Tax employment details

mchammer

Please a little help folks....

When I look at my PAYE income tax summary for this year I have my current employer £48,000 (correct) and my pension £15,500 (correct) and then another employer have ended since 2024 of (£35,778). Now the last amount was not from employment but from money my mum left me when she passed earlier last year that was taxed at 40%.

Since the last amount was paid I'm now paying 40% tax on my pension as I'm now 'earning' over £1000,000.

Is this correct?  Is the £35,778 part of my income? 

thank you 

molerat

How was this money "left to you" ?

Her pension ?   How old was she ?

Inheritances are generally not taxable but inherited pension pots often are and would be treated as income, they are often shown as employer income for simplicity.

mchammer

That kind of answers the question as its was an inherited pension thank you 

Exodi

mchammer said:

Since the last amount was paid I'm now paying 40% tax on my pension as I'm now 'earning' over £1000,000.

40%? Even if you hadn't inherited your late mothers pension, your income for the year would have been £48k+£15.5 = £63.5k, so you were already £13,230 deep into the higher rate 40% bracket, e.g. you were already paying 40% tax on your pension.

Above £100k you get into the dreaded effective '60% tax rate trap', where your personal allowance is reduced between £100k and £125,140.

If your income is as you say, £99,278 for the year, I would try to reduce income as much as possible until the end of the tax year.

SacredStephan

Have you considered making a personal pension contribution to take yourself out of 40% tax? You would need to do this by 5th April.