Income Tax and earnings over £100,000

[JJBaumhardt]

HRMC have asked me to complete a Tax Return for 2010-11 presumably because a bonus payment took me over £100,000 earnings and wiped out my personal allowance.
Are there any investments or actions which I could take now which would reduce my 2010-11 income tax?

[mullet]

Difficult to respond without knowing much about you. Some reliefs rely on a specific payment date being within a tax year for relief to be available in that year. Other reliefs can be either applied in the year of payment (or loss etc) or carried back one year. Sorry for not being more specific.

Remember the over-riding principle - in order to obtain relief whether it be at 20%, 40% or 50%, you have to spend/lose 100% of the amount on which you are obtaining relief. The easiest way to obtain 100% relief from a year's income tax is to give all your income to a registered charity. OK, no tax ... but no income left to spend either!

[pjclar02]

Remember the over-riding principle - in order to obtain relief whether it be at 20%, 40% or 50%, you have to spend/lose 100% of the amount on which you are obtaining relief. The easiest way to obtain 100% relief from a year's income tax is to give all your income to a registered charity. OK, no tax ... but no income left to spend either!

Surely you would still pay basic rate tax on the income? And also tax due on the grossed up proportion of the gift aid donation that would not be covered by taxable income?

[mullet]

Surely you would still pay basic rate tax on the income? And also tax due on the grossed up proportion of the gift aid donation that would not be covered by taxable income?

I wasn't thinking from that angle. I am thinking of a situation I saw many years ago where convent school teachers (nuns) had NT codes because they gave their full salary back to the convent. Accept that I might be wrong ...

[section 44]

Surely you would still pay basic rate tax on the income? And also tax due on the grossed up proportion of the gift aid donation that would not be covered by taxable income?

...because donations to charity have to be made through gift aid

[Peter D]

If in any month your total income including the bonus exceeds £150,000/12 then your will be taxed at 50% and HMRC will contact you so you can claim back the excess tax paid. Regards Peter

[mullet]

because donations to charity have to be made through gift aid

Whoops, I was thinking back to pre-gift aid times. I now wonder whether what I saw was actually correct ...

[section 44]

Mullet, your post was correct. There is no reason why an individual cannot reduce his taxable income to nil by making donations to charity.

[tax_schmax]

Surely that is tough to do in the year following the earnings?

[section 44]

Indeed.