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Where Taxpayers and Advisers Meet

Reduce my Tax rate from 40% to 20% ??

wazzer1969
Posts: 3
Joined: Sat Jan 19, 2019 3:27 pm

Reduce my Tax rate from 40% to 20% ??

Postby wazzer1969 » Sun Jan 20, 2019 3:45 pm

Hi
I currently earn £60,000 a year and pay 40 % Tax on part of my earnings, I was told that come 6th April 2019 the new TAX Fresshold for paying 40% will be only if you earn over £45,000 a year, anything less will be 20% Tax.
I currently contribute to my works pension and I understand that if I pay in £15,001 a year Salary Sacrifice into my works pension then I will not have to pay the 40% tax on what I earn because this will be £44,999 a year that I will be paying tax on at 20% is that correct??.
Hope I have tried to explain this correctly, Thank you.

AnthonyR
Posts: 268
Joined: Wed Feb 08, 2017 2:33 pm

Re: Reduce my Tax rate from 40% to 20% ??

Postby AnthonyR » Mon Feb 04, 2019 5:12 pm

The threshold goes up to £50,000 on 6 April, which means that you would only need to sacrifice £10,000. However, bear in mind that at the 20% level you also pay 12% national insurance bringing the total up to 32%. At the higher rate you only pay 2% NI, so 32% vs 42% doesn't sound so bad.

However, if you can afford to lose £10,000 of your salary and tie it up until you retire you will limit your tax liability to only 32%.
Anthony Rogers LLB CTA TEP
Fusion Partners LLP
anthony@fusionpartners.co.uk


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