Higher rate tax

apcorbett

I've just got a substantial pay rise, which will put me on £36k per year. This is going to be backdated to Jan 1st, so there is four months of last years money in there as well...

However, this will push me over into the 40% tax pay band for this year, is there any way that I can get this put into last years pay to enable the money to be taxed at the standard 22% instead of 40?

telly-addict

No, sorry, income from employment is taxed on a receipts basis for employees, i.e. it is taxed in the fiscal year in which you receive it.

Richie(UK)

Andy,

Look on the positive side - the NIC hit will be less this way (unless you are a director with an annual earnings period for NIC)

Might also be a good time to think about pension contributions.

Debt_Free_Chick

Also, you only pay 40% on the bit you earn over the limit - not the whole lot

apcorbett

Thanks for all the advice - So am I right in thinking that on over a certain amount, NIC is only 1% rather than the usual 11 - making the high rate tax not so bad!

I'm rather happy to be in this problem!

telly-addict

apcorbett wrote:

Thanks for all the advice - So am I right in thinking that on over a certain amount, NIC is only 1% rather than the usual 11 - making the high rate tax not so bad!

I'm rather happy to be in this problem!

For people not contracted out of SERPS you pay (for 2005-06) 11% on £94.01 to £630 per week and 1% on the excess over £630 per week. For contracted out the rates are 9.4% and 1% on the same figures.

Cook_County

You can eliminate the higher rate tax entirely either by increasing your pension contributions this year or next tax year...

reddevilled

Also, now you are a HR tax payer (if only for a year), consider every time you sponser a guy at work and tick the gift aid box, you can then reclaim 18% of the gross gift when you complete your tax return.