HMRC | First time Form Filler | Presume they are always right?

BoGoF

It's probably now too late to sort for 2011-12 but you need to give them your estimate of your income, difficult I know if you get bonuses. If you earn over £100,000 then for every £2 over your personal allowance is reduced by £1 until it reaches zero.

You seem to be on a non standard code as the standard codes were 647L and 747L respectively. Do you have notices of coding to show what the restrictions were.

Anything that reduces your taxable income is a good thing, so pensions would help towards this.

agrinnall

Does anyone else find it a bit worrying that someone can get to a position where they are paid over £120K a year yet still have very little idea about tax (not including footballers of course, although they will probably have someone to do all their thinking for them )?

OP - never having earned that much I can't say whether you should remain on 0T next year, although I think it's quite likely that's what HMRC will decide. It sounds like you were on close to the standard tax code for 2010/11, which would have been 647L, as you were on 623L you must have had some sort of benefit in kind or reclaim from a previous year. BIK is most likely as your tax code for the current year was the same difference from standard (747L vs 723L). Presumably you didn't earn over £100K last year so they weren't expecting you to this year.

I would expect that joining the pension scheme would have a significant benefit on the amount of tax you have to pay, it's probably best to get the pension scheme information from your pension admisitrator then see a IFA to get an independent view of whether the company scheme is best or some other option.

payless

Does anyone else find it a bit worrying that someone can get to a position where they are paid over £120K a year yet still have very little idea about tax

agree in lots of ways, but then if OP is a brain surgeon - would I care if he can't do tax, so long as he can do his job

agrinnall

payless wrote: »

agree in lots of ways, but then if OP is a brain surgeon - would I care if he can't do tax, so long as he can do his job

Quite agree, it clearly has no impact on the ability to do the job for the vast majority of people. You'd just think that if you had that much money coming in it might be sensible to have some idea if what you're paying in tax is right.

xylophone

For Bobsy - see http://www.hmrc.gov.uk/incometax/index.htm
http://www.hmrc.gov.uk/incometax/relief-pension.htm
http://www.hmrc.gov.uk/specialist/sal-sac-question-and-answers.htm
http://www.hmrc.gov.uk/specialist/salary_sacrifice.htm
http://www.pensionsadvisoryservice.org.uk/personal-and-stakeholder-pensions/group-stakeholder-pension-schemes/salary-sacrifice

bobsy31

xylophone - thanks for the links, really useful

bogof - what are notices of coding and where would I find out if I do/don;t?

agrinnal et al - Looking back at your comments I cannot help but laugh (and despair) at myself too at my lack of knowledge/naivety.

To cut along story short I had a very good work hard/ play hard/ spend hard lifestyle in my 20's and ended up not thinking about my long term future in any way. Ended up in debt by a serious five figure amount - not good!

Anyway i;ve paid off debts and only in the last couple of years started to plan for my long term future eg through investing via a s&s isa and am now going to look at a pension.
It;s only the last two years I have ended up in the HRT and the earnings I have had as a result.

I have self taught (with help of such forums) myself everything so far in the last year on long term investing, pensions is now next on the list I now need to learn!

As a HRT is salary sacrifice through work best or doing my own SIPP pension?

I also need to get advice on how to be 'tax efficient' as I am in HRT territory now....will put another post on that to see what input I can get!

BoGoF

A notice of coding is what HMRC send you (and your employer). It shows you how your code number is made up - allowances/dedcutions.

You do realise HRT kicks in at £42,475 for this year so unless you have had a really big increase then possibly you have been higher rate longer than you think