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    • NODDYNODSVILLE
    • By NODDYNODSVILLE 8th Mar 18, 7:33 AM
    • 3Posts
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    NODDYNODSVILLE
    Tax
    • #1
    • 8th Mar 18, 7:33 AM
    Tax 8th Mar 18 at 7:33 AM
    Morning all,
    I am just about to draw my pension and along with my wages will put me over the threshold of 45000 for the 40% tax. Will I pay 20% tax up to the 45000, then 40% on anything over 45000 or will I pay 40% on the lot from scratch.
Page 1
    • Alistair31
    • By Alistair31 8th Mar 18, 7:41 AM
    • 34 Posts
    • 22 Thanks
    Alistair31
    • #2
    • 8th Mar 18, 7:41 AM
    • #2
    • 8th Mar 18, 7:41 AM
    All explained in the below link. Rest assured that it is not 40% from scratch.

    https://www.moneysavingexpert.com/banking/tax-rates
    • AnotherJoe
    • By AnotherJoe 8th Mar 18, 7:46 AM
    • 9,364 Posts
    • 10,313 Thanks
    AnotherJoe
    • #3
    • 8th Mar 18, 7:46 AM
    • #3
    • 8th Mar 18, 7:46 AM
    The former, 40% on whats over, not on everything. No different whether its pension income or work income, eg say you had a second job.

    Of course the practical outcome is that all or nearly pension income is effectively taxed at 40% which leads to the question of if its worth deferring it. Depends how long you intend working and if the pension would rise if deferred. Do you mean state pension for example, if so i think you get an extra 5.8% every year its deferred?
    • bowlhead99
    • By bowlhead99 8th Mar 18, 8:37 AM
    • 7,820 Posts
    • 14,286 Thanks
    bowlhead99
    • #4
    • 8th Mar 18, 8:37 AM
    • #4
    • 8th Mar 18, 8:37 AM
    You could also put some more of your wages into a private pension before the end of the tax year that you were going to go over the limit, so that you get tax relief as though you had never earned the money and so won't need to pay 40% (well, you might pay it initially, but later get it back from the tax man)

    But if you don't want to do that the higher rate tax is only on the amount over the high rate threshold and not the stuff that falls within the personal allowance or 20% bands.
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