40% Tax Liability

ChopperST

As we have an 85% LTV mortgage our rate is comparatively high to some @ 4.38% so overpaying would be a relatively cost efficient way of utilizing my income and pushing us towards the lower % LTV's.

Considering a split between additional contributions to my pension alongside overpaying the mortgage as I have a reasonable amount of instant access cash available.

lisyloo

FWIW - that sounds sensible.
Lot's of people seem to concentrate on doing only one thing when of course you can do many things in whatever proportions you choose.

bigadaj

If you are employed by the nhs isn't there good employer pension prOvision currently?

Archi_Bald

ChopperST wrote: »

Obviously some of my income is exposed to the 40% tax bracket which is a bit of a sickener...

What is sickening about earning enough to have to pay 40% tax on some of your income? Tens of thousands of people would bite your arm off to have this "problem".

Stop whining, make the best of the lucky situation you have worked to be in. It is entirely in your hands whether you want to pay the 40% on a small part of your earnings, or whether you want to exploit the tax avoidance opportunities that are available to you.

How do I know this is possible? I'll give you one guess.

gadgetmind

Just into HR tax such that you can sal sac back to BR, still get child benefit etc., is a pretty cool place to be.

I'm currently getting hit by various pension caps and personal allowance claw-backs so find it hard to avoid paying a (metric) shed load of tax.

grey_gym_sock

the grass always looks greener in the other tax bracket.

gadgetmind

grey_gym_sock wrote: »

the grass always looks greener in the other tax bracket.

Maybe, but seeing such a large percentage of the total that you've earned (as opposed to been given) disappearing is a major disincentive to putting in the extra.

Twice recently I've had people turn down promotion because they looked at the extra work and responsibility (huge amounts!), looked at the extra money (lots!) and then looked at the extra tax (mind boggling sums!) and decided to take the easy route and say "no".

Our system of taxation is called "progressive". Funny word for a whip with which to lash your hardest workers, but there you go.

Thrugelmir

gadgetmind wrote: »

Twice recently I've had people turn down promotion because they looked at the extra work and responsibility (huge amounts!), looked at the extra money (lots!) and then looked at the extra tax (mind boggling sums!) and decided to take the easy route and say "no".

Make hay while the sun shines. So many unknowns in life. Maximising every opportunity makes the future far less stressful.

gadgetmind

Thrugelmir wrote: »

Maximising every opportunity makes the future far less stressful.

That's always been my view, but some just do a quick before and after calculation regards their pay slip and say "naaa".

Seriously, we have *huge* issues getting people to take on management responsibility and other employers that I speak to have the same issue. If you keep squeezing the middle, then no-one will want to move there.

grey_gym_sock

gadgetmind wrote: »

Seriously, we have *huge* issues getting people to take on management responsibility and other employers that I speak to have the same issue.

but you can't blame that all on tax. if ppl see it as a trade off so much extra money (even after tax) versus extra time and responsibility, then they may think that further money has limited marginal benefit. since they are already very decently paid. (and perhaps they wouldn't have enough time to spend it.)

If you keep squeezing the middle, then no-one will want to move there.

ah yes, "the middle" meaning ppl wealthier than most ppl, but not really really rich.

say what you like, there is no good argument against marginal tax rates rising gradually as income rises. (not that that is exactly what we have now - marginal rates actually bounce up and down.)