Caught in the 40% tax + 50k + single income trap ; )

6mouthstofeed

Hello,

40% Question:
I am NOT self-employed and have a company pension (private sector) and also have a private personal pension (just in case). My salary pushes me into the higher tax bracket. My personal pension provider automatically adds the 20% relief but they indicate I must claim the additional 20% relief through my tax return. Can an employed person (on PAYE) submit a tax return, is this the correct/simplest way to get my rebate? Am I meant to use the "Self Assessment" process?? Doesn't sound right : )

50k Question:
I wish to avoid the 50k benefit trap for a single income family. Am I correct in thinking that when I complete Child Benefit/Tax Credit forms (4 sons under 10) do I indicate my salary to be that less all my private pension contributions over the year. I have heard the term "adjusted income", is this what it means. Can you clarify how I stay within the law but avoid the 50k trap. I am also considering salary sacrifice, but wish to keep my private pension healthy as well so really want to understand how I present my "adjusted income" correctly.

Thanks : )

Linton

6mouthstofeed wrote: »

Hello,

40% Question:
I am NOT self-employed and have a company pension (private sector) and also have a private personal pension (just in case). My salary pushes me into the higher tax bracket. My personal pension provider automatically adds the 20% relief but they indicate I must claim the additional 20% relief through my tax return. Can an employed person (on PAYE) submit a tax return, is this the correct/simplest way to get my rebate? Am I meant to use the "Self Assessment" process?? Doesn't sound right : )

50k Question:
I wish to avoid the 50k benefit trap for a single income family. Am I correct in thinking that when I complete Child Benefit/Tax Credit forms (4 sons under 10) do I indicate my salary to be that less all my private pension contributions over the year. I have heard the term "adjusted income", is this what it means. Can you clarify how I stay within the law but avoid the 50k trap. I am also considering salary sacrifice, but wish to keep my private pension healthy as well so really want to understand how I present my "adjusted income" correctly.

Thanks : )

40% Question: Your personal pension provider is correct - only the basic 20% tax is handled through HMRC payments into your pension. The extra 20% is handled by an increase in your tax free allowance (tax code). Suggest you ring HMRC and tell them about your private pension. They may accept your data and change the tax code accordingly and/or may put you on their list for self assessment, in which case you will be sent the appropriate form.

xylophone

http://www.scottishwidows.co.uk/extranet/literature/doc/52632
http://www.hmrc.gov.uk/adjustednetincome/
http://money.aol.co.uk/2012/10/29/how-to-keep-your-child-benefit/
might be worth a look.