About to go over 40% tax bracket by £1000 - help on how to avoid it

sarahlouise210

westernpromise wrote:

There could be a relatively innocent explanation, like relatives using his ISA allowances. If they gift you the money and survive 7 years it's yours tax free IIRC.

Saeed has said that he has had "money and houses transferred into his name..back and forth!" You do not need to declare Isa's..... there is more to it!

nearlyrich

sarahlouise210 wrote:

If you claim high expenses you will get a tax return..other than that you do not have to worry.

I claim high expenses but they told me last year they would not be asking for a tax return this year. It isn't terribly hard to fill in a return on line in my opinion.

westernpromise

sarahlouise210 wrote:

Saeed has said that he has had "money and houses transferred into his name..back and forth!" You do not need to declare Isa's..... there is more to it!

I missed the bit about the houses.

We do get some right cards on here, don't we? There was some guy on the eBay board recently couldn't figure out why his eBay account had been suspended. He'd built a great feedback score - buying and selling nothing but "e-books" for pennies about 50 times, among a group of 2 or 3 similar people all incestuously creating feedback for each other. Then he started listing 5 grand plasma TVs for sale, and bafflingly, those folks at eBay suspended his account!

He just couldn't figure out how eBay had seen through his cunning attempted fraud...and so he came here for help.

Still don't see Saeed's problem. If you even think that your activities might create a liability to tax, you are supposed to volunteer a tax return just in case, and the Revenue will tell you if you are right.

He seems to think that he only has a problem if the Revenue send him a return, and that as long as this doesn't happen he's fine.

If they do, he should just fill it in dishonestly with false information. It's no different from what is going on now.

Note that I don't recommend this course of action. It's just that he doesn't seem to have cottoned on to the fact that by not submitting a return, he has already lied to the Revenue by omission. So sending one in with explicit lies on it amounts to the same thing. It's no worse than what he's already done, so if he is comfortable with that, he may as well do this.

Many crooks are crooks because they're just too thick to make an honest living and they figure it's easier to make a dishonest one. The trouble is...you still have to be minimally smart to get away with making a dishonest one.

sarahlouise210

nearlyrich wrote:

I claim high expenses but they told me last year they would not be asking for a tax return this year. It isn't terribly hard to fill in a return on line in my opinion.

It depends what you class as high expenses... if your expenses are over £2500 per year you should complete a tax return. I do not think that it is in question here if it is difficult to complete a tax return - I agree with you it is not difficult. The reason completing a tax return would be difficult for Saeed is that he has income that he has not and does not want to declare. He has income that is in his name but not his income..that is what we know about! No doubt there is even more to the story.

Western promise makes some good points - Saeed thinks that as long as he does not get a tax return he is home free! Not the case. If discovered he could be facing .... fines and penalties for not declaring the interst in his £30,000 savings (this is bound to have topped hime over 40% as he is so borderline with his income) .. countless charges re fraudulently havng income in his name that does not belong to him. Will he take the rap or bring down the numerous so called friends who have misapproprated their funds in this way ? Even worse .... could they have been paying him for taking these assets off their hands (and their benefit,tax credit, housing benefit etc claims..??) oooooohhhhhhh:eek: no wonder Saeeed is worried...I would not want to be in his position! (apart from having £30,000 in th bank of course!)

jamesebaker

Remember, you only get taxed at 40% on any earnings over 31,400, anything before that is at 22%. So if you earn 32,400, only £1,000 will be taxed at 40% and the rest will be at the lower rate.

Debt_Free_Chick

jamesebaker wrote:

Remember, you only get taxed at 40% on any earnings over 31,400, anything before that is at 22%. So if you earn 32,400, only £1,000 will be taxed at 40% and the rest will be at the lower rate.

Don't forget your personal allowance. You add the personal allowance on to the thresholds to work out the gross income at which you start to pay tax. So, if you have the full single person's allowance this year, you will only pay 40% tax once your gross income goes over £37,295.

You're better off doing the calculation the way that HMRC do it - take gross taxable income, deduct your personal allowance. Then deduct £2,090 (but calculate 10% tax on £2,090); then deduct £32,400 (but calculate tax at 22% on that slice i.e. the amount between £2,091 and £32,400); the remainder, if any, calculate tax at 40%. Add the slices of tax up and that's the total

stevenclarkuk

I don't get a tax return any more even though I have hit the 40% tax bracket. As soon as I stopped having 2 jobs with shares and stuff and back to one job, no hassle the Inland revenue told me I didn't have to fill one in anymore...

As for tax returns... I used to hate filling in my tax return and ended up with loads of penilties. Until I started doing it online... It's an absolute doddle. Done in 10-15 minutes.

stevenclarkuk

I meant to say... If you don't want to pay 40% on your last £1000, one option is to put the £1000 toward a company share scheme where the amount going to the share investment each month is deducted before tax. However, your take home pay would reduce by £600 a year and you might have to keep the investment for 3 to 5 years to be fully tax free...

sarahlouise210

stevenclarkuk wrote:

I meant to say... If you don't want to pay 40% on your last £1000, one option is to put the £1000 toward a company share scheme where the amount going to the share investment each month is deducted before tax. However, your take home pay would reduce by £600 a year and you might have to keep the investment for 3 to 5 years to be fully tax free...

I dont think you could have read the whole thread ! Not wanting to pay 40% on his final £100 is the last of Saeeds worries!!:rolleyes:

ddclutch

Saeed,
Setting aside the complications that others have focussed on, if you want to avoid paying 40% on that top £1000, then you could donate to a charity and sign a Gift Aid declaration. You will still pay 40% initially but the charity can then claim back 22% on top of your donation, and you can claim the 18% as a tax refund.