Higher rate questions.

tomstickland

Tax is one area that I've not looked into properly yet. I currently have a salary that's a a few K below the higher rate tax point. It is possible that in the next year or two then I'll broach the threshold.

Can you point me to a basic guide to income tax rules?

Also, can I take some simple steps to keep my salary below the threshold. For example via pension contributions, or could I negotiate with the company to see if there are any more tax efficient options?

Bordera

Hi Tom

The financial pages of the Sunday papers are probably the best place to start to familiarise yourself with tax rules. They do it in bite-sized chunks

You get basic rate tax relief on pension contributions before you pay them so you would only get additional relief on them if you are a higher rate taxpayer, same thing goes for charitable contributions. In effect they will increase your basic rate threshold.

Where possible avoid your investment income taking you into higher rates (All of your income is added together to calculate your tax band). Keep to tax efficient investments where you can.

tomstickland

OK thanks, looks like I should move £3K of savings into an investment ISA before April then.
I've already got a £3K cash mini ISA.
Then shove another £3K into anoth cash ISA after April.

angelica

Can somebody remind me what expenses are tax deductible for higher rate tax payers, e.g. National Trust subscriptions etc
Personal Income Tax is not my strongest subject.
Thanks

lisyloo

You can get 40% tax relief on your pension contributions (it's usually given at 22% on your pension so you can claim the extra).

You can also claim the extra tax relief on charity donations (again it's the difference betwen basic and higher). I don't think subscriptions count.

You can also claim for things that you would ONLY use for work e.g. cost of a briefcase. But it has to be strictly only for work use and I wouldn't advise taking the mickey with the tax office.

Savvy_Sue

lisyloo wrote:

You can also claim the extra tax relief on charity donations (again it's the difference betwen basic and higher). I don't think subscriptions count.

But the National Trust might ... Yup, have just checked their site and you can tick the Gift Aid box. Always worth checking this: the Scouts allow you to Gift Aid subscriptions as well!

angelica

Thank you Savvy_Sue and lusyloo. I guess I was unclear in my question, it is not about payments to charity or claiming work expenses.

Someone few years ago told me that higher rate payers can deduct expenses such as tickets to visit historical places (e.g. London Tower), National trust subscriptions (you are right this most likely will be a Gift Aid) etc, but I cannot find this info anywhere and do not remember who told me that to ask again.

ManAtHome

Remember you only get taxed at 40% on the bit which is over the threshold, not on the whole lot..