AteMoose

Higher Rate Tax Payer

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So... this next tax year I become a Higher rate tax payer via PAYE! Um is there anything I need to prepare for? If so do I need to fill in a tax return form and if so what records do I need to keep to fill out my first tax return form? Edited by AteMoose

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[quote name='AteMoose' timestamp='1332443896' post='908997661']
So... this next tax year I become a Higher rate tax payer! Um is there anything I need to prepare for? If so do I need to fill in a tax return form and if so what records do I need to keep to fill out my first tax return form?
[/quote]

Don't worry. They always find you.

A friend of mine had a demand for £21k from HMRC last week. Her pension is just £11k. HMRC caved in when she phoned to complain.

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Um.... that doesn't sound good would rather be proactive! Could I pay more money into a pension to avoid paying the extra tax and having the hastle of filling in a tax return?

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[quote name='AteMoose' timestamp='1332444422' post='908997669']
Um.... that doesn't sound good would rather be proactive! Could I pay more money into a pension to avoid paying the extra tax and having the hastle of filling in a tax return?
[/quote]
Youre part of the A team now, whats not to love?

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[quote name='AteMoose' timestamp='1332443896' post='908997661']
So... this next tax year I become a Higher rate tax payer via PAYE! Um is there anything I need to prepare for? If so do I need to fill in a tax return form and if so what records do I need to keep to fill out my first tax return form?
[/quote]

Mostly there's no change if you're employed as they collect it all via PAYE.

However, strictly as a 40% tax payer you should be paying tax on 40% on bank interest (except of course ISAs which are tax free) which means you should fill in a tax return, although if your interest income is small HMRC may not be bothered. You should hold onto the summary page your bank sends at the end of each tax year detailing interest and tax paid anyway.

On the plus side, you may WANT to fill in a tax return, as you now get extra tax relief on gift aid donations and contributions to personal pensions, so keep a record of donations and pension contributions (although if your pension contributions are just deducted from your pre-tax earnings there's no change).

[Disclaimer - i'm no tax advisor, just telling you what I believe to be true]

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[quote name='AteMoose' timestamp='1332444422' post='908997669']
Um.... that doesn't sound good would rather be proactive! Could I pay more money into a pension to avoid paying the extra tax and having the hastle of filling in a tax return?
[/quote]

Yes - but best to do it into your work scheme where contributions can be deducted from pre-tax income.

If you pay into a personal pension, you'll have to claim relief via self assessment.

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[quote name='Bossybabe' timestamp='1332444164' post='908997663']
Don't worry. They always find you.
[/quote]

Not necessarily.

But you're in trouble if you've amassed a big bill and then they do. Ask Rangers FC.

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You could ask for reduced hours for the same money instead to keep you under the threshold? No-one on their deathbed ever says that they wished they'd spent more time at the office.
Buckers

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ok so Im worrying about nothing thats good news :) carry on as normal for now, and increase pension contributions.

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[quote name='AteMoose' timestamp='1332444422' post='908997669']
Um.... that doesn't sound good would rather be proactive! Could I pay more money into a pension to avoid paying the extra tax and having the hastle of filling in a tax return?
[/quote]

You can pay extra money in to avoid the higher rate. Not sure about the tax return bit.

It's not that hard once you've done a three year part-time course at the local tech on evenings to try and work it all out.

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You don't need to do anything.

Your bank tells HMRC about your bank interest and your PAYE coding will be amended to collect any tax you owe from your bank interest.

You do not need to file tax returns (unless you have another reason for doing so).

If you are making Gift Aid payments and want to claim tax relief, you can call HMRC and ask for them to be coded into your PAYE coding. HMRC [i]may [/i]ask you to file tax returns if you do this.

(I am a tax advisor).

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[quote name='AteMoose' timestamp='1332443896' post='908997661']
So... this next tax year I become a Higher rate tax payer via PAYE! Um is there anything I need to prepare for? If so do I need to fill in a tax return form and if so what records do I need to keep to fill out my first tax return form?
[/quote]

My OH is in the higher rate bracket and has been for quite some time. Also via PAYE not yet been asked to fill in a tax return yet.

She has just upped her pension contribution from 3% of gross salary to 6% to start from April 1st and the company adds a further 9%. Regardless of being a higher rate tax payer she'd be silly not to.

Still a fair amount above the threshold we are planning to chuck another xx,xxx into a SIPP to get us under the threshold so we don't lose our child benefit.

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I was under the inpression that anyone earning over the higher rate threshold had to do a self assessment return. I do, but then I run a partnership as well as being employed full time, so that's probably why.

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