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Close to higher rate already and interest over £1000
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newfoundglory
Posts: 1,912 Forumite


Hi all.
I was earning less than 39k per year until August, but a rise in pay has taken me to just over the higher rate of 43k per year.
I had long-held savings accounts which were paying above the normal rates and so I estimate I will receive approx £2300 in gross interest up until April (e.g. Santander 123, 4-year Nationwide regular saver, fixed bonds etc)
With interest now being paid gross, I am concerned that i will either end up paying 20% of 1300 (£260) or 40% of 1800 (£720) of this in tax if I do not act (unfortunately I have already used my cash ISA allowances and so there is nothing I can do about this and these are not included in the 2k)
I have to admit I do not know what my end of year position might be, what my current pension contributions are (maybe around £130-140 per month), or if I can make one off overpayments - or even if this is the correct thing to do.
I would be grateful for some suggestions as to what calculations and actions I should be taking.
I was earning less than 39k per year until August, but a rise in pay has taken me to just over the higher rate of 43k per year.
I had long-held savings accounts which were paying above the normal rates and so I estimate I will receive approx £2300 in gross interest up until April (e.g. Santander 123, 4-year Nationwide regular saver, fixed bonds etc)
With interest now being paid gross, I am concerned that i will either end up paying 20% of 1300 (£260) or 40% of 1800 (£720) of this in tax if I do not act (unfortunately I have already used my cash ISA allowances and so there is nothing I can do about this and these are not included in the 2k)
I have to admit I do not know what my end of year position might be, what my current pension contributions are (maybe around £130-140 per month), or if I can make one off overpayments - or even if this is the correct thing to do.
I would be grateful for some suggestions as to what calculations and actions I should be taking.
0
Comments
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http://www.litrg.org.uk/sites/default/files/files/Savings%20and%20dividend%20tax%20FINAL.pdf
Pension contributions or charitable donation to reduce adjusted net income?
https://www.gov.uk/guidance/adjusted-net-income
If it is too complicated to make additional contributions to your workplace pension, consider a SIPP?
http://www.hl.co.uk/partners/search/sipp?theSource=PCHLS&Override=0&adg=G+HLBS+HPN&gclid=COKFwOyq3tACFRVmGwodLBIChg0 -
noone should be paying HRT given one can put £40k into a pension scheme each year unless they are massively overpaid or at the lifetime limit, which I'd wager the OP isnt.0
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Many would like to face your conundrum!
The two ways out are pension contributions and charitable giving.
So, which is it to be?0 -
My pension scheme changed this year and I cannot make a lump sum contribution until after April. That is not good.
If I need to reduce my TAXABLE income by a known amount, is that the amount I put into a SIPP or is it the known amount less 20% because of the relief which gets added?0 -
You cannot reduce your taxable income paying into a sipp, the sipp pension contribution merely increases the amount you of income you pay 20% on, thereby reducing the amount you pay 40% tax on (if you're earning to that level).
From your op you have 45300 taxable income this year so well over the standard 40% threshold0
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