Are you paying tax at 60%?

Source: HM Revenue & Customs | | 19/12/2017

For high earning taxpayers, their Income Tax personal allowance is gradually reduced by £1 for every £2 of adjusted net income over £100,000 irrespective of age. This creates an effective marginal rate of tax of around 60% for tax payers as the £11,500 tax-free personal allowance is gradually withdrawn.

Taxpayers whose income sits within this band should consider what planning opportunities are available to them in order to avoid this personal allowance tax 'trap'. This can include giving gifts to charity, increasing pension contributions and participating in certain investment schemes. These strategies also apply to higher rate and additional rate taxpayers looking to reduce their tax bills.

Planning note

For example, a higher rate or additional rate taxpayer who wanted to reduce their tax bill for the last tax year could decide to make a gift to charity in the current tax year and then elect to carry back the contribution to 2016-17. A request to carry back the donation must be made before or at the same time as the 2016-17 self-assessment return is completed. The deadline for filing a paper tax return has now passed but the online deadline of 31 January 2018 means that for most taxpayers there is still some time to act.



Toggle

Latest News

Tax gap lowered according to HMRC
20/06/2018 - More...
HMRC has published figures that show the tax gap for the 2016-17 tax year was 5.7%. The tax gap is basically the

M&S lose expensive VAT case
20/06/2018 - More...
The First-Tier Tribunal recently heard an appeal that considered the correct VAT treatment of a promotional offer by the

Self-assessment second instalment due end of July
20/06/2018 - More...
Taxpayers that make payments on account should be aware that the second payment on account for 2017-18 is due on or

Newsletter

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

» Sign up for the Newsletter
» Login

 

Search News


Our Address

Sterlings Ltd
Chartered Accountants
Lawford House,
Albert Place,
London N3 1QA

 

Company Registration No: 1357789
Registered in England and Wales
VAT No: 802 8138 49

Contact Us

tel: 020 8343 2255
e fax: 0871 474 2696
This email address is being protected from spambots. You need JavaScript enabled to view it.

Why Choose Us

Our Number

In the world of accountancy these are the only numbers you need -
020 8343 2255