Exceeding PSA with new pay rise - what to do?

Yorkie1

Are you basing your pay rise info on the gross salary you'll be receiving, or on the taxable earnings?

Contribution rates - Civil Service Pension Scheme sets out what you will be paying for the alpha pension. If, for example, your pay rise has taken you to £53,000 gross salary per year, then you'll be contributing 5.45% to the pension, which would be £2888.50 per year, leaving you with a taxable income from salary of £50,111.50. This is under the 40% HR band (England) of £50,270.

You'd need to add in any other taxable income, e.g. savings interest, to find out what your overall taxable income was. 

You can then use pension contributions, for example, to reduce your taxable earnings further. Either through Civil service (AVC, EPA, Added pension) or SIPP.

Or gift aid on charitable donations can increase the size of your basic rate band to cover your taxable earnings.

Jami74

Yorkie1 said: 

Or gift aid on charitable donations can increase the size of your basic rate band to cover your taxable earnings.

Please could you explain how this works in practice? I'm a higher rate tax payer but do not self assess. Is it just a case of phoning them up to tell them after the end of the tax year?

OP, I moved savings as they matured into a flexible cash ISA (kept my NatWest digital saver though) and make contributions to my SIPP (also in a DB pension at work). I am back paying tax on the first year I exceeded the PSA but should avoid paying further tax on interest by using the ISA and SIPP.

Dazed_and_C0nfused

Jami74 said:

Yorkie1 said: 

Or gift aid on charitable donations can increase the size of your basic rate band to cover your taxable earnings.

Please could you explain how this works in practice? I'm a higher rate tax payer but do not self assess. Is it just a case of phoning them up to tell them after the end of the tax year?

OP, I moved savings as they matured into a flexible cash ISA (kept my NatWest digital saver though) and make contributions to my SIPP (also in a DB pension at work). I am back paying tax on the first year I exceeded the PSA but should avoid paying further tax on interest by using the ISA and SIPP.

Unless it's a huge amount yes I think you could sort it via a phone call.

You could even tell HMRC during the year so your tax code is updated to give any higher rate tax relief due.  

But you would then need to check the actual donations once the tax year ends.