Goodier Smith and Watts

Devonshire House
Manor Way, Borehamwood
Hertfordshire, WD6 1QQ

Search News


Loss of tax personal allowance

Source: HM Revenue & Customs | | 03/12/2019

If your income is expected to exceed £100,000 for the first time, we would like to remind you of the effects this can have on your personal allowance and marginal tax rate.

If you earn over £100,000 in any tax year, your 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 your 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.

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%. This is because your £12,500 tax-free personal allowance is gradually withdrawn (see previous paragraph). If your income sits within this band you should consider what financial and tax planning opportunities are available to avoid this outcome.

For example, you could increase charitable donations, pension contributions or consider participating in certain tax effective investment schemes.

Tax planning tip

A higher rate or additional rate taxpayer who wanted to reduce their tax bill last year, 2018-19, could make a gift to charity in the current tax year, 2019-20, and 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 and filed.



 

Latest News

New guidance on sexual harassment and harassment at work
22/01/2020 - More...
The Equality and Human Rights Commission (EHRC) has published new technical guidance on sexual harassment and harassment

Don’t be taken in by this scam
21/01/2020 - More...
The Insolvency Service has warned that fraudsters have been contacting investors in insolvent schemes claiming to be

Disclosing VAT errors
21/01/2020 - More...
Where an error on a past VAT return is uncovered, you have a duty to correct the error as soon as possible. As a general

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