www.thesalarycalculator.co.uk
 
There's new income tax rates inbound in Scotland for next year and those sites may not be updated with the details:

BandsBand nameRate
£14,733 - £25,688Scottish Basic Rate20%
£25,689 - £43,662Intermediate Rate21%
£43,663 - £125,140**Higher Rate42%
Above £125,140**Top Rate47%

Even less money in your pocket. Got to pay for indyref 2, 3, 4... somehow. :rolleyes:
 
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