Difficulty understanding my tax situation

Crazydude7561

I have 2 jobs, company car and medical insurance benefits that gives me a combined taxable income in excess of 50k.  In order to reduce my tax, I took out the salary sacrifice (into my pension) option with my main employer to avoid paying as much tax. I have only so far made 2 months payments of salary sacrifice. I am sacrificing 8K into my pension annually hoping to come into the 20% tax bracket for my second job, however this hasn’t changed, I’m guessing this is because of what income has accrued already this tax year is in excess of 50K. However looking on HMRC on line they predict I will pay £800 extra in tax next year. Why is this when I think I should be paying less tax next year with my salary sacrifice being applied for the full year ? Also I am considering paying in more salary sacrifice, but will it further reduce my tax bill ?

400ixl

You likely need to tell them that you will be earning less next year. You can do that through the HMRC app.

molerat

You need to ensure that both jobs are showing the correct annual estimated income for both this year and next in your tax account.  With more than one income source you need to do this every year as the codes issued are usually a stab in the dark based on the previous year and when on the fringe of moving tax bands it can often lead to the wrong code being allocated to a secondary income.

Crazydude7561

On the HMRC on line account they have my salary as 42k this year which is correct. But from April I believe this should read 34k as I am now using salary sacrifice (pension) and putting in 8K over the year (666 a month). Should I change the 42K to 34K in my HMRC account for next year, am I correct in doing this ?

Dazed_and_C0nfused

Crazydude7561 said:

On the HMRC on line account they have my salary as 42k this year which is correct. But from April I believe this should read 34k as I am now using salary sacrifice (pension) and putting in 8K over the year (666 a month). Should I change the 42K to 34K in my HMRC account for next year, am I correct in doing this ?

What HMRC will be interested in is what you expect your taxable pay to on your P60.

If you think that will be £34k for 2025-26, because you have agreed to a smaller salary, then that is what you update it to for 2025-26.

Just remember to keep an eye on it if things change, the more accurate that figure is the more chance your tax will be right, particularly if you have more than one employment or pension.

penners324

Why not salary sacrifice on both jobs?