Tax effect of bobbing over £100k

[Greatcheeser]

If your salary is 95k and you get a one off bonus of 7.5k making 102.5k I think that in addition to the 40% tax on it your personal allowance will reduce by £1250 adding a further £500 to the tax liability

have I got that right?

then if you were to put that 7500 into your SIPP and claim the extra 10%, will you still end up paying that extra £500?

Put it into listen to taxman, with the higher salary and the lower.

Yes, the personal allowance is tapered.

You could put 3.5k into the SIPP to keep you below £100k.

You're right it's best to put the extra into a pension. Google "100k tax trap" or "60k tax trap"

Yes you are right you would lose the 1250 personal allowance, and pay highest rate tax on all earnings.
Pay enough into the pension that keeps you on 40%, and you'll still keep the 1250 tax free.

It's worse if you're using funded childcare hours, you'd lose them too. Don't forget to take all earnings into account as I think it includes interest on savings too.

no you only lose £1 of personal allowance for every £2 you go over 100k so therefore you would still have all your allows less 1

plus you only pay 40% tax on anything you earn after 50k, so you wouldn't pay 40% tax on all your earnings only on 52k

@bloodyeffinnora - you pay 40% tax on the bit of your personal allowance you lose. So the effective tax rate at that point is 60% (40% on the earnings, plus 0.5x 40% due to the personal allowance tapering).

Anything over 100k is effectively taxed at 60% (more if you use childcare) so best to put it into your pension unless you desperately need it.

I’d rather the government put a penny or two (or whatever) onto the higher rate tax band, or start the 50% band at 100k than trap people with a 60% tax rate.