Advice on keeping income tax as low as poss.

chesky369

Yes, it is possible to defer even if you have started drawing it already. But I think you can only do this once - you can't keep changing your mind.

Elizabet

Thanks folks for comments and advice. Evil, I don't have anywhere enough pension to pay 40% tax!! Wish I had....wouldn't be looking to work. My point was that my salary added to pension would take me into 40% territory - which incidentally I thought - was after earnings of £34600 (not 40k). Am I wrong?

sleepless_saver

exil wrote: »

The obvious answer is to defer the state pension (if this is possible when you're already in receipt, I don't know) to age 65 when the tax allowance increases dramatically.

The increased tax allowance is clawed back £ for £ above a certain income level (from £20,900 this year) so it is likely that the OP's income is going to be too high to get any benefit from the age allowance.

exil

Yes - sorry, I forgot about that!

Deferring pension may well still be a good idea if the OP doesn't need the cash immediately.

Careful_ly

Elizabet wrote: »

Thanks folks for comments and advice. Evil, I don't have anywhere enough pension to pay 40% tax!! Wish I had....wouldn't be looking to work. My point was that my salary added to pension would take me into 40% territory - which incidentally I thought - was after earnings of £34600 (not 40k). Am I wrong?

You need to take your personal allowance into consideration, which for 08/09 for someone under 65 is £5435.
So you don't pay 40% on an income of 40k as long as you don't have taxable perks eg private medical insurance or a company car.

HTH

Elizabet

Thank you careful_ly. Now it makes sense.