Over £100,000 salary, reducing tax

TaxSaver25

Hi,

My wife earns around £70k basic salary a year but her bonuses through the year 24/25 took her to £110k so I assume we can expect a tax bill? She has a pension that is salary sacrifice does that reduce what we pay? Is there a way I can work out our liability?

Other question is, we don’t know how much bonus she will get this tax year so how do we make sure we don’t go over again. Do we just monitor through the year and start paying more in to her pension at the end of the year if we are getting close? I don’t want to be in a situation where a whole month’s salary has to go in to the pension however. 

Thank you. 

Dazed_and_C0nfused

TaxSaver25 said:

Hi,

My wife earns around £70k basic salary a year but her bonuses through the year 24/25 took her to £110k so I assume we can expect a tax bill? She has a pension that is salary sacrifice does that reduce what we pay? Is there a way I can work out our liability?

Other question is, we don’t know how much bonus she will get this tax year so how do we make sure we don’t go over again. Do we just monitor through the year and start paying more in to her pension at the end of the year if we are getting close? I don’t want to be in a situation where a whole month’s salary has to go in to the pension however. 

Thank you. 

There is nothing she can do pension wise to reduce her 2024-25 tax liability.  She needed to contribute before 6 April 2025 for there to be any benefit for the 2024-25 tax year.

Salary sacrifice means she doesn't contribute to a pension.  She has agreed to a reduced salary in return for additional employer contributions.  There is no pension tax relief due on employer contributions.  But she didn't have that salary to pay tax or NI on in the first place.

What tax code was shown on her 2024-25 P60?

For the current tax year yes, she needs to keep a close eye on this and make sure she makes any contributions within the tax year.

kinger101

Dazed_and_C0nfused said:

TaxSaver25 said:

Hi,

My wife earns around £70k basic salary a year but her bonuses through the year 24/25 took her to £110k so I assume we can expect a tax bill? She has a pension that is salary sacrifice does that reduce what we pay? Is there a way I can work out our liability?

Other question is, we don’t know how much bonus she will get this tax year so how do we make sure we don’t go over again. Do we just monitor through the year and start paying more in to her pension at the end of the year if we are getting close? I don’t want to be in a situation where a whole month’s salary has to go in to the pension however. 

Thank you. 

There is nothing she can do pension wise to reduce her 2024-25 tax liability.  She needed to contribute before 6 April 2025 for there to be any benefit for the 2024-25 tax year.

Salary sacrifice means she doesn't contribute to a pension.  She has agreed to a reduced salary in return for additional employer contributions.  There is no pension tax relief due on employer contributions.  But she didn't have that salary to pay tax or NI on in the first place.

What tax code was shown on her 2024-25 P60?

For the current tax year yes, she needs to keep a close eye on this and make sure she makes any contributions within the tax year.

If a tax return has not yet been filed, there is one option but it involves donating the money to a charity.

You can deem donations to charity were made in a prior year. Only really makes sense if you wanted to donate the money or you would otherwise be in a 100 percent or more marginal rate due to tax free childcare or nursery hours.

OP - lots of people face this every year. If your employer doesn't have a bonus sacrifice option then you can always pay into a SIPP.  There's a cashflow implication on the latter, but only a few months, particularly I'd all BIK have been patrolled as you don't have to wait until July for a P11D.

Nomunnofun1

TaxSaver25 said:

Hi,

My wife earns around £70k basic salary a year but her bonuses through the year 24/25 took her to £110k so I assume we can expect a tax bill? She has a pension that is salary sacrifice does that reduce what we pay? Is there a way I can work out our liability?

Other question is, we don’t know how much bonus she will get this tax year so how do we make sure we don’t go over again. Do we just monitor through the year and start paying more in to her pension at the end of the year if we are getting close? I don’t want to be in a situation where a whole month’s salary has to go in to the pension however. 

Thank you. 

The £70k ‘basic’ salary. Is this before or after salary sacrifice. What is the monthly TAXABLE salary on her payslip?

BikingBud

When is the bonus paid?

What are you obligations/outgoings

If early enough in the tax year can it be banked and then reduce monthly wage by SalSac to ensure minimum required is still available over whole year?