January 9th 2015
If you estimate that your taxable income for 2014-15 will marginally exceed £100,000, perhaps for the first time, you should consider your options.
If your income does exceed £100,000 then for every £2 that your income exceeds this amount your personal tax allowance will be reduced by £1.
As the basic personal allowance is £10,000 for 2014-15 this means that when your income is £120,000 or greater, you will no longer qualify for a basic personal allowance. Any steps that you can take to keep your income below £100,000 will potentially save you Income Tax at the marginal rate of 60%.
For example you could consider negotiating a salary sacrifice arrangement with your employer or additional pension contributions. Maybe, trading salary for non-taxable benefits such as increased holiday entitlement? Further, pension premiums and gift aid payments count as deductions in arriving at your taxable income.
If you would like to discuss your options in more detail please call DSC Chartered Accountants in Harrogate on 01423 560547.
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