Taxable income over 100k next tax year

kjs31

Jeremy535897 said:

You can deliberately overpay into your pension scheme and pay the annual allowance charge at 40% rather than the effective 60% rate. There are disadvantages though, in that you still have to pay tax to get the money back out of the pension, and if a LTA is reintroduced it could cause other problems.
https://www.mandg.com/wealth/adviser-services/tech-matters/pensions/annual-allowance/annual-allowance-explained#annual-allowance-tax-charge

Thanks! I am having to estimate what my pension contribution will be in my last 1 month and 13 days in the next tax year as I have to choose my redundancy severance amount soon and the final month of pay / pension contribution will be pro rata. I was going to err on the side of caution and ensure that I am under the annual allowance including carry over but it doesn’t sound like a huge deal if I’m a bit over. Do you pay the extra tax charge via self assessment? 

I am well over the LTA already so need to be mindful of what might happen there. I do plan to live within the basic rate tax band when I start drawing from my pension in 25/26 as I don’t think I will need to draw more out than that in normal circumstances. 

kjs31

Dazed_and_C0nfused said:

No, the only I can think of is the tax implications.  And tax free childcare can be impacted if that's relevant.

Sometimes you just have to pay what's due and remember it's a nice problem to have!

Thanks. Yes definitely a nice problem to have but an unexpected one as I had intended to retire halfway through the next tax year so pushed a lot of my savings interest / income into next year via fixed rate bonds etc that I now can’t change. Then unexpectedly I’ve ended up getting severance which is completely perfect for me but has derailed my tax planning a little. I’m busy calculating how much savings interest I have earned in 23/24 to see if I have scope to close some accounts and get the interest paid up now as I think I should be a bit under 100k this year.