How to reduce taxable income

[Theonlylonely]

Hello, really need some help as I’m very confused and HMRC not helpful. Said I need to pay for tax advice but I can’t afford to!

I’m the main earner (PAYE) and DH works very part time due to childcare so earns well below personal tax allowance. As such, I’ve taken some of his allowance through married tax allowance. We claim child benefit for 2 kids.

I’m currently £2000 over the 20% tax bracket for 23/24 and have started to pay a small amount of 40% tax.

How can I reduce my taxable income to £50k so I can keep my marriage allowance and full child benefit?

I can’t pay more into my salary sacrifice pension, as it’s a fixed contribution. We don’t qualify for childcare as DH not working enough hours.

I am considering increasing the contribution to my private SIPP pension to £2k this year (before March 2024). But every time I put money in per month I get the 20% added from HMRC (every 80p becomes £1). So is that the extent of my tax relief?

My question is…. Can I use the SIPP contributions to reduce my taxable income to £50k by completing a self assessment after the tax year has ended.

I’ve looked online, watched lots of YouTube videos but can’t find the answer to what I think is a very basic question!!

Realise I said I can’t afford to pay for advice… that’s not strictly true but don’t think our wealth was high enough for them to take us on last time I enquired…

Wouldn’t be averse to paying for advice if it helps us maximise our wealth

Do you not have an accountant?

No we do not have an accountant. I’m PAYE

I don’t think it’s normal to have an accountant in the UK if you’re an employee unless you’re on megabucks? This is the first time I’ve gone into 40% tax bracket.

Sorry I can't really help, but I think your question is entirely reasonable and it's normal not to have an accountant or IFA when you have relatively simple finances.

Hopefully someone else will come along and help!

A local accountancy practice will be happy to advise you for a fee. They will have plenty of clients who just use them to complete self assessment forms or to do the accounts for micro businesses. I’m guessing the companies who declined your business were companies who specialise in tax advice for high net worth clients. Try Googling for local accountants and self assessment advice (even though this isn’t a self assessment question). That will bring up the type of practices that have lots of small businesses and individuals as clients.

As long as you pay the SIPP contributions in the tax year then I think you can do self assessment at the end of the year to claim a further 20% tax relief, and when you do the self assessment that's when you also pay back child benefit if you are still over 50k...which hopefully you won't be if you did it right.

Basically if you complete the self assessment you will probably find that you are owed a refund of tax from HMRC.

I do self assessment every year myself now. The very first time though I paid an accountant £120 to help me with it. Now I'm happy to do it on my own.

You are completely correct, OP.
Pay 80% of the amount you want into your SIPP. It will be topped up with 20% tax rebate directly into your SIPP, and you fill in a self assessment after the tax year has finished and you will have the rest of the rebate this way.
So, if you want to put in £2000, add £1600 and it will be topped up after a few months to £2000. You will also get £400 cash back via your self assessment.
Keeping your earnings after pension contributions at or below £50k will allow you to keep the whole child benefit (and you’ll have more in your SIPP for retirement)

Thank you everyone that’s really helpful!

just £120 for an accountant to advise? That’s very reasonable- way less than I thought it would be. I will look into it. Yes, before I looked for an IFA but they said it wasn’t worth it due to size of our assets so I guess we consulted the wrong type of advice.

I thought I was being a bit stupid trying to reduce my tax burden to not lose a few hundred quid in CB/ marriage allowance, but actually it’s a lot more lucrative for me to put this money away- I’ll be adding to my SIPP which will help it grow a bit faster, rather than giving it to the taxman. It’s a no brainer really.

I’m still able to save a moderate amount each month, so won’t be missing out on the extra money…. Although it would be nice to have more disposable income, I’d probably just spend it on frivolities tbh!

Both pension contributions and gift aided charity donations count. So your income net of those two things is your income for tax purposes.

As previously said, you do self assessment and claim back, they may even look at changing your paye code if its regular. Its not hard to do the SA form.

Pension contributions and then do Self Assessment.