Higher rate taxpayer?

Bean123

Rather than hijack someone else's thread, I thought I'd start a new one.

For the tax year 2013-14, will I be a higher rate taxpayer?

Gross income £42730 (3560/mth), but I pay pension contributions of £670/month. I know that the 40% band is payable from £41451 gross income, but do the pension contributions bring me back into the 20% band?

Or am I looking at this completely wrongly?

The underlying reason for asking is that I am trying to work out whether it is worth my making overpayments on a mortgage rate of 2.79%. Savings are mainly in cash ISAs at 3%.

dzug1

Yes your pension contributions will bring you back into 20% land.

anselld

Bean123 wrote: »

The underlying reason for asking is that I am trying to work out whether it is worth my making overpayments on a mortgage rate of 2.79%. Savings are mainly in cash ISAs at 3%.

... however the answer does not affect the that tradeoff. ISA would still be tax free and would still be better than overpaying at 2.79%

Bean123

Thanks to both of you.

So, fill the ISA first and then look at mortgage overpayments after that?

I will have a £3600 FD Reg Saver maturing in May, which will go towards the ISA.

Am I right that a mortgage rate of 2.79% equates to 3.48% gross interest rate on non-ISA savings for a non-higher rate taxpayer?

anselld

Bean123 wrote: »

Thanks to both of you.

So, fill the ISA first and then look at mortgage overpayments after that?

Yes.

Bean123 wrote: »

Am I right that a mortgage rate of 2.79% equates to 3.48% gross interest rate on non-ISA savings for a non-higher rate taxpayer?

Near enough, 3.49 according to my calculator

getmore4less

3.4875 == 2.79/0.8

Bean123

Thanks, both. Glad to see not all of my maths has deserted me this evening!