Higher rate tax

[Mamaemmeline]

Dh has recently become a higher rate tax payer (well into the bracket so not particularly easy to reduce it below the threshold). Tax is really confusing me. Are there any ways apart from paying more into a pension which would reduce the large amount of tax we now pay? Not looking to cause any type of debate just looking for those who are financially savvy to give us some advice. Thank you!

How much into the bracket?

Salary is 65k.

Charitable giving

Is that the royal we? Do you work and pay tax? Do you use all your personal allowance?

Oh sorry, thought you meant top rate and losing personal allowance and pension tax benefits etc.

No. Not really other than paying into pension which is tax efficient.

If he pays into a pension make sure you check whether you need to claim back tax

Salary sacrifice schemes. Cycle to work, pensions, you used to be able to do childcare vouchers. Check what his employer offers.

£65k salary minus 10% pre tax pension contributions still means child benefit needs to be paid back though.

I work part time and use all my personal allowance. Maybe I am just hoping for a way that just isn't possible!

@Rollercoaster1920Rollercoaster has some good ideas. He may also be able to buy an extra week’s holiday. Is he in a position to pay £15k each year into a pension? If he takes it as cash he’ll get £9k after tax, and that’s before NI. I assume he’ll be paying some into his pension anyway and his employer will be contributing. As others have said you don’t get child benefit at that level so the marginal tax rate is higher than 40%.

These are really helpful comments. Thank you.

I guess it is just the reality of tax! You get a salary increase and get excited about paying your mortgage off quicker and then you remember the higher rate tax charge.....

But he still gets more than half the money over the tax threshold.

So you do lose a percentage, but he still keeps most of it.

That's the way a progressive tax system works. Weight the tax take towards those who can afford it most. Because the alternative is to take more money off people who earn less and can't even afford the basics.

If you have similar earning abilities, and enough flexibility you could reduce tax burden by you increasing a day at work, while your DH drops a day at work.

But, obviously that's unlikely, so say to yourself "From each according to his ability, to each according to his needs", and be grateful that you have the ability. Paying tax is a brilliant contribution to society. So be proud.

Btw, check the child benefit rules. I think once one of you earn over £50k the rules change for it.

Try and be half full and not half empty.

Has he got a company car or any other taxable benefits?

You get crucified on tax for a company car once you become a higher rate tax payer, unless it’s electric or a decent hybrid

OP, are you aware that some people reading this will be pushed into poverty in the next few months by the general cost of living crisis? How do you think it looks to have people publicly asking whether they can get out of paying tax when they are among the most fortunate financially? Surely you could pay a tax advisor to have a cosy chat about protecting your wealth in private.

Oh give over @valadon68 she’s not asking how to commit tax fraud, she’s asking for sensible solutions to reduce the liability.

Sorry, bit combative on my part. It ticked me off though. There are people who actually will be badly hit by increases in tax (NI) this year, so a more discreet attitude to dodging it wouldn't go amiss. Then again, it's good to know how people think, so perhaps we should all be talking about money more openly.

Is he salaried or self employed because if he's salaried, the options really are limited to salary sacrifice schemes offered by his employer and increased pension benefits.

If he's self employed, there may be some additional options such as reviewing what expenses are genuinely business or considering a LTD company structure.

Having said that, I do tend to feel that the taxable amount is the taxable amount. He's paying more tax on the amount over the threshold, but he's still earning more than many people.