Am I paying Higher Rate Tax?

[BrassTax]

Sorry, I am clueless about tax.

I am fortuinate that my new salary for 2010-2011, from April 1, is £48,660. I claim no tax related benefits or 'breaks'. Does this mean I am paying higher rate tax on a proportion of my salary? And if so should I be paying into a Stakeholder pension? There is no pension attached to my job at all, I have a small pension which I took out against my mortgage on a previous house, but we have now switched to a repayment-only mortgage. No significant savings or other pension provision.

I am not married and live with a DP who is on a lower salary than me. One DC.

Thanks for any advice.

There are websites where you put your salary in and your tax and ni and net pay come out.

Here is one

Not sure which parts at higher rate or not (have forgotten the bands but you are around the limit for 20% I think).

Rates and allowances here. If between 6 April 2010 and 5 April 2011, you will earn more than 37,400 plus 6475 (basic rate tax band plus personal allowances), which is £43,875, then you will pay 40% tax on some of your income.

Pensions - well, imo everyone should save for a pension. At the moment it is definitely a good idea for higher rate taxpayers because (as long as you tell the Revenue that you are paying into a pension) you get higher rate relief on a pension and then when you collect it you pay tax at your marginal rate then, which is likely to be lower.

This obviously comes with caveats about if you have no savings, you may get pensions credit, which you wouldn't get if you had savings, but to be honest I do not trust any government to give me an income in retirement so I save as much as I can.

Thank you for all this.

How do I tell the Revenue about the pension I do have?

Yes, I agree that I need to save towards my retirement - this is the first time in my earning life that I have ever had any capacity to do so. And I am not young. I am in my 50s.

On current payments my mortgage will be paid off when I am 65, but in about 2 years I will have an endowment that matures, paying about £30k, and in another 5 years the pension was due to pay off another £33k against my old mortgage. So not too bad, perhaps.

I am not sure about the pension you have at the moment, but to tell the Revenue about payments you make this year (to check they give you the correct tax coding), look at your payslip which should give your tax office, then phone them up with your National Insurance number, and tell them how much you will pay into a pension per month. They should (eventually) send you a new coding notice to give you some more tax relief.