Child Benefit: If you earn more than £50,000 pa, you start to have child benefit reduced. If you earn more than £60,000 your child benefit is reduced to zero. By making pension contributions to keep your income at or below £50,000 you protect your child benefit.
Losing Personal Tax Allowance: For every £2 you earn over £100,000, your personal tax allowance (£12,500) is reduced by £1. This means that if you earn £125,000 you have zero personal allowance, that’s an equivalent tax rate of over 60%. By making pension contributions early, you can reduce your earnings to below £100,000 and get your full personal allowance back.
Transfer Personal Allowance: If you are a low earner and do not use up your personal allowance but your partner earns more, you can transfer 10% of your personal allowance to your partner. Millions of people fail each year to do this.
Make sure you use all the allowances that you can:
Use all the allowances you can but don’t wait, get some early tax year end planning done now. Contact us.