How much can I earn with overtime without going into the higher tax bracket?

prowla

I'm assuming it's not the £100k tax band...

Dazed_and_C0nfused

[Deleted User] said:

Albermarle said:

You could make enough extra pension contributions to get tax relief of 40% on the contributions.
Some or all of the relief, would go into the pension rather than back to you, but it would maybe make the overtime more worthwhile, knowing you would benefit from an increased pension/earlier retirement.

Yes - that may be true, but you could end up paying more tax on the extra pension when you retire.  It's called deferred tax!!  No such thing as a free lunch I'm afraid.

I think all those low/non earners getting a free £720 each year from HMRC would disagree.

A free lunch every week with that 😃

[Deleted User]

Dazed_and_C0nfused said:

[Deleted User] said:

Albermarle said:

You could make enough extra pension contributions to get tax relief of 40% on the contributions.
Some or all of the relief, would go into the pension rather than back to you, but it would maybe make the overtime more worthwhile, knowing you would benefit from an increased pension/earlier retirement.

Yes - that may be true, but you could end up paying more tax on the extra pension when you retire.  It's called deferred tax!!  No such thing as a free lunch I'm afraid.

I think all those low/non earners getting a free £720 each year from HMRC would disagree.

A free lunch every week with that 😃

Yes. Many thousands benefit from higher rate tax relief on their pension contributions - massively more than pay higher rate tax on the resultant pension. 

It’s a few years ago since I specialised on this but I recall that, as a result of the lifetime allowance, £43500 per annum is around the maximum pension receivable. Might be a little more than that now but, as a sole income, less than the higher rate threshold.

norsefox

Adamc said:

Thanks. I actually do earn a little over £3142 taxable. So overtime at 40% tax is a lot less appealing. 

I've done a few hours extra yesterday to cover sickness and earlier this week as a last resort but I am really feeling it now.  

Presumably, you make pension contributions currently.  Depending on your level of contributions and the pension setup, and how much overtime you undertake, you could receive 20% back in tax relief against most or all of your OT working.

Adamc

norsefox said:

Adamc said:

Thanks. I actually do earn a little over £3142 taxable. So overtime at 40% tax is a lot less appealing. 

I've done a few hours extra yesterday to cover sickness and earlier this week as a last resort but I am really feeling it now.  

Presumably, you make pension contributions currently.  Depending on your level of contributions and the pension setup, and how much overtime you undertake, you could receive 20% back in tax relief against most or all of your OT working.

I am in the NHS Pension Scheme. The overtime is classed as 'Bank' for the highest hourly rate. Will this have an impact?

Flugelhorn

normally you get a pension tier set for the annual pensionable pay for the job - you have to be careful as one £ over the threshold puts you in a higher threshold for the whole of the years pay (can happen - cost me £1000) 

Having said that unless you are a practitioner you will only be pensioned on 37.5 hours a week:

"In respect of an officer or practice staff scheme member, overtime in excess of whole time hours (for example 37.5 hours for AfC members) is not pensionable and therefore does not fall under tiered contributions. Any income earned by a part timer in respect of additional hours up to whole time (for example 37.5 hours for AfC members) is pensionable. Different rules apply to GPs, GDPs, OMPs, or non-GP providers in practices or centres"

[Deleted User]

Flugelhorn said:

normally you get a pension tier set for the annual pensionable pay for the job - you have to be careful as one £ over the threshold puts you in a higher threshold for the whole of the years pay (can happen - cost me £1000) 

Having said that unless you are a practitioner you will only be pensioned on 37.5 hours a week:

"In respect of an officer or practice staff scheme member, overtime in excess of whole time hours (for example 37.5 hours for AfC members) is not pensionable and therefore does not fall under tiered contributions. Any income earned by a part timer in respect of additional hours up to whole time (for example 37.5 hours for AfC members) is pensionable. Different rules apply to GPs, GDPs, OMPs, or non-GP providers in practices or centres"

That is absolutely correct and it applies to each individual week. For example, work 39 hours one week and 30 the following week. Week 1 - 37.5 hours pensionable, week 2 - 30 hours pensionable. 

nigelbb

purdyoaten2 said:

As an aside - locums are self employed and you need to register as such. They are also responsible for declaring income to the NHS pension scheme. 

This is going to depend on the job role but in general IR35 has ended the days of self employed locums.

[Deleted User]

nigelbb said:

purdyoaten2 said:

As an aside - locums are self employed and you need to register as such. They are also responsible for declaring income to the NHS pension scheme. 

This is going to depend on the job role but in general IR35 has ended the days of self employed locums.

I have yet to come across a locum doctor under IR35 although NI is a small place. The accountancy practice for whom I still provide some assistance currently has over one hundred self-employed locums on their books. I am not sure how pension contributions are contributed under IR35.

jimi_man

[Deleted User] said:

Albermarle said:

You could make enough extra pension contributions to get tax relief of 40% on the contributions.
Some or all of the relief, would go into the pension rather than back to you, but it would maybe make the overtime more worthwhile, knowing you would benefit from an increased pension/earlier retirement.

Yes - that may be true, but you could end up paying more tax on the extra pension when you retire.  It's called deferred tax!!  No such thing as a free lunch I'm afraid.

That's unlikely. It's fairly easy to control this and in this situation is likely to get 40% relief on the way in and only pay 15% on the way out.