Reduce Income Tax

Hello,

Hopefully someone could advise me.

I received a letter from HMRC, stating:

"We estimate that you have not paid enough Income Tax so far this tax year. You currently owe

£1,725.14

How this will be collected

We will start to collect this amount straight away.

To do this we have reduced your tax-free amount by £6,005. This means that you will pay more tax until 5 April 2024, so that we can collect the £1,725.14 owed."


I was wondering if I was to increase my pension by 2%, salary sacrifice, as this would reduce my salary by £1800 approx, would this then reduce the Income Tax that HMRC say I owe.  I am a normal employee so I don't know how this has happened as my work sort out my tax each year.

I phoned HMRC and they said that this is estimated on my salary I should get this year.


thanks for any advice! 

Comments

  • Horhif said:
    Hello,

    Hopefully someone could advise me.

    I received a letter from HMRC, stating:

    "We estimate that you have not paid enough Income Tax so far this tax year. You currently owe

    £1,725.14

    How this will be collected

    We will start to collect this amount straight away.

    To do this we have reduced your tax-free amount by £6,005. This means that you will pay more tax until 5 April 2024, so that we can collect the £1,725.14 owed."


    I was wondering if I was to increase my pension by 2%, salary sacrifice, as this would reduce my salary by £1800 approx, would this then reduce the Income Tax that HMRC say I owe.  I am a normal employee so I don't know how this has happened as my work sort out my tax each year.

    I phoned HMRC and they said that this is estimated on my salary I should get this year.


    thanks for any advice! 

    No idea where you got that idea from, your tax is your responsibility!

    Are you a higher earner now getting into a situation where your Personal Allowance is tapered?

    If so then reducing your adjusted net income could well help.  Adjusted net income starts with your taxable income so if you decide to sacrifice some for extra employer pension contributions that will reduce your taxable income.

    But if you are reducing it from say £140k to £130k it won't help as the taper ends at £125,140 (of adjusted net income).


  • Horhif said:
    Hello,

    Hopefully someone could advise me.

    I received a letter from HMRC, stating:

    "We estimate that you have not paid enough Income Tax so far this tax year. You currently owe

    £1,725.14

    How this will be collected

    We will start to collect this amount straight away.

    To do this we have reduced your tax-free amount by £6,005. This means that you will pay more tax until 5 April 2024, so that we can collect the £1,725.14 owed."


    I was wondering if I was to increase my pension by 2%, salary sacrifice, as this would reduce my salary by £1800 approx, would this then reduce the Income Tax that HMRC say I owe.  I am a normal employee so I don't know how this has happened as my work sort out my tax each year.

    I phoned HMRC and they said that this is estimated on my salary I should get this year.


    thanks for any advice! 

    No idea where you got that idea from, your tax is your responsibility!

    Are you a higher earner now getting into a situation where your Personal Allowance is tapered?

    If so then reducing your adjusted net income could well help.  Adjusted net income starts with your taxable income so if you decide to sacrifice some for extra employer pension contributions that will reduce your taxable income.

    But if you are reducing it from say £140k to £130k it won't help as the taper ends at £125,140 (of adjusted net income).


    Thank-you for your help and advice.   

    I note your comment, what I really meant was I'm not self employed so am not well versed in completing tax returns and tax codes/bands etc.

    I appreciate your advice, thanks again!
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