Reducing taxable income/pension

[ThatIsNotMyNameSoWhyAreYouCallingMeThat]

Appreciate the optics on this, but have had a bigger than expected pay rise and bonus and needing to get my taxable income down from next month!

Salary: £90k
Benefits: £9k
Bonus: £9-12k

Totals £108-111k. Really don’t want to lose tax free allowance or pay 45%+ tax as a result. Tax code is reduced due to underpayment this year, so around £9500 in 2025/26. I think that means I need taxable pay of no more than £97k.

Plan on buying max amount of leave (£4200) and I add DH and DD to my PMI (which still appears to be a taxable benefit even when I’m paying for it?).

Pension is DB and accrues at 1/85. I can increase it to 1/65 for 4.5% which doesn’t get me low enough or to 1/50 for 11.5%.

Alternatively I could increase charitable donations (already chunky).

Is there anything else that I’m missing?

I thought you said that paying for higher accrual wouldn't bring your income down low enough? If so I'd pay for the extra accrual and then put whatever other income I needed to lose into the SIPP.

Does your employer have any other salary sacrifice schemes that would benefit you? E.g purchasing more leave as a salary sacrifice option, or car lease?
Other than that I think additional pension contributions is your only option

I have about 12 years of Civil Service DB (forecasting £15k a year at 60), 4 years of NHS (1/54 accrual so about £4k a year) and about £100k in a SIPP which is doing pretty well (touch wood). I’ve 20 years to go to 67. Also have a LISA which will be at full allowance and house is paid off (probably £400k at today’s prices).

All DB schemes include dependents/spousal pension should I die.

Already maxing out the leave. No car scheme (and I’d never want to lease a car).

I’ve put the sum in a later post, which I think works?

Private pension. I dump a lump sum yearly to avoid higher rate tax. You still have to pay tax when you draw it down but you can take 25% lump sum tax free then top up your main pension while keeping under the higher rates.
As a recently retired person the bigger your pension the easier life is. I retired at 59 but continue to work part time. My smallish private pension will be used to top up my pension when I give up totally in a couple of years and plug the gap until I claim my state pension. I’m lucky to be self employed so can offset some tax against expenses.

Also I may be wrong but I don't think you need to go lower than £100k as last years underpayment won't affect this years calculation. The adjustment to your tax code is just a method of paying last years tax.

You’ll have to add the BIK of the private health cover to that calculation as well

They’ll collect more tax this year through the lowering of the tax code.

It’s included already.

Adding family members to Private Medical Cover doesn’t reduce your taxable income - which is why it looks like a benefit in kind even though you’re paying - because the benefit for you increases taxable income, and then the bit for them reduces income (cash) but not taxable income, as you essentially have to pay it out of net income not gross

You could open a pension for your DC or salary sacrifice for things like the Cycle to work scheme, get a cracking electric bike 😉

Following as I expect to be in a vaguely similar position next year, albeit far lower tax bracket!

What job do you do?! Love my job, but not a hope in hell of ever earning over £100k!

Have you asked your HR department if there are additional schemes to enter?

i work 200 miles away. 😂

Everything is in the benefits portal, which only opens for 2 weeks a year.

I work in project management. When I left the NHS in 2021 I was on about £50k.

Buying a bike with your works cycle scheme

Cut your hours at work by .1 or half a day a week so you can enjoy free time too! (As long as your workload will actually decrease)

I think we may work in the same place as your benefits sound pretty specific and similar to mine.

If so, there’s a financial tool offered beginning with B that you could access and I think it gives access to a financial coach who may be able to assist- appreciate time may be of the essence though if it is the same place!

Personally, I’d throw it all into the 1/50th pension or your SIPP. I’d also use up all your benefits allowance on extra dental/critical illness/group /payroll giving (or whatever is offered!) etc.

I’m way over the benefits pot if I buy all the additional leave that I can, and then max out the pension. :)

I might try and do this in future.

Great exercise then 🤣

Yes DB pension. Assume no company share scheme you can pay through salary sacrifice for