Tax codes and pension

steve811

Hi all, I have a question about tax and pension earnings. I have a full time job which earns just above the 40% threshold and a armed forces pension that brings in £6500 a year. The HRMC have told me my new tax code is 941L due to repayment of previous overpayments, and that I will pay 40% tax on my pension as well as on the bit of my salary above the threshold. This actually makes me worse off this year by £86 a month, even though my pay rise was less than £20 a month!

My question is, my wife does not work, can I use her tax free allowance? If not, is there another way of reducing the tax?

mgdavid

you can reduce the income tax paid by paying into a current pension scheme, preferably your employer's and preferably by salary sacrifice. However this will decrease your net pay (if this is what you are concerned about).

00ec25

the current married couples allowance (and transfer thereof) is only available if one of you was born before 1935, its a fair guess to say you aren't that old, is your wife???

if on the other hand you are thinking of the recent statement in the budget allowing a transfer of up to £1,000 for people born after 1935 then you are jumping the gun as this will not start until April 2015 and both partners must be basic rate taxpayers so it excludes you

so forget about using her unused allowance, it is not possible

steve811

mgdavid wrote: »

you can reduce the income tax paid by paying into a current pension scheme, preferably your employer's and preferably by salary sacrifice. However this will decrease your net pay (if this is what you are concerned about).

Thanks but that will not reduce my tax by much I don't think, and I am sure there must be a way of using my wife's unused allowance!

dzug1

Send her out to work. Though it would be a good idea if it appears to be her own idea.

xylophone

Thanks but that will not reduce my tax by much I don't think,

http://www.scottishlife.co.uk/scotlife/Web/Site/Adviser/TechnicalCentralArea/InformationGuidance/Contributions/Membercontributionsandhigherratetaxrelief.asp might be worth a look.

Hold your savings accounts in your wife's sole name?

steve811

xylophone wrote: »

http://www.scottishlife.co.uk/scotlife/Web/Site/Adviser/TechnicalCentralArea/InformationGuidance/Contributions/Membercontributionsandhigherratetaxrelief.asp might be worth a look.

Hold your savings accounts in your wife's sole name?

Don't hold any real savings, and money is too tight to contribute much more to pension! With three kids, my wife can't work so looks like we loose out all round.

Savvy_Sue

steve811 wrote: »

Don't hold any real savings, and money is too tight to contribute much more to pension! With three kids, my wife can't work so looks like we loose out all round.

That's a fairly astonishing statement! I have three kids (now grown up) and worked part-time throughout their childhood. But there are advantages to her being at home too.

steve811

The problem is the kids are all primary school age and the only work she would be qualified for is low paid (dental nurse) so after child care we would not really be any better off.