tax allowance on salary and savings.

tin2080

I currently have an annual salary of £30200 I also have around £200000 invested into a 1 year fix rate account paying 5.2%net.
does this put me in the 40% tax bracket ?
if so what options do I have to avoid paying tax at the higher rate?

any ideas..

tin2080

CLAPTON

if you earn 30,200
and you have 200,000 earning 5.2% net and this will pay out in this tax year then the situation is this

your income is your salary plus the 'grossed' up interest i.e
200,000 x 5.2%/0.8 = 13,000

so your gross income is 43,200 which means some will be taxed at the 40% rate, unless you pay into a pension in which case you can deduct the pension payments.


basically assuming your tax code is 543L
and no pension contributions
then
43,200 gross income
5435 tax free
so 37765
of which the first 36000 is taxble at 20% and the remaining at 40%

i.e. 1765 at 40% .. but you have already had 20% deducted so you will owe the HMRC £353 ... you will need to write and tell them at year end.