sorry another nhs pension question
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sazdes
Posts: 108 Forumite
Hi, not sure if anyone can help as the two different hmrc people I've spoken with have confused me furthrr
I am currently £392 into higher rate tax (salary 46742, so paying £153 @ higher rate), but because drs have to move round the country annually I have not been able to buy a house and subsequently have quite a bit of money in savings accounts
I was trying to get out of higher rate tax in order to have keep higher tax-free savings allowance, £1000 instead of £500 as I currently make about £1100/year in interest so is the difference between 0.2*100 vs 0.4*600 so £20 tax or £240).... and since I am only just into higher rate tax it is actually financially disadvantaging myself my being on a higher rate
I was planning on buying £1370 AVC which gets you £250/year extra pension. However, when talking to hmrc earlier, it seems you only get the 20% additional tax relief (from pension over paying), on the £153 higher rate tax I am paying, and not 20% of the £1370 I have put into the pension
Is this correct, as by that logic even if I buy more than one block of these £1370 chunks I am only going to get the £30.60 tax relief, by his theory.
Is this correct (and just because you can't actually salary sacrifice in the NHS)? If so is there any other way of just binning the extra £392 salary to get out of higher rate tax, as it is causing me to pay an extra £153 in direct income tax and also £240 on my savings so I will be £1 worse off than not having that bit of my salary in the first place?
Thanks so much
Sarah
I am currently £392 into higher rate tax (salary 46742, so paying £153 @ higher rate), but because drs have to move round the country annually I have not been able to buy a house and subsequently have quite a bit of money in savings accounts
I was trying to get out of higher rate tax in order to have keep higher tax-free savings allowance, £1000 instead of £500 as I currently make about £1100/year in interest so is the difference between 0.2*100 vs 0.4*600 so £20 tax or £240).... and since I am only just into higher rate tax it is actually financially disadvantaging myself my being on a higher rate
I was planning on buying £1370 AVC which gets you £250/year extra pension. However, when talking to hmrc earlier, it seems you only get the 20% additional tax relief (from pension over paying), on the £153 higher rate tax I am paying, and not 20% of the £1370 I have put into the pension
Is this correct, as by that logic even if I buy more than one block of these £1370 chunks I am only going to get the £30.60 tax relief, by his theory.
Is this correct (and just because you can't actually salary sacrifice in the NHS)? If so is there any other way of just binning the extra £392 salary to get out of higher rate tax, as it is causing me to pay an extra £153 in direct income tax and also £240 on my savings so I will be £1 worse off than not having that bit of my salary in the first place?
Thanks so much
Sarah
0
Comments
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Key Features of the NHS Additional Voluntary Contributions
(AVC) Scheme for England & Wales
The Prudential AVC? Paid from your salary before tax?
AVC payments are deducted from your
salary before tax and passed to Prudential
for investment. This means if you normally
pay tax you’ll qualify for immediate tax relief
on your payments.
If you make a lump sum payment by
cheque you will need to reclaim any tax
relief you are due by contacting HMRC.
We’ve based this information on our
understanding of current law and HM
Revenue and Customs practice. Your
individual circumstances and future changes
in law and tax practice could affect the
amount you pay. For more information
please visit https://www.pru.co.uk/tax or visit the
HMRC website at https://www.hmrc.gov.uk
If you need further advice on tax you may
wish to speak to a financial adviser.0 -
its not via the prudential/standard life options private pensions.... its additional nhs pension ie £1370 buys you £250/year pension when you retire0
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