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Tax confusion

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Hi I’d be grateful if anyone can help me out please, I’m trying to bring myself within the basic rate tax bracket.

i took early retirement and have a company pension income of £17,027.92 pa tax code BR.

recently I started a new job 
salary £60k plus car allowance £5,610.

I’ve bought some holiday which I think will reduce tax reducing my income by £923.28 pa.

60000.00
17017.92
  5610.00
—————-
82627.92 total
    923.28 holiday buy
—————-
81704.64 income 

I also have married persons allowance of £1260. I’ve worked out that I’d need to put £30,174.64. Pa into a company pension to stop paying 40%tax. 

Does this sound right as it seems an awful lot to me and would appreciate any guidance with my figures as I’m so confused.

many thanks 
«134

Comments

  • caromary1056
    caromary1056 Posts: 14 Forumite
    10 Posts
    My tax code is 1383M on my new job
  • eskbanker
    eskbanker Posts: 37,282 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    I also have married persons allowance of £1260.
    Not if you're a higher rate taxpayer....
  • caromary1056
    caromary1056 Posts: 14 Forumite
    10 Posts
    eskbanker said:
    I also have married persons allowance of £1260.
    Not if you're a higher rate taxpayer....
    Thank you. So do I need to give that allowance back to my husband then? I had hoped I could keep under the high rate threshold and keep the marriage allowance and put some earnings into a company pension…hopefully 
  • Nomunnofun1
    Nomunnofun1 Posts: 689 Forumite
    500 Posts Name Dropper
    Income of £81704 attracts income of £31434 at 40%. 

    You could put £25147 into a SIPP which will be grossed up by HMRC to £31434 (give yourself some leeway). 

    You can then claim additional tax relief from HMRC of £6286. 
  • caromary1056
    caromary1056 Posts: 14 Forumite
    10 Posts
    Income of £81704 attracts income of £31434 at 40%. 

    You could put £25147 into a SIPP which will be grossed up by HMRC to £31434 (give yourself some leeway). 

    You can then claim additional tax relief from HMRC of £6286. 
    Thank you. I will have a look at SIPPs it’s something I hadn’t considered at all. My only thoughts where to contribute each month to my new employers pension scheme via salary sacrifice to keep under the 40%
  • Albermarle
    Albermarle Posts: 27,963 Forumite
    10,000 Posts Seventh Anniversary Name Dropper
    Income of £81704 attracts income of £31434 at 40%. 

    You could put £25147 into a SIPP which will be grossed up by HMRC to £31434 (give yourself some leeway). 

    You can then claim additional tax relief from HMRC of £6286. 
    Thank you. I will have a look at SIPPs it’s something I hadn’t considered at all. My only thoughts where to contribute each month to my new employers pension scheme via salary sacrifice to keep under the 40%
    If you have a salary sacrifice arrangement with your new employer then contributing via that route would be easier, as you would get the full tax benefit automatically ( by never paying it in the first place) and a small NI benefit.
    Some employers will even increase their contribution if you increase yours ( to a point) - worth checking that.
  • caromary1056
    caromary1056 Posts: 14 Forumite
    10 Posts
    Income of £81704 attracts income of £31434 at 40%. 

    You could put £25147 into a SIPP which will be grossed up by HMRC to £31434 (give yourself some leeway). 

    You can then claim additional tax relief from HMRC of £6286. 
    Thank you. I will have a look at SIPPs it’s something I hadn’t considered at all. My only thoughts where to contribute each month to my new employers pension scheme via salary sacrifice to keep under the 40%
    If you have a salary sacrifice arrangement with your new employer then contributing via that route would be easier, as you would get the full tax benefit automatically ( by never paying it in the first place) and a small NI benefit.
    Some employers will even increase their contribution if you increase yours ( to a point) - worth checking that.
    Ok thanks think salary sacrifice through company pension sounds easiest route. Do you think I’m correct with my figures and needing to put £30,174.64 into the pension pa to avoid being a 40% tax payer please?
  • Strummer22
    Strummer22 Posts: 715 Forumite
    Ninth Anniversary 500 Posts Name Dropper Combo Breaker
    eskbanker said:
    I also have married persons allowance of £1260.
    Not if you're a higher rate taxpayer....
    Thank you. So do I need to give that allowance back to my husband then? I had hoped I could keep under the high rate threshold and keep the marriage allowance and put some earnings into a company pension…hopefully 
    If you put sufficient into a company pension or use other tax allowances (e.g. gift aid) to get your adjusted net income below £50,270, you get to keep the marriage allowance. 
  • DRS1
    DRS1 Posts: 1,261 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    Income of £81704 attracts income of £31434 at 40%. 

    You could put £25147 into a SIPP which will be grossed up by HMRC to £31434 (give yourself some leeway). 

    You can then claim additional tax relief from HMRC of £6286. 
    Thank you. I will have a look at SIPPs it’s something I hadn’t considered at all. My only thoughts where to contribute each month to my new employers pension scheme via salary sacrifice to keep under the 40%
    If you have a salary sacrifice arrangement with your new employer then contributing via that route would be easier, as you would get the full tax benefit automatically ( by never paying it in the first place) and a small NI benefit.
    Some employers will even increase their contribution if you increase yours ( to a point) - worth checking that.
    Ok thanks think salary sacrifice through company pension sounds easiest route. Do you think I’m correct with my figures and needing to put £30,174.64 into the pension pa to avoid being a 40% tax payer please?
    I think that puts you on £51530 which is still in higher rate territory.  You need another £1260. (That is gross so depending on how you contribute you may want to multiply the amount by 0.8 to get what you actually contribute)

    Do you already contribute to a pension?

    If you want to do it this tax year there aren't many days left.  Is it already too late for salary sacrifice?  Does that need a payroll run?
  • caromary1056
    caromary1056 Posts: 14 Forumite
    10 Posts
    DRS1 said:
    Income of £81704 attracts income of £31434 at 40%. 

    You could put £25147 into a SIPP which will be grossed up by HMRC to £31434 (give yourself some leeway). 

    You can then claim additional tax relief from HMRC of £6286. 
    Thank you. I will have a look at SIPPs it’s something I hadn’t considered at all. My only thoughts where to contribute each month to my new employers pension scheme via salary sacrifice to keep under the 40%
    If you have a salary sacrifice arrangement with your new employer then contributing via that route would be easier, as you would get the full tax benefit automatically ( by never paying it in the first place) and a small NI benefit.
    Some employers will even increase their contribution if you increase yours ( to a point) - worth checking that.
    Ok thanks think salary sacrifice through company pension sounds easiest route. Do you think I’m correct with my figures and needing to put £30,174.64 into the pension pa to avoid being a 40% tax payer please?
    I think that puts you on £51530 which is still in higher rate territory.  You need another £1260. (That is gross so depending on how you contribute you may want to multiply the amount by 0.8 to get what you actually contribute)

    Do you already contribute to a pension?

    If you want to do it this tax year there aren't many days left.  Is it already too late for salary sacrifice?  Does that need a payroll run?
    Thanks, I’m well under for this year as only recently started working again. Thinking of next tax year. I’m only contributing £250 a month to match the max that my employer contributes but realise this won’t be enough for new tax year to keep as a basic rate tax payer.  Please can you explain the £51,530 figure? Many thanks 
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