Higher rate tax band - advice

patchyX2

I'm due to start a new job soon which will push me into the higher rate tax band. 

There's a couple of things I've stumbled across recently that I didn't know previously, so was wondering if anyone else had any advice regarding tips, or things to be careful of? The two things I recently learned are:

- I will need to complete a self assessment tax form to claim for the additional 20% tax relief on my pension contributions

- I need to opt out of child benefit, as the amount I will earn (60k) is above the threshold 

In case it makes a difference. I'm full time employed and will pay via PAYE. 

penners324

You could increase your pension deductions through your work scheme so it's automatically topped up to 40%.

Dazed_and_C0nfused

- I will need to complete a self assessment tax form to claim for the additional 20% tax relief on my pension contributions

That in itself isn't a reason to need to complete a Self Assessment return.

And there is no "additional 20%" on relief at source pension contributions.

The gross contribution increases your basic rate band so you can pay more tax at 20% and less at 40%.  But you might contribute say £6,000 (gross) and only pay 40% tax on £600.  So the higher rate relief would (usually) only be a saving of £120.

- I need to opt out of child benefit, as the amount I will earn (60k) is above the threshold 

That's a personal choice.  You don't have to opt out.  Plenty of people have taxable income of £60k or more but still get the Child Benefit as it's cash flow in your favour or they make pension contributions which mean they only need to pay some(or none) of it back.

Liability to the High Income Child Benefit Charge would make a Self Assessment return mandatory.

Grumpy_chap

Pension contributions and gift aid are two ways to reduce your income below the £50k point.

What level of contributions does the employer pension scheme permit?  
Are you able to increase pension contributions via salary sacrifice?

patchyX2

Thanks for the advice all, but I'm a little confused on the pension front. 

I know they don't offer salary sacrifice, and they only pay in the minimum amount (4%? ). I am planning to pay in 8% and I don't want to pay in too much more than that if I can help it, as the extra money will come in handy when we move house in the next year or two.

Is there an online calculator or similar I could use which would help show how my contributions would affect the amount of child benefit I'd receive? 

I'm not sure if it's paid using a relief at source or net pay method. I'm guessing the former.

penners324 said:

You could increase your pension deductions through your work scheme so it's automatically topped up to 40%.

How does that work? 

Dazed_and_C0nfused

You can never get 40% pension tax relief added to a pension.

You either get 20% relief (relief at source method) or no relief (net pay or salary sacrifice).  Net pay and salary sacrifice save you paying tax (and NI with salary sacrifice) in the first place.

HICBC is based on your adjusted net income.

There is a calculator here however until you understand what method you are using to contribute to the pension you won't get the correct answer.

https://www.gov.uk/child-benefit-tax-calculator