How to get round 60% tax issue

sultan123

I am going to be earning 103k (gross salary + car allowance).

On top of this each year I will get a bonus maybe 15k-18k on top of the 103k.

I am aware even going to 103k will cost me 60% tax. How much should I salary sacrifice into pension bearing in mind I have to take account of bonus too.

Should I keep salary to 99k? If so how much do I put into pension as salary sacrifice.

Dazed_and_C0nfused

sultan123 said:

I am going to be earning 103k (gross salary + car allowance).

On top of this each year I will get a bonus maybe 15k-18k on top of the 103k.

I am aware even going to 103k will cost me 60% tax. How much should I salary sacrifice into pension bearing in mind I have to take account of bonus too.

Should I keep salary to 99k? If so how much do I put into pension as salary sacrifice.

Salary sacrifice means you agree to a lower salary in return for extra employer contributions.

You don't get any pension tax relief added to your pension fund, it's simply £1 sacrificed is £1 added to your pension.

Don't forget your Personal Allowance is based on your adjusted net income, not just earnings.  So you have to add all taxable income, even that which is taxed at 0%.

sultan123

Dazed_and_C0nfused said:

sultan123 said:

I am going to be earning 103k (gross salary + car allowance).

On top of this each year I will get a bonus maybe 15k-18k on top of the 103k.

I am aware even going to 103k will cost me 60% tax. How much should I salary sacrifice into pension bearing in mind I have to take account of bonus too.

Should I keep salary to 99k? If so how much do I put into pension as salary sacrifice.

Salary sacrifice means you agree to a lower salary in return for extra employer contributions.

You don't get any pension tax relief added to your pension fund, it's simply £1 sacrificed is £1 added to your pension.

Don't forget your Personal Allowance is based on your adjusted net income, not just earnings.  So you have to add all taxable income, even that which is taxed at 0%.

Thanks but how much do I need to sacrifice from 103k to keep below 60%

Grumpy_chap

From £103k to get to £99k (under £100k) is £4k to SS.
Assuming no other income.
Assuming SS is available.
Assuming available annual allowance.
It may be too late if considering the current tax year.

sultan123

Grumpy_chap said:

From £103k to get to £99k (under £100k) is £4k to SS.
Assuming no other income.
Assuming SS is available.
Assuming available annual allowance.
It may be too late if considering the current tax year.

Thanks this new wage kicks in from May.

If I am not allowed to put bonus into pension can I still manage by putting it into SIPP?

DRS1

Maybe he was asking about the car allowance?

I assume that is an amount which is added to your salary and counts as taxable income.  If so include that in your sums.

And any other taxable income you have - eg savings interest.  And as @Dazed_and_C0nfused said include it even if it is under £500 and so taxed at 0%

You wouldn't want to find yourself over the  £100K because you left something out.  

sultan123

DRS1 said:

Maybe he was asking about the car allowance?

I assume that is an amount which is added to your salary and counts as taxable income.  If so include that in your sums.

And any other taxable income you have - eg savings interest.  And as @Dazed_and_C0nfused said include it even if it is under £500 and so taxed at 0%

You wouldn't want to find yourself over the  £100K because you left something out.  

103k includes car allowance

Dazed_and_C0nfused

sultan123 said:

Grumpy_chap said:

From £103k to get to £99k (under £100k) is £4k to SS.
Assuming no other income.
Assuming SS is available.
Assuming available annual allowance.
It may be too late if considering the current tax year.

Thanks this new wage kicks in from May.

If I am not allowed to put bonus into pension can I still manage by putting it into SIPP?

Yes, more complicated but has same impact for adjusted net income purposes.

400ixl

£103k + £12-15k bonus + taxable benefits + taxable interest - Pension already sacrificed will give you a reasonably close estimate of how much you are over the £100k. That will be the additional amount you ned to sacrifice if anything.

sultan123

400ixl said:

£103k + £12-15k bonus + taxable benefits + taxable interest - Pension already sacrificed will give you a reasonably close estimate of how much you are over the £100k. That will be the additional amount you ned to sacrifice if anything.

What % do I salary sacrifice into pension out of 103k to get it to 99k.

Aware of bonus but that will all,go into bonus anyway

Dazed_and_C0nfused

sultan123 said:

400ixl said:

£103k + £12-15k bonus + taxable benefits + taxable interest - Pension already sacrificed will give you a reasonably close estimate of how much you are over the £100k. That will be the additional amount you ned to sacrifice if anything.

What % do I salary sacrifice into pension out of 103k to get it to 99k.

Aware of bonus but that will all,go into bonus anyway

By my count 103 minus 99 = 4.

But the fact you are asking what the sum of of 103 minus 99 is suggests there is more to your question