Anyone got any ideas on what to do with income over £46k? I.e when you hit the 40% tax rate? I figure boosting pension contributions is the easiest way but wondered if anyone was more clued up than I! Once you start studying accountancy everyone thinks that you’re their personal tax advisor and as I’ve never had this problem I’ve never really looked into it!
Ps. Advice will not be taken - just ideas for further research and discussion
As we are not talking footballers amounts then salary sacrifices (I pay for extra pension & annual leave) followed by increased pension contributions are clear winners.
I’m guessing they can’t take cash in hand thus avoiding the lovely tax man.
As a 40% tax payer I just deal with it as neither May or Corbyn are not going to change anything soon.
We’re not - but we all try and get the best savings rate by moving from one saving account to the next when you can just get an extra boost by not paying that top rate by increasing pension contributions for example.
Flip side is a LISA but I’m not sure I trust them…
I discussed this with our company pension adviser a few months ago, she basically told me the best way is to increase pension contribution and take a loan from the company which they can deduct from salary before tax every month which means Gross income will come down.
On higher tax - another thing to remember is that as soon as you or your partner cross 50k/pa and if you are claiming child benefit (Which you should because of NI & state pension implication) you will have to do self-assessment and pay tax on child benefit.
Well you can still keep claiming put that into a high interest saving account and pay tax on it - That was the advice I was given because if you stop claiming child will have to apply for NI number, they will not get one automatically.
I couldn’t believe it when it was announced. A household on £100K (using 2 personal tax allowances!) get the full benefit and a household on £60K (using 1 personal tax allowance) get nothing.
I understand it’s all relative and for those with a lower combined income it’s wholly irrelevant. For those who may be somewhat better off, however, it offers a very clear value judgement of people who take time out of work to look after children.
So, for people reading this thinking “if you earn 60K, you shouldn’t complain” - I hear you.
But here’s a very generic calculation regarding the parent on less income.
Lets say Parent A is the 60K earner, whose out at work all day.
Parent B can either go to work, and put the kids in child care - Or they can stay at home and be a full-time parent.
It’s also worth pointing out that putting young children in nursery etc, can do wonders for their development anyway. But we also have situations around taking/picking up from school to consider as they get older.
If Parent B earns 20K - That’s a take home salary of “around” £1,400 per month.
Probably just enough to cover childcare costs for 1 child - But not 2.
So what does Parent B do?
Work, and see all of their money disappear into childcare costs?
Not work, and potentially have more money and time with the children, but possibly not give the child the development they need?
It’s a horrible situation, and one that is incredibly unfair on so many people - But just because there is this stigma over “One of you earning 60K”, it’s assumed you are absolutely minted, when it can often be far from the case.