Falling foul of the PSA - Self Assesment?

SpeedSouth

With 2 months to go it looks like I am going to fall foul of the 40% PSA cliff edge.

My gross salary will be £49K and some change, then with around £1K in savings earnings.  Combined I'm just going to tip into 40% bracket.  Not the £100k plus trap, but annoying none the less.

What's the easiest way to resolve it?
I can't up my works pension % again this year, but will do that for next tax year, and look at cash ISA, or putting the money in my missus name.

So assuming I drop in £1000 or whatever it takes into my SIPP, does it mean a full on self assessment or is there an easier/simpler way?

SacredStephan

Making a personal pension contribution does not, on its own, trigger the need for self assessment. You will need to report the contribution (after you made it) to HMRC using the online form.
https://www.gov.uk/guidance/claim-tax-relief-on-your-private-pension-payments

SpeedSouth

Yeah I realise I'd need to report it somewhere, so this looks like the simpler way I hoped would exist.

If I use this online form would it shake out the 40%on the savings as well?  Putting me back up to £1000 PSA or would it simply bump up the pension payment by another 20% relief over the platforms automated 20%?

Or would the reporting of it, make them decide if a SA is required?

SacredStephan

"SpeedSouth said:

If I use this online form would it shake out the 40%on the savings as well?  Yes.
Putting me back up to £1000 PSA  Yes.
or would it simply bump up the pension payment by another 20% relief over the platforms automated 20%? No, any higher rate relief goes to the individual, not into the pension pot.

molerat

Paying into a SIPP lifts the 40% threshold by the gross amount paid in. So if you pay in £1000 that adds £1250 to the threshold taking it from £50270 to £51520.  If your total income is below that you are a basic rate tax payer with a £1K PSA.  If you do not pay any 40% tax on your income then there will be no tax to refund.

SpeedSouth

Thanks both,
I will have paid 40% this year when it all shakes out currently.  I'll complete the form in order to get that refunded. 

Yorkie1

It's not your gross salary which is relevant for these purposes; it's your taxable earnings.

Have you been making pension contributions during the year? If so, then your taxable earnings will be less than £49K, and so even if you add the £1K savings interest back on, you are likely to be below the 40% threshold.

SpeedSouth

https://forums.moneysavingexpert.com/discussion/comment/81851592#Comment_81851592

Wrong language choice originally. My Gross salary is £80k, My taxable earnings are £49K, reflecting contributions thus far.