tatty

Marginal Tax Rate For Income £100,000 - £115,000

34 posts in this topic

Thanks - I think that is the bit I am struggling with :

I have a personal pension with my employer so I get 20% relief at source (is this "salary sacrifice" - i thought salary sacrifice is something specific.

I get the additioanl 20% relief through my coding notice or tax return.

So if I wanted to top my pension up this year by say 10k to "get back" the personal allowance I dont get how that happens as you say - just a one off payment direct to the personal pension out of my taxed income or does it need doing in some special way.

It is easier if you can use a scheme sheltered from PAYEE which will typically be your work pension using salary sacrafice.

My new Tax adviser (i didn't have one before) says it not what you pay into your pension that determines the tax relief, but your highest rate of tax and then work in reverse as you use the allowance - which I kind of knew.

The question I still haven't fathomed is I can pay in a lump sum, but the so and soes at the HMRC still have a huge chunk of my gross income. The relief I'll get will most be at 40%, with half of that claimed back by the provider. I still haven't worked out what to do to get the 60% bit back, basically the challenge is I may be a lot closer to £150k than I'd thought, so I might have to stick a huge sum in to even get use of the 60% releif.

Share this post


Link to post
Share on other sites

Thanks - I think that is the bit I am struggling with :

I have a personal pension with my employer so I get 20% relief at source (is this "salary sacrifice" - i thought salary sacrifice is something specific.

I get the additioanl 20% relief through my coding notice or tax return.

So if I wanted to top my pension up this year by say 10k to "get back" the personal allowance I dont get how that happens as you say - just a one off payment direct to the personal pension out of my taxed income or does it need doing in some special way.

I did ask my adviser and he suggested they'd use a coding notice change for small sums or write a cheque for larger amounts. No idea what the threshold is though, I believe you may be able to request an immediate refund or an adjustment when doing your tax return..

Share this post


Link to post
Share on other sites

I'll be just inside the £100-114k income range after I retire at the end of this year. My company asked if I want to take on some consultancy work, I thought about it but for every £1000 they'd pay me I'd actually only get £380, so I think I'd rather potter in the garden and sail my boat. Also I've no option to put it into a pension as I'm already up against the lifetime limit.

I explained the situation to my company and said thanks but no thanks. So they've handed the project to a recently retired colleague in the US.

Share this post


Link to post
Share on other sites

It is easier if you can use a scheme sheltered from PAYEE which will typically be your work pension using salary sacrafice.

My new Tax adviser (i didn't have one before) says it not what you pay into your pension that determines the tax relief, but your highest rate of tax and then work in reverse as you use the allowance - which I kind of knew.

The question I still haven't fathomed is I can pay in a lump sum, but the so and soes at the HMRC still have a huge chunk of my gross income. The relief I'll get will most be at 40%, with half of that claimed back by the provider. I still haven't worked out what to do to get the 60% bit back, basically the challenge is I may be a lot closer to £150k than I'd thought, so I might have to stick a huge sum in to even get use of the 60% releif.

I put in £50k in each of the three years of my life I've had that much money in the first place. Equivalent to £30k from taxed income.

i.e. 40k contributions, 10k taxback in the scheme making 50k, and another 10k rebate when I complete the tax form.

Share this post


Link to post
Share on other sites

I'll be just inside the £100-114k income range after I retire at the end of this year. My company asked if I want to take on some consultancy work, I thought about it but for every £1000 they'd pay me I'd actually only get £380, so I think I'd rather potter in the garden and sail my boat. Also I've no option to put it into a pension as I'm already up against the lifetime limit.

I explained the situation to my company and said thanks but no thanks. So they've handed the project to a recently retired colleague in the US.

I don't think you'll get too much sympathy as hard-done-by :D Especially since your 62% marginal rate is so much lower than for a person of working age.

But that's a nice little illustration of why excess taxes are bad for the economy. Slash your marginal rate in half and ... 31% of something is more than 62% of nothing.

Share this post


Link to post
Share on other sites

I don't think you'll get too much sympathy as hard-done-by :D Especially since your 62% marginal rate is so much lower than for a person of working age.

But that's a nice little illustration of why excess taxes are bad for the economy. Slash your marginal rate in half and ... 31% of something is more than 62% of nothing.

I think this thread makes an point though - £100k-150k PA isn't really rich.

Well off yes, and considerably better off than the majority - yes.

But it isn't rich, rich is probably having an unearned income of £500k + from assets and investments, so I guess you'd need £10m assets, and the flexibility to arrange your tax structure.

The mega rich are even better set up with hundreds of millions or even billions, and I think these are the people who need to be taxed.

Edited by Mikhail Liebenstein

Share this post


Link to post
Share on other sites

I think this thread makes an point though - £100k-150k PA isn't really rich.

Well off yes, and considerably better off than the majority - yes.

But it isn't rich, rich is.....

".... someone earning considerably more than X"

where X is the salary of whoever is talking.

http://news.bbc.co.uk/1/hi/8151355.stm

Only 1% earn more than 118k apparently. There is no way being in the top 1% of earners does not make you rich.

Are there lots of people in London who earn a tonne more? Sure. Could they make you feel small at the golf club? Probably. Does that stop you being rich? No.

Edited by gadget

Share this post


Link to post
Share on other sites

Only 1% earn more than 118k apparently. There is no way being in the top 1% of earners does not make you rich.

If you earn £26k/year you're in the global top 1% of earners.

Whether either of those figures makes you rich depends on a range of circumstances. Above all, property ownership.

Share this post


Link to post
Share on other sites

Only 1% earn more than 118k apparently. There is no way being in the top 1% of earners does not make you rich.

On a traditional income muliplier, that would allow you to borrow enough to buy a house around 400k. According to the BBC, the average house price in London is now 406k.

Being able to buy an average house in London does not make you rich.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!


Register a new account

Sign in

Already have an account? Sign in here.


Sign In Now