Personal allowance lost over £100k

SGM_2

Thread withdrawn.

fengirl_2

This is laid down in the Finance Act - there is nothing your employer can do. It amazes me that someone on your level of salary doesn't take time to understand the tax system, or at elast employ an accountant to do it for him/her.
I suspect not many people will have much sympathy for you!

[Deleted User]

IMAO Sounds a tad greedy seeing as so many people may only get a total of £540 per month in wages!

How about doing a SOA and cutting back on some of your outgoings. The debt free wannabe board can help.

UnderPressure

Well I sympathise with you, I do Im sure you have probably worked very hard to get where you are now earning the salary you earn and to lose £540 extra a month seems a tad harsh to me.

I dont pretend to actually be knowledgable in any way when it comes to matters like this I just felt I should post considering the 2 people that did post were both so negative!

I would seek the advice of a good accountant and see what they have to say there may be other ways to try and re-coup some of this money I certainly would not take it lying down that is for sure.

I hoep you manage to sort this out and well done on getting where you are

teabelly

If you had a pay cut to 99,999 would you be better off? In return could you ask for more holiday or shorter hours?

If you are finding the loss of £500 ish a month a struggle on such a large salary would it be fair to say you have over extended yourself rather? £100k a year is roughly £2k per week gross so I'd imagine take home pay must be £4k ish a month.

Definitely go and see someone that specialises in tax for higher rate earners as they may know of other ways that you can reduce your liability.

nzmegs

If you are just on the threshold then it might be worth your while to ask for a decrease in wages or hours worked to bring hyou below the threshold. Consider hiring an accountant to gain money back elsewhere. On your income i am sure you have investments which could be tidied up to improve income.
I don't want to tell you how to run your life, but I paid my own way through uni and it did me a world of good. I worked weekends and still managed to pass. Reliance on parents has to end at some point and starting university is the perfect time. Perhaps your kids need to be told you can no longer afford to pay their fees. You should be looking to your retirement.
I do have sympathy though for your posistion. I suppose it crept up on you, but lets face it you won't go hungry will you? As a percentage of income it is comparable to me losing £50 a month and that happens to me often as a self emplyed person. I just make changes and live with it.

Timmne

I think your calculations are out, OP.

You'll have lost £540 of personal allowance, not of earnings. Your actual loss of earnings will be about 40% of that, i.e. £216. This will only be the case where your income is over £112,950 though as that's the point the loss of PA comes in.

So - assuming you're on £112,950, you'll have gone from a net pay of around £6070 to £5865.

A reduction of about 3.3% net pay would cost me £73 per month and even I can afford that!

I don't like to just label people like this but I think you're making something up.

DVardysShadow

Indeed, it is tough times for the stinking rich, who cannot even afford a car without a loan. Perhaps the good Lord in his mercy will make you poor, so that the gap you have to bridge each month is much smaller.

PasturesNew

As has been pointed out, you have lost your personal allowance of £6495 - that just means you now pay tax on £6495 that you didn't pay tax on before.

Before: £6495/year in your hand tax free, £541/month
Now: You pay tax on this amount, at your tax rate of 40%, so now you get £325 (not £541)

Loss: £541-325 = £216/month, or £50/week.

If you're earning £100k I'd have expected you to understand pay/tax .... and if you're strapped for £50/week then maybe take on a 2nd job to make up the difference, working in a bar at minimum wage .... and see how lucky you are!

SGM_2

OK everyone, thanks for taking the time to reply; I'm not sure whether to curl up and hide, or try and defend myself. In my defence, I've worked hard since leaving comprehensive school and getting an average degree from an old polytechnic, and been fortunate to keep my career moving forwards by looking out for opportunities to progress as they came up. No magic here, just hard work over 25 years.

Pastures New, having thought through what you've said, you must of course be right, that I've just lost the tax I wasn't paying on my £6495 allowance. What threw me was that my salary was down £500 this month, our payroll department told me to contact the tax office, and the tax office explained that the new ruling meant I was effectively losing this amount of money.

I take from this that our payroll team are wrong, and while I'm sure the tax office is right, they didn't take the time to work through my problem and hence sent me away with the wrong information.

I'm sorry if I came across as greedy, yes I'm a little over-stretched but a divorce can have that effect on even the most robust of finances, and thanks to everyone who either sympathised or contributed in some other way.

donquine

SGM wrote: »

I am in the fortunate position to exceed the £100k limit for the personal tax allowance, but I hadn't stopped to work out (until I received my wage slip for May) that I have now lost the full £6475 per year, a whopping £540 per month!

As I say, I know I am fortunate, but this is a huge chunk out of my salary, which is already committed to a mortgage, car loan, maintenance payment and three children at university, and I'm genuinely concerned about how I will bridge the gap.

Is anyone else similarly concerned? Is anyone out there finding their employer sympathetic and perhaps looking at ways to ease the impact? I don't want to sound greedy, but that's a lot of money for anyone to lose, especially when I am on just on the threshhold of losing the full allowance.

OP, you earn over £100,000, therefore are not entitled to a personal allowance anymore. Previously, the first £6,475 of your income was exempt from income tax. Now, it's not, so your taxable income is increased and you end up with another £6,475 taxed at your top rate. You say you earn only just over £100,000, so I assume well under £150,000. This means you are paying income tax at 40% on the £6,475, which works out at £2,590 a year or £216 a month.

This is a lot less than the £540 you thought you were paying.

[Edited because I checked out goRt's point and the poster is correct - HMRC have cracked down on new admissions to salary sacrifice schemes.]

You could probably do with speaking to a tax adviser, to be honest. You don't seem to know much about your tax affairs and with a divorce behind you, it may be time to re-examine your financial affairs.

PS Don't feel guilty for earning so much. I'm sure you've worked hard to get where you are. You will always come across someone who earns less than you and someone who earns more than you. Some people have chips on their shoulder and you just have to ignore them. We should all take steps to ensure we're managing our income and expenses appropriately and check we're not paying too much tax.