Advice needed - £20k Bonus

Alexland

Fatbritabroad wrote: »

You should be able to put the bonus in. I had to complete a form for mine last year and that was it

My employer also allows this but they are useless at telling us what bonus we are due and although I can do the calculations against my targets I never know the exact amount until it is paid.

As such, after doing some tax calculations supported by the HMRC portal, I raise an HR ticket on the payroll stack a month in advance saying "please pay me up to £x of my bonus as income and put the rest as salary sacrifice in my pension".

I try and keep my earned taxable income for the year within about £500 of the 40% tax bracket which gives some room for unwrapped interest.

Alex

ffacoffipawb

Halfie wrote: »

It is salary sacrifice but we can only make set payments each month and can only change this once per year.

The rules on salary sacrifice changed a while back and you can change as often as you like.

I have changed my sacrifice percentage 4 times this tax year, targetting a specific gross income.

greenglide

But the employer does not have to allow changes to the sacrifice amount in their scheme.

They may wish to keep it the same as it was to save changes to their HR / payroll system.

Halfie

My base salary is already over the 40% threshold (only just) so all commission is going to be at that rate unfortunately.

Halfie

I think this is what my employer does to avoid administrative tasks and changing the payroll especially for the sales staff who get regular commission at irregular amounts.

If I pay in directly to pension from my net pay then the tax man gets double... I think i might have to look at increasing my payment via salary sacrifice next year and save commissions from this year to fund it.

Dazed_and_confused

If I pay in directly to pension from my net pay then the tax man gets double.

Not necessarily, it depends on what your other taxable income is when you take the pension as income.

Plenty on here seem to manage to empty some of their DC pension pots without paying any tax on it at all.

And don't forget if you are paying into a relief at source pension it gets a 25% uplift courtesy of HMRC in the first place so if say you were able to pay £4k in (and it qualify for tax relief) then it would become £5k in your pension fund. With the possibility of you getting a tax refund if you have paid some higher rate tax in the tax year you make the contribution.