Salary over £100k - tax self-assessment??

[user14729372739]

Hi, I've NCed for this for obvious reasons. In April my salary went to £115k. This is the first time it's been over £100k. A friend has just told me that once you go over £100k you need to do a self assessment tax return as you lose your personal allowance. No one at work or HMRC has mentioned this to me, but looking at my tax code and Google it seems she's right and I might owe them a fair bit in tax.

I'm clueless about this. Do I need to contact HMRC now and tell them about the salary increase? Or wait and do a self assessment return at some point? When would this be and how much should I be putting aside to pay this potential extra tax bill?

And why did no one mention this to me?!

TIA!

You may not need to save money for additional tax if your tax code is correct and you are fully PAYE.

You fill in a self assessment after the relevant tax year has closed, so if 2015-16 your P60 shows that you were paid >100k you will need to do a self assessment by January 2017

If you don't get any letters about self assessment by the Autumn yes maybe give HMRC a call

You will still have some personal allowance - it is gradually withdrawn from £100k until it is all gone at £120k.

If your tax code is correct then your net pay will be calculated based on your reduced personal allowance and you won't owe anything. You will need to do a tax return for the year 2016-17 but you don't need to submit this until 31 January 2018, if you submit it online.

Thanks! So will HMRC see that my salary has gone over £100k from my P60 in April 2017 and write to tell me to do a self assessment by January 2018? Is that how it works?

I guess I'll check with payroll about my tax code and take it from there. And how difficult is it to do a self assessment tax return ?

Cross post there, sorry. Thanks! I just remembered I also got a £6k bonus so presumably that means the personal allowance had all gone?

You need to arrange it yourself. HMRC never wrote to me when I started earning over £100k. It's very very easy to do it yourself.

Thanks Batfurger. I'll do that but I still think it's ridiculous this can't be sorted automatically through PAYE

Well, if you think about it, it's not really... each pound you earn £100-120k is taxed differently, so things like interest, charity donations and so on make a much bigger difference than they do on the pounds between whatever the higher rate is and £100k.

That's the way I understand it anyway. I have two jobs, one of which is taxed at D0 because my other job earns me over £100k, D0 is only 40% so it has to be added up somehow in order to reduce your personal allowance. I think the "marginal" rate £100-120k is 60% so my second job is almost worthless... I do it because it helps some people out and I quite enjoy it but it's rapidly getting to the point where I'm almost paying to do it due to insurance and travel etc.

I often get a NI rebate as well so keep an eye out for a letter, very simple form to fill in.

I thought everyone earning > £40k (upper tax band) had to do self-asst for taxes.

I have to SA because I get £9 in foreign bank interest each year.

HMRC can't sort it out for you because they just see raw numbers through the payroll - they don't know it's a new regular pay level - for all they know it could be advances or a bonus. They also don't know what you're going to do to mitigate it - most people do something to avoid the 60%+ deductions you face over £100k, such as making pension contributions, making charitable gift aid payments, or making other tax efficient investments such as EIS or VCT investments. Lots of people take more evasive action when they realise the penal tax rate such as cutting down the number of hours they work (popular amongst dentists and doctors!) to bring their pay back below the £100k level.

You're far better phoning HMRC to tell them so that you can get your tax code corrected. If you wait until after the year end, then you'll have a lump sum to find.

Thank you, lots to look into here.

There's no need to wait until they send you a letter. Sign up for SA on their website and complete the return. At least then, you'll know how much you need to pay by 31/1/17. You'll need your P60 and your P11D plus details of any payments made to charity or payments into your pension (these 2 things will reduce your liability). Once the return is in, your current year code should change via the "auto coding" process.