Guest_ringledman_* Posted March 21, 2011 Share Posted March 21, 2011 (edited) Anyone else considering overloading the pension contributions in 2011/12 to offset the lowering HRT band and increased 1% on NI? However much the increase is, I will be offsetting the same percentage (divided by 40%) in increased pension payments. Income tax is now at the point in which it will start dragging down revenues... Edited March 21, 2011 by ringledman Quote Link to comment Share on other sites More sharing options...
VeryMeanReversion Posted March 21, 2011 Share Posted March 21, 2011 Anyone else considering overloading the pension contributions in 2011/12 to offset the lowering HRT bank and increased 1% on NI? However much the increase is, I will be offsetting the same percentage (divided by 40%) in increased pension payments. Income tax is now at the point in which it will start dragging down revenues... I'm doing the opposite for now, stopping pension contributions until the child benefit rule come in (2013?) and only then getting income back under the 40% limit and stopping doing extra contract work. So a temporary dash for cash then minimising income like you. I've bought a small house with small net debt (<1x income) and will basically take it easy. No point working extra when the effective marginal rate is way over 50% (60+% if I include transport costs). Quote Link to comment Share on other sites More sharing options...
Guest_ringledman_* Posted March 21, 2011 Author Share Posted March 21, 2011 I'm doing the opposite for now, stopping pension contributions until the child benefit rule come in (2013?) and only then getting income back under the 40% limit and stopping doing extra contract work. So a temporary dash for cash then minimising income like you. I've bought a small house with small net debt (<1x income) and will basically take it easy. No point working extra when the effective marginal rate is way over 50% (60+% if I include transport costs). Likewise, I can either work overtime and give over half to HMRC through the two taxes (time for NI to be merged) or take it as leave. This year I will be taking it as leave. We are past the point at which it pays to increase working. Quote Link to comment Share on other sites More sharing options...
porca misèria Posted March 21, 2011 Share Posted March 21, 2011 Anyone else considering overloading the pension contributions in 2011/12 to offset the lowering HRT bank and increased 1% on NI? However much the increase is, I will be offsetting the same percentage (divided by 40%) in increased pension payments. You can't kill off NI that easily Last year (2009/10) I targeted zero tax other than NI. This year it's more complicated, but I shall still look to reclaim most of my tax other than NI. Building up both a pension pot (fast) and a tax-free income (gradually). Quote Link to comment Share on other sites More sharing options...
Guest_ringledman_* Posted March 21, 2011 Author Share Posted March 21, 2011 You can't kill off NI that easily Last year (2009/10) I targeted zero tax other than NI. This year it's more complicated, but I shall still look to reclaim most of my tax other than NI. How do you do that? As a Ltd contractor paying yourself minimum wage (and the wife!) or by throwing huge amounts into the pension? I still have to pay the increase in NI tax and income tax but however much I am worse off, I will make as a minimum an amount into my pension to offset this. Quote Link to comment Share on other sites More sharing options...
porca misèria Posted March 21, 2011 Share Posted March 21, 2011 How do you do that? As a Ltd contractor paying yourself minimum wage (and the wife!) or by throwing huge amounts into the pension? Keeping the taxman at bay 40% income into things with 40% relief. 20% income into things with 30% relief. Quote Link to comment Share on other sites More sharing options...
The Knimbies who say No Posted March 21, 2011 Share Posted March 21, 2011 I've reduced my tax bill by stopping working altogether. Remains to be seen whether I can spreadbet my way to retirement, but seems like it's worth a blast in this high-tax environment. Quote Link to comment Share on other sites More sharing options...
19 year mortgage 8itch Posted March 21, 2011 Share Posted March 21, 2011 I'm doing the opposite for now, stopping pension contributions until the child benefit rule come in (2013?) and only then getting income back under the 40% limit and stopping doing extra contract work. So a temporary dash for cash then minimising income like you. I've bought a small house with small net debt (<1x income) and will basically take it easy. No point working extra when the effective marginal rate is way over 50% (60+% if I include transport costs). My concern would be some measures to prevent you from dropping below the 40% tax threshold in 2013 for child benefit purposes if you have exceeded it in the previous couple of years. Or at least a tortuous paper trail to prove that you were below the threshold all year and you can only claim it back after the FY 2013/14 has ended. It would be too much to hope that the policy was a sop to the really poor and that with a nudge and a wink the Tories would allow the almost poor to keep their CB easily. This change is like hitting a brick wall for me. Pensions and investments are moot for a man with a young family and earning* in the 20% tax region will just not get me anywhere. 3 more years of fiscal drag? Retarded marginal tax rates? Miserly pay rises? That house I'm after will not get any easier to buy (the MSM argument for inflation) even if the price in pounds stays the same. *keeping taxable income below £42.5K on PAYE Quote Link to comment Share on other sites More sharing options...
pilchardthecat Posted March 21, 2011 Share Posted March 21, 2011 Family household with very lopsided incomes, we are really punished by the tax system already (vs say 2 people just below the 40% bracket each) and it's going to get much worse. The only thing we can do really is try to increase the lower income (stay-at-home-mum stops staying at home) or we up-sticks and leave the country I actually don't object to them cutting child benefit, but the notion of people with a much higher household income, (who are already favoured by the tax system) still getting it really boild my piss Quote Link to comment Share on other sites More sharing options...
shindigger Posted March 21, 2011 Share Posted March 21, 2011 I've reduced my tax bill by stopping working altogether. Remains to be seen whether I can spreadbet my way to retirement, but seems like it's worth a blast in this high-tax environment. Post of the day. Quote Link to comment Share on other sites More sharing options...
jaynewcastle Posted March 21, 2011 Share Posted March 21, 2011 As a public sector worker, looking forward to 2011-12. A £250 payrise (at least) & an extra £1000 on the personal allowance as well, saving another £200 a year, will easily offset the small rise in NI. Quote Link to comment Share on other sites More sharing options...
Froggee Posted March 22, 2011 Share Posted March 22, 2011 What's the point of putting it in a pension when the government will probably pinch it off you anyway? I take it nobody's increasing charitable giving? Quote Link to comment Share on other sites More sharing options...
Recommended Posts
Join the conversation
You can post now and register later. If you have an account, sign in now to post with your account.