Bonus has taken me over £100k

Clive_Woody

[Deleted User] said:

Clive_Woody said:

[Deleted User] said:

You will need to register for self assessment firstly. 

For 2021/22 you will have received c£8500 personal allowances more than you should have, potentially underpaying £1700 for that year. You should also update your personal tax account to estimate your earnings for 2022/23 to mitigate any underpayment for that year also.

I did try logging into my HMRC tax account but couldn’t see where to change potential earnings, not sure if a phone call might be more successful.

With my pay rise that comes into account from April and a similar bonus next year I think I will most likely lose all of my person allowance. Can I simply request that I have a tax code with £0 personal allowance?

Is that a daft idea?

There should be an option under PAYE to go this but haven’t been on this site for a while. The effect of adjusting your code to 0T will mean that you will overpay as you don’t, as of yet, hit the 125140 threshold where all of your personal allowance would disappear.

My payrise effective from April will take me over that threshold....even if my bonus is somewhat smaller next year.

Dazed_and_C0nfused

There is nothing you can do now for 2021:22 but you may as well update your estimated earnings for 2022:23 as that will get you a new tax code and spread out the tax over the whole year.

For 2021:22 I think you will actually owe more like £3,400 (£8,500 x 40%).

Clive_Woody

Dazed_and_C0nfused said:

There is nothing you can do now for 2021:22 but you may as well update your estimated earnings for 2022:23 as that will get you a new tax code and spread out the tax over the whole year.

For 2021:22 I think you will actually owe more like £3,400 (£8,500 x 40%).

That’s what I feared my tax bill might be. Would this be required a one off payment to HMRC?

Dazed_and_C0nfused

Yes, once it goes over £3k you have to pay it direct.

But not until 21 January 2023.

Grumpy_chap

Clive_Woody said:

Dazed_and_C0nfused said:

There is nothing you can do now for 2021:22 but you may as well update your estimated earnings for 2022:23 as that will get you a new tax code and spread out the tax over the whole year.

For 2021:22 I think you will actually owe more like £3,400 (£8,500 x 40%).

That’s what I feared my tax bill might be. Would this be required a one off payment to HMRC?

You will need to complete your tax return and pay any tax due by 31st January 2023.  This is still far later than if all the money was collected through PAYE - think of it as an interest free loan from the Government.

You will also need to make first payment on account for 2022/3 in January 2023 and second payment on account in July 2023 with final balancing payment the following January 2024.  

Probably worth engaging an Accountant - that will make it all easy.

Clive_Woody

Dazed_and_C0nfused said:

Yes, once it goes over £3k you have to pay it direct.

But not until 21 January 2023.

Thanks. So I guess the process is I register and then complete my self assessment, then they send a bill do they?

[Deleted User]

Clive_Woody said:

Dazed_and_C0nfused said:

Yes, once it goes over £3k you have to pay it direct.

But not until 21 January 2023.

Thanks. So I guess the process is I register and then complete my self assessment, then they send a bill do they?

Register - complete and file return and pay tax due, both by 31st January 2023. You can pay online.

Clive_Woody

Just revisiting my thread from earlier this year after completing my self assessment and calculating my tax bill.

I was just looking at my employee benefits options and saw that I have the option to buy additional annual leave using salary sacrifice. This is not something I had thought much about previously, but finding myself in the lovely 60% tax bracket it has rather focused my mind.

Having maxed out pension contributions and carry forward allowance to try and get below the elusive £100k I was thinking that purchasing a few days annual leave using salary sacrifice would make sense. Am I missing something (other than line manager approval) or does this seem like a reasonable approach to pay a bit less tax and enjoy some extra time off?

biscan25

Clive_Woody said:

Just revisiting my thread from earlier this year after completing my self assessment and calculating my tax bill.

I was just looking at my employee benefits options and saw that I have the option to buy additional annual leave using salary sacrifice. This is not something I had thought much about previously, but finding myself in the lovely 60% tax bracket it has rather focused my mind.

Having maxed out pension contributions and carry forward allowance to try and get below the elusive £100k I was thinking that purchasing a few days annual leave using salary sacrifice would make sense. Am I missing something (other than line manager approval) or does this seem like a reasonable approach to pay a bit less tax and enjoy some extra time off?

This IMO is the best way to avoid tax - just work less!
I just turned up to 4 days a week for the last few weeks of the last tax year when contracting to avoid the threshold.

Now I'm perm, I'll flex up to 35+BH days annual leave from 28+BH to make sure I go under.

Clive_Woody

biscan25 said:

Clive_Woody said:

Just revisiting my thread from earlier this year after completing my self assessment and calculating my tax bill.

I was just looking at my employee benefits options and saw that I have the option to buy additional annual leave using salary sacrifice. This is not something I had thought much about previously, but finding myself in the lovely 60% tax bracket it has rather focused my mind.

Having maxed out pension contributions and carry forward allowance to try and get below the elusive £100k I was thinking that purchasing a few days annual leave using salary sacrifice would make sense. Am I missing something (other than line manager approval) or does this seem like a reasonable approach to pay a bit less tax and enjoy some extra time off?

This IMO is the best way to avoid tax - just work less!
I just turned up to 4 days a week for the last few weeks of the last tax year when contracting to avoid the threshold.

Now I'm perm, I'll flex up to 35+BH days annual leave from 28+BH to make sure I go under.

As much as I'd love to go down to 4 day weeks I think we are limited on how many days leave we can purchase. Definitely something to consider.