What should i do?

haras_nosirrah

Hi

Just seeking some opinions

I work part time with a 19 month old but in a very heavily commission based job. Basic is £26,400 but with how things are going this year I think I will finish the year on about 58 - 63k

I currently pay 15% into a pension and employer 8% but this is based on my basic only. I am thinking of increasing my pension contribution to circa 50% of my basic for the rest of the tax year so from £330 a month to £1100 a month to try to avoid losing child benefit/ 40% tax bracket. This should mean I still am at around the 50k mark which is more than enough for my families needs

Should I significantly reduce my taxable pay in order to avoid losing a significant proportion to the tax man or keep paying what I am even though I will lose a lot of it in tax?

What would you do in my position? Mortgage is £800 a month and hubby on 20k and no debt

morgani

It is potentially good tax planning but only you can decide if you wish to tie up that amount of money into a pension. You may need to see an IFA to talk through your options as this would be a long term plan.

Your_Hero

That sounds fine as long as you are happy with the fact that pension is a retirement vehicle and can't be touched until 55 at the earliest (or 57 by 2028).

If you want to do this properly, then you need to ensure your income is below £50,000. If it is above £50k, for every £100 over, they will charge you extra tax of 1% of the child benefit via your personal tax returns. Above £60k, the child benefit is lost.

RickyC_IFSWP

Ideally, if you can, try to put enough into the pension so that you're not a higher rate tax payer altogether.

You will usually receive 20% tax relief at source from the pension providers, and you then need to reclaim the other 20% via Self Assessment. This would be tax-efficient, puts a good chunk into retirement planning, and helps you keep the child benefit.