Tax Return on Income Over £100k - threshold change?

[LaLaFlottes]

Hello - hoping for some help please if possible.
As we come towards the end of the financial year, looking at DH's salary and bonus, it seems he will have earnt around £121k. He has no other income through self employment or interest or anything. So all PAYE.

Am I right in thinking his pension contributions will come off that total of £121k?

Am I also right in thinking he does not need to submit a tax return as the threshold has increased for the tax year 2023 - 2024 to £150k?

I know he will still lose his tax free allowance, that's not changed, so I assume his tax code will be adjusted for tax year 2024 - 2025 so that he pays the amount he will owe that would previously have been billed through a tax return? Is that correct?

Finally - his actual salary is now £99,850 - but he may receive a bonus again at the end of April (not guaranteed). It's unlikely to be as much as last year, however would it be sensible to increase his pension contributions by the amount of the bonus? Is that the best thing to do? Or are there any other sensible things to consider?

Thank you for any input. We may need to see a financial adviser I guess, but wanted to try asking here to start with. Appreciate any help.

Thank you.

Congratulations to your DH, that’s a great amount to earn.

Here’s the official link to determine whether you need to fill in a tax return.

HMRC link

short answer: he probably does need to.

Pension question: if you don’t need the money now then yes putting his bonus immediately into a pension is probably a sensible and tax efficient thing to do.

Thank you @Greenbike appreciate that - the link seems to only have the option for the tax year 2022 - 2023 and I think the change has only come into effect for tax year 2023 - 2024.

Thank you for answering the pension question - that makes sense. He just pays via his work scheme so I think it should be easy enough to update. He can't put his bonus into his pension I don't think, but can increase his contribution each month to the same value.

Thank you.

May be worthwhile checking the "taxable YTD" figure on his payslip if all income is PAYE. This will already be net of pension contributions and other payrolled benefits eg private medical insurance.

Assuming his company don't submit any P11D for other benefits like private medical, and it's all payrolled. Otherwise P11D earnings will also need to be added on.

Is childcare £100k limit a concern here?

Even without the childcare element the effective rate on £100-120k is 60% plus NI, so it would be very tax efficient to put as much of the excess over £100k into pension as possible. This will obviously need to be done before 5 April for this tax year (can still open a private pension in time), or to consider next year as you say.

@TheOneWithUnagi thank you - we will check his payslip to see where he is up to with taxable pay.

It does seem like for 2023 - 2024 tax year he doesn’t need to do a self assessment, but I wonder then if his tax code will just be adjusted to collect this tax?

It’s hard to plan for as it’s his bonus which takes him over the £100k and we don’t find out what that is until 1st April, but I guess we estimate it and increase his pension contributions to what we can afford (probably should be paying more in anyway) or pay into a private pension last minute like you suggest!

Childcare isn’t a consideration now as DD is at Uni.

Thanks so much for your help.

@LaLaFlottes did you ever find the answer on how the tax gets collected? I assume must be through tax code?
I was just looking and we earn over £100k but under £150k so we will still need to pay the tax but don’t have to do a return!

Hi @Strawberry08
we didn’t really but are working on the assumption that it will be via tax code and we will keep a close eye on that!
If I do find out more I’ll report back here 😊

@LaLaFlottes Thanks so much! I’ll work on that same assumption.

I've had to self assess this year for similar reasons, although I pay into a private pension. My job is heavily commission based so you never know where you'll be.