Self assessment if earning more than 100k, but less after pension contributions?

chssvl

I just got a notice from an automated e-mail from my employer saying that I may need to consider registering with HMRC for a self assessment.

Long story short, I technically earn just over 100k gross, but after pension deductions (which are taken gross from my paycheck and paid into and approved pension provider) they are well below the 100k mark. Last year P60's states that my pay was below 100k.

I have no other income (other than the paltry £5 a month of interest I get from my bank) and I have a S&S ISA with a performance this year that hasn't exactly made me feel any richer (then again, as it's an ISA so I'm guessing that it doesn't really matter).

In any case, I read the guidance on adjusted net income from HMRC (see Personal Allowances: adjusted net income - GOV.UK (www.gov.uk) ), and I know I should be in the clear as pension contributions should be deducted. However, as I'm generally very paranoid about these things, I thought I would ask.

It's the sort of thing that when I started working more than a decade ago, 100k seemed so far away, but steady increases mean that I'm now here without having given it much thought. 

Grumpy_chap

I think I know the answer to the question but not 100% so I'll let someone else confirm who is certain.

The one thing I'd say is, as you approach or exceed the £100k threshold, you want to be sure to take a proactive approach to income and tax management so that you do not inadvertently (and avoidably) end within the £25k band through which the personal allowance is withdrawn resulting in an effective tax rate exceeding 60%.

Given your income level, it is probably worth engaging the services of an Accountant,  Having done that, whether or not you need a tax return is irrelevant as the Accountant can simply process that within their service to you.

Dazed_and_C0nfused

If your P60 is going to show taxable income of less than £100k and your other taxable income, such as the (non ISA) interest, doesn't take it above £100k then you wouldn't need to register for Self Assessment.

The exception being if you would be liable to the High Income Child Benefit Charge.

chssvl

Thanks a lot for this. 

Yes, forgot to mention that I get no child benefits so no issues there. Still, as Grumpy_chap states, probably best to start planning for this this.

I've been trying to put down as much into my pension as possible to use as much of my personal allowance while I still can and also because in my early years of work  I couldn't afford to put much. Still, at the current level of inflation (and assuming that my earnings don't fall way below it) this could become an important issue relatively soon.