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  • FIRST POST
    • vanderbosch
    • By vanderbosch 14th Jan 20, 6:59 PM
    • 5Posts
    • 1Thanks
    vanderbosch
    Now a higher rate tax payer, anything I should know?
    • #1
    • 14th Jan 20, 6:59 PM
    Now a higher rate tax payer, anything I should know? 14th Jan 20 at 6:59 PM
    I have just got a new job which has put me in the higher rate tax bracket for the first time.

    My salary is 56k, minus 5% salary sacrifice for pension, with annual bonus of 20%.

    Is there anything obvious I should know or do in order to minimise my tax? I'm guessing the only thing I could do is salary sacrifice even further by increasing pension contributions?
Page 1
    • cloud_dog
    • By cloud_dog 14th Jan 20, 7:06 PM
    • 4,744 Posts
    • 2,986 Thanks
    cloud_dog
    • #2
    • 14th Jan 20, 7:06 PM
    • #2
    • 14th Jan 20, 7:06 PM
    Pretty much.

    Any other BIK to be taken into consideration (health insurance, car, etc etc)
    Personal Responsibility - Sad but True

    Sometimes.... I am like a dog with a bone
    • vanderbosch
    • By vanderbosch 14th Jan 20, 7:08 PM
    • 5 Posts
    • 1 Thanks
    vanderbosch
    • #3
    • 14th Jan 20, 7:08 PM
    • #3
    • 14th Jan 20, 7:08 PM
    Yes I get a health plan which is about 9 a month BIK.

    Also 6k of my salary is a car allowance.

    I don't get any other benefit or subsidy.
    • gdrforest
    • By gdrforest 14th Jan 20, 7:10 PM
    • 26 Posts
    • 10 Thanks
    gdrforest
    • #4
    • 14th Jan 20, 7:10 PM
    • #4
    • 14th Jan 20, 7:10 PM
    For anything that you gift aid you will be able to claim 20% back on your self-assessment. Always look for this option on memberships, entrance fees, sponsorship
    • zagfles
    • By zagfles 14th Jan 20, 7:12 PM
    • 14,930 Posts
    • 13,520 Thanks
    zagfles
    • #5
    • 14th Jan 20, 7:12 PM
    • #5
    • 14th Jan 20, 7:12 PM
    Claim tax back on any gift aid contributions. This can include days out eg at the zoo, national trust etc.

    Do you get marriage allowance transfer or child benefit (you or partner)? You'll lose both (child ben partially) unless you get yourself down to basic rate eg through pension contributions.
    • zagfles
    • By zagfles 14th Jan 20, 7:18 PM
    • 14,930 Posts
    • 13,520 Thanks
    zagfles
    • #6
    • 14th Jan 20, 7:18 PM
    • #6
    • 14th Jan 20, 7:18 PM
    For anything that you gift aid you will be able to claim 20% back on your self-assessment. Always look for this option on memberships, entrance fees, sponsorship
    Originally posted by gdrforest
    25% (it's 20% on the gross, 25% of the net).

    Gift aid rules say for one off fees where you get something, eg entrance to the zoo, they have to charge you 10% more - this is worth doing if a higher rate taxpayer as you get 25% back.
    • redpete
    • By redpete 14th Jan 20, 10:49 PM
    • 4,377 Posts
    • 3,880 Thanks
    redpete
    • #7
    • 14th Jan 20, 10:49 PM
    • #7
    • 14th Jan 20, 10:49 PM
    Charitable donations? Does your company offer sharesave or similar?
    loose does not rhyme with choose but lose does and is the word you meant to write.
    • MDMD
    • By MDMD 15th Jan 20, 11:05 PM
    • 494 Posts
    • 392 Thanks
    MDMD
    • #8
    • 15th Jan 20, 11:05 PM
    • #8
    • 15th Jan 20, 11:05 PM
    Don’t forget to add in any interest, dividends etc not in an ISA.

    You need to include them if you are planning to Sal Sac down to the BR threshold.
    • lisyloo
    • By lisyloo 15th Jan 20, 11:23 PM
    • 25,758 Posts
    • 13,942 Thanks
    lisyloo
    • #9
    • 15th Jan 20, 11:23 PM
    • #9
    • 15th Jan 20, 11:23 PM
    I don’t know what your employer is contributing to your pension or how old you are but 5% is not very much.

    Pension salary sacrifice is a good deal because you get tax and employees NI.
    If you are lucky your employer may also pass on employers NI.
    This is quite easy to check.
    Compare your deduction with what’s been contributed to your pension (minus employers contribution).
    If your contribution is increased by 13.8% then they’ll passed it on in full.
    I had one employer do half i.e. 6.9.
    • vanderbosch
    • By vanderbosch 16th Jan 20, 6:20 PM
    • 5 Posts
    • 1 Thanks
    vanderbosch
    I am 31, and my employer contributes 4%, which I think is about average for private sector?

    I could put more in but at the same time I would prefer to overpay the mortgage. Having said that, now I'm a higher rate tax payer it may be sensible to pay more into my pension.
    Last edited by vanderbosch; 16-01-2020 at 6:23 PM.
    • Prism
    • By Prism 16th Jan 20, 6:44 PM
    • 1,280 Posts
    • 948 Thanks
    Prism
    I am 31, and my employer contributes 4%, which I think is about average for private sector?

    I could put more in but at the same time I would prefer to overpay the mortgage. Having said that, now I'm a higher rate tax payer it may be sensible to pay more into my pension.
    Originally posted by vanderbosch
    Thats what I did. I haven't paid any higher rate tax for around 20 years now by contributing to a pension. Even though I could pay off the mortgage now I have just renewed a 5 year fixed deal.
    • vanderbosch
    • By vanderbosch 16th Jan 20, 6:46 PM
    • 5 Posts
    • 1 Thanks
    vanderbosch
    Thats what I did. I haven't paid any higher rate tax for around 20 years now by contributing to a pension. Even though I could pay off the mortgage now I have just renewed a 5 year fixed deal.
    Originally posted by Prism
    I'm not sure I want to pay in over 17k a year into my pension, but an extra chunk just to minimise tax and reap the benefits might be worth doing.
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