Earn over £100k? 5 strategies to avoid losing your personal allowance at tax year end
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- Опубликовано: 14 окт 2024
- The personal allowance is the amount that you can earn free of income tax. It’s currently £12,570 a year, but if you earn over £100,000, the personal allowance starts to be restricted.
Where income from all sources exceeds £125,140 there is a full clawback of the personal allowance, so all your relevant income is liable to be taxed.
The effect of the personal allowance abatement is that income in the £100,000 - £125,140 band suffers tax at an effective rate of 60%. With this in mind here are 5 strategies to bring income down to £100,000 and avoid the personal allowance clawback.
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I have sat thru a lot of videos on the topic, your are the most useful ones! Thanks!
I am in this marginal rate, I know, nice problem to have. However, this stifles investment as I am loath to make more money from investing as the tax paid on it will be 60%. I could put funds into my pension to offset it but I don't have those funds. If you make £5k in the band between £100k and £125k then you have to put £5k into your pension to offset it. On a £10k pay rise in that band (say, £100k to £110k) you will only receive £3,800 due to 60% tax and 2% NI. It is madness but most people do not know that they are paying it which is why it is rarely discussed. It is also not a headline rate like 40% and 45% so never makes the news. Make no mistake though, between £100k and £125k you are paying 60% tax plus 2% NI. If you earn £125k, maybe go down to four days on £100k as you are paying 60% tax on the Friday (5th day).
Great Strategy to reduce your hours. Salary Sacrifice straight into your pension is really tax efficient.
@@TheRetirementCafe Thank you
You will not be able to carry back the gift aid for adjusted net income calculation.
For your next video suggestion - please(!!) make a video on pension advice for all those millions in the UK who are renting, and who will not have their own house at retiral.
What about salary sacrifice car scheme
Why am i paying tax before free allowance?
The pension contributions I’m not a fan of as you don’t get access to that money till 57 unless government changes goal posts again and you still have to pay tax on pension income when you receive it.
The tax in this country punishes those who take risks to earn more.
Yes it is annoying, but the money will be nice once the age hits .. hate how they keep increasing the age. Should be 50
This is why high earns are leaving this country.
This world don’t want you rich at all
Which of these strategies will you be using, to help you avoid the personal allowance clawback?