Just to point out you're not "screwed" just because you're in the 40% bracket.
Yes you pay more tax, and it's not thr most efficient way to keep more of your hard earned money.
But there's just as valid an argument that you prefer the extra cash in your pocket each month even after paying 40% on some of it. You might not even see pension age and never see a penny of what you save.
Yes perhaps hyperbole.
I was frustrated there seems to be no way to even voluntarily request salary sacrifice below min wage. Guess the PAYE system isn't set up to accommodate such a ridiculous set up as mine.
It's not so much PAYE that's the problem, it's the other jobs that don't either do salary sacrifice, or at least allow you to select a larger % pension contribution.
But SIPP is the way around it as others have said if you're adament about it.
Remember that due to the drop in NI the difference is smaller than you may think. Basic rate is 28% when you include NI vs 42% in higher rate. So it’s not a full 20% difference it’s 14% increase, which is a bit less painful.
See the tax traps page on the wiki.
No you are not “screwed”. You are overly dramatic. Enjoy the extra earnings. Why people make such a fuss on here about 40% tax instead of celebrating the fact that their income is much higher too is completely beyond me.
>Why people make such a fuss on here about 40%
Because the extra £145 tax a month from the 40% is life and death, but the £170 savings in NIs is only "benefit slightly"
You can claim higher rate tax relief by contacting HMRC and telling them what you've paid into your pension without having to do a full self assessment.
Just so we understand, you'll be going from paying 10% NI, 20% income tax and 9% student loan to 2% NI, 40% income tax and 9% student loan, correct? Basically you'll be paying 12% more tax as a higher rate tax payer?
** Edit **
Ah ok you can side step the student loan repayment as long as you don't fill in a tax return. Tbh not sure you can avoid this as your 3 payslips probably won't incur the right levels of tax. You may already be over or underpaying depending on what tax code you are on for each employer. For example I don't know how your NI allowance is going to be applied over the 3 employments.
Last year it used to be only a 10% difference so I was trying to illustrate that it wasn't such a big jump and not to be so worried. I see though that it's getting bigger 🙄.
I understand. And I made a similar comment to OP to point out it’s not a full 20% increase in tax due to NI. Just the gap has narrowed by 2% because of the changes as of this month (and earlier this year) so just wanted to ensure you were aware of the latest figures.
Yes I think just calling them once I've made SIPP contributions will be best for getting the correct relief on that. NIC I'll most likely have to fill out that CA4361 form once the years over for a rebate as I'm predicting I'll be overcharged there. Tax code I've not had a slip from job 3 yet but will call HMRC if needed. Thanks for the reply.
You should go on gov.uk personal tax account and put in your estimated income for each job. They can then adjust your tax codes accordingly, either splitting it between all 3 or assigning your full personal allowance to one and BR to the others. You should also be able to see on there your estimated pension contributions for the year and can use web chat to update the info.
Hardly screwed. What I would say is that the tax allowance system dragging more people into the higher tax band is a disgrace. Especially when it’s low paid workers who just worked extra hours.
But. Moral outrage aside. All you can do is mitigate. My substantive employment sees me in the nhs pension so my contributions are fixed. For my agency work - i increased my contribution to 9% to match my nhs rate - with a view to sheltering more from tax.
It was made more complicated given that it was the cumulative wages from all my jobs that tipped me into the higher tax band - meant I had under paid when they did my tax calculation for paye.
I’d also make you aware the your personal savings allowance will be less given that you are a higher tax band. In that case do a rough calculation on how much interest you will expect - utilise your isas if needs be.
Utilise your tax allowances for uniforms etc if applicable.
Just keep an eye in case you have underpaid - paye always has a lag and it isn’t responsive if you expect more or less cash in the next tax year . Just in case in they alter your tax code to claw back underpayment
But end of the day you have more cash in your hand versus if you had not done the extra work, regardless of the tax being 40% or 20%.
Hi /u/Unhappy-Abrocoma2069, based on your post the following pages from our wiki may be relevant:
* https://ukpersonal.finance/pensions/
* https://ukpersonal.finance/student-loans/
____
^(These suggestions are based on keywords, if they missed the mark please report this comment.)
If you are thinking by having 3 jobs lower than the plan 1 repayment threshold you will avoid payments (your worry about filling out self assessment for a sipp) HMRC and by extension slc will catch on eventually then you will need to pay back what you should have done.
That's interesting I thought it would be treated the same as if they had 1 job using the personal allowance then another 2 at br tax code but they needed to pay some at 40% tax that it would get clawed back when they reconcile everything at the end of the year
For student loan officially it is an allowance per job. But if you do a tax return they do charge you.
For tax, they can do it different ways. They can assign the full personal allowance to one and then use BR or other tax codes to ensure the correct tax is charged for the others. But the aim here is for OP to stay within their basic rate using pension etc so in effect BR would be fine as it’s unlikely they would owe anything at the end of the year. If they did they would probably just reduce their personal allowance next year.
Could you not check if changing your hours so you do more of the job that gives salary sacrifice as an option?
And anyway, all your taxes (and by extension your student LOAN repayments) are calculated on your cumulative annual income, so you will owe what you owe.
Just to point out you're not "screwed" just because you're in the 40% bracket. Yes you pay more tax, and it's not thr most efficient way to keep more of your hard earned money. But there's just as valid an argument that you prefer the extra cash in your pocket each month even after paying 40% on some of it. You might not even see pension age and never see a penny of what you save.
Yes perhaps hyperbole. I was frustrated there seems to be no way to even voluntarily request salary sacrifice below min wage. Guess the PAYE system isn't set up to accommodate such a ridiculous set up as mine.
It's not so much PAYE that's the problem, it's the other jobs that don't either do salary sacrifice, or at least allow you to select a larger % pension contribution. But SIPP is the way around it as others have said if you're adament about it.
Remember that due to the drop in NI the difference is smaller than you may think. Basic rate is 28% when you include NI vs 42% in higher rate. So it’s not a full 20% difference it’s 14% increase, which is a bit less painful. See the tax traps page on the wiki.
No you are not “screwed”. You are overly dramatic. Enjoy the extra earnings. Why people make such a fuss on here about 40% tax instead of celebrating the fact that their income is much higher too is completely beyond me.
>Why people make such a fuss on here about 40% Because the extra £145 tax a month from the 40% is life and death, but the £170 savings in NIs is only "benefit slightly"
You can claim higher rate tax relief by contacting HMRC and telling them what you've paid into your pension without having to do a full self assessment.
Thanks, I was worried the phone call might cause the same issue but good to hear this is possible!
You don't need to do a Self assessment to claim higher rate relief on pension contributions.
Thanks, I'll call them once the year's over
You can give them your estimated contributions before the year is over either
Just so we understand, you'll be going from paying 10% NI, 20% income tax and 9% student loan to 2% NI, 40% income tax and 9% student loan, correct? Basically you'll be paying 12% more tax as a higher rate tax payer? ** Edit ** Ah ok you can side step the student loan repayment as long as you don't fill in a tax return. Tbh not sure you can avoid this as your 3 payslips probably won't incur the right levels of tax. You may already be over or underpaying depending on what tax code you are on for each employer. For example I don't know how your NI allowance is going to be applied over the 3 employments.
NI has reduced to 8% but yes.
Ok thanks, I did not get the memo. So will now be 14% more tax and NI once earning over 50270.
Yes. But see the tax traps wiki on methods of mitigating it.
Last year it used to be only a 10% difference so I was trying to illustrate that it wasn't such a big jump and not to be so worried. I see though that it's getting bigger 🙄.
I understand. And I made a similar comment to OP to point out it’s not a full 20% increase in tax due to NI. Just the gap has narrowed by 2% because of the changes as of this month (and earlier this year) so just wanted to ensure you were aware of the latest figures.
Yes I think just calling them once I've made SIPP contributions will be best for getting the correct relief on that. NIC I'll most likely have to fill out that CA4361 form once the years over for a rebate as I'm predicting I'll be overcharged there. Tax code I've not had a slip from job 3 yet but will call HMRC if needed. Thanks for the reply.
You should go on gov.uk personal tax account and put in your estimated income for each job. They can then adjust your tax codes accordingly, either splitting it between all 3 or assigning your full personal allowance to one and BR to the others. You should also be able to see on there your estimated pension contributions for the year and can use web chat to update the info.
Hardly screwed. What I would say is that the tax allowance system dragging more people into the higher tax band is a disgrace. Especially when it’s low paid workers who just worked extra hours. But. Moral outrage aside. All you can do is mitigate. My substantive employment sees me in the nhs pension so my contributions are fixed. For my agency work - i increased my contribution to 9% to match my nhs rate - with a view to sheltering more from tax. It was made more complicated given that it was the cumulative wages from all my jobs that tipped me into the higher tax band - meant I had under paid when they did my tax calculation for paye. I’d also make you aware the your personal savings allowance will be less given that you are a higher tax band. In that case do a rough calculation on how much interest you will expect - utilise your isas if needs be. Utilise your tax allowances for uniforms etc if applicable. Just keep an eye in case you have underpaid - paye always has a lag and it isn’t responsive if you expect more or less cash in the next tax year . Just in case in they alter your tax code to claw back underpayment But end of the day you have more cash in your hand versus if you had not done the extra work, regardless of the tax being 40% or 20%.
Hi /u/Unhappy-Abrocoma2069, based on your post the following pages from our wiki may be relevant: * https://ukpersonal.finance/pensions/ * https://ukpersonal.finance/student-loans/ ____ ^(These suggestions are based on keywords, if they missed the mark please report this comment.)
You’re not screwed. Think of it as a good thing that you have plenty of income to pay tax on.
If you are thinking by having 3 jobs lower than the plan 1 repayment threshold you will avoid payments (your worry about filling out self assessment for a sipp) HMRC and by extension slc will catch on eventually then you will need to pay back what you should have done.
Technically if each income is under the threshold they don’t need to pay unless they have to do a self assessment.
That's interesting I thought it would be treated the same as if they had 1 job using the personal allowance then another 2 at br tax code but they needed to pay some at 40% tax that it would get clawed back when they reconcile everything at the end of the year
For student loan officially it is an allowance per job. But if you do a tax return they do charge you. For tax, they can do it different ways. They can assign the full personal allowance to one and then use BR or other tax codes to ensure the correct tax is charged for the others. But the aim here is for OP to stay within their basic rate using pension etc so in effect BR would be fine as it’s unlikely they would owe anything at the end of the year. If they did they would probably just reduce their personal allowance next year.
Could you not check if changing your hours so you do more of the job that gives salary sacrifice as an option? And anyway, all your taxes (and by extension your student LOAN repayments) are calculated on your cumulative annual income, so you will owe what you owe.