Advanced search

Mumsnet has not checked the qualifications of anyone posting here. Free legal advice is available from a Citizen's Advice Bureau, and the Law Society can supply a list of local solicitors.

Pension salary sacrifice and higher rate tax

(2 Posts)
changingallthetime2 Sun 09-Jul-17 10:50:59

I'm separating from my partner and trying to get all of my financial ducks in order and would really appreciate some advice on pensions and higher rate tax.

I currently work 80% (4day week) but want to go up to 90% (9 day fortnight). However the increase in salary would push my gross annual salary into the higher rate tax band by £1100. As I buy childcare vouchers, this shift would substantially reduce the amount I can claim.

I make pension contributions of 8% of my monthly gross income via salary sacrifice. Am I right in thinking that my taxable income is calculated on the basis of gross income minus the pension salary sacrifice? My 90% salary less an 8% ss pension contribution would bring my annual income under the higher rate tax threshold by £3k.

I should add I'm not trying to avoid paying my fair share of tax, but just want to be as financially secure as possible right now.

lobsterface Sun 09-Jul-17 10:53:07

Yes, you're right - but would you not only pay 40% tax on the 1100 anyway rather than your full pay?

Join the discussion

Registering is free, easy, and means you can join in the discussion, watch threads, get discounts, win prizes and lots more.

Register now »

Already registered? Log in with: