Goodier Smith and Watts

Devonshire House
Manor Way, Borehamwood
Hertfordshire, WD6 1QQ

Search News


Be wary of 60% Income Tax charge

Source: HM Revenue & Customs | | 16/07/2019

For high earning taxpayers the personal allowance is gradually reduced by £1 for every £2 of adjusted net income over £100,000 irrespective of age. This means that any taxable receipt that takes income over £100,000 will result in a reduction in personal tax allowances.

Your adjusted net income is your total taxable income before any personal allowances, less certain tax reliefs such as trading losses and certain charitable donations and pension contributions.

This means that for the current tax year if your adjusted net income is likely to fall between £100,000 and £125,000, you would pay an effective marginal rate of tax of 60% as your £12,500 tax-free personal allowance is gradually withdrawn. If your income sits within this band, you should consider what tax planning opportunities are available in order to avoid this personal allowance trap by trying to reduce your income below to £100,000. This can include giving gifts to charity, increasing pension contributions and participating in certain investment schemes.

Carry-back opportunity

A higher rate or additional rate taxpayer who wanted to reduce their tax bill could make a gift to charity in the current tax year and then elect to carry back the contribution to 2018-19. A request to carry back the donation must be made before or at the same time as the 2018-19 Self-Assessment return is completed (by 31 January 2020).

 



 

Latest News

Statutory maternity, adoption, paternity, shared parental and sick pay to rise from April 2020
15/01/2020 - More...
According to proposals set out in a government policy paper, the revised rates for statutory maternity pay (SMP),

Tax allowances you can claim for business cars
14/01/2020 - More...
Capital Allowances allow your business to secure tax relief for certain capital expenditure. Qualifying expenditure on

On your bike – tax free cycling
14/01/2020 - More...
There are special rules involving bicycles for work use, usually referred to as 'Cycle to Work' arrangements.

Newsletter

With our newsletter, you automatically receive our latest news per e-mail and get access to the archive including advanced search options!

» Sign up for the Newsletter
» Login

 

 

ICAEW-BLK RGB  

 

Save

Save

Copyright © 2020 - Goodier, Smith and Watts

Cookie Policy | Website Privacy Policy                                                                                                                                                                                                                                                         

Registered in England under the number 3724657