Income was £106313
Tax paid was £28662
Trying to find tax code now.
Thanks. I assume we are dealing with 2013/14. The tax code will be shown on your P60. Did you make any pension contributions other than via a deduction from your monthly pay which will be shown on your payslips and which should be reported in your tax return?
Tony, I might have to get back to you tomorrow. My P60 is at home. I did make pension deductions but they came from my monthly pay.
Most of the money (£97772 came from my salary). Then an additional £8541 came from my private consulting business. So, I know I have some tax to pay on the private consulting but it seems that £4700 is a little steep.
Aren't there any deductions I can make? Or, do I need to go to a professional accountant?
Thanks. I assume we are dealing with 2013/14. The tax code will be shown on your P60.
As you had an income in excess of £100,000 in 2013/14, you are not entitled to the full personal allowance for the year of £9,440 as you will read here. You lose £1 of the allowance for every £2 of income over £100,000 so,assuming you made no pension contributions other than via a deduction from your your salary or any charitable donations through the gift aid scheme, your personal allowance for 2013/14 should have been £6,284 (£9,440 - £3,156 (£106,313 - £100,000 / 2).
On an income of £106,313 and with a personal allowance, your tax liability is £33,609.60. As you paid £28,662, you would appear to be underpaid by £4,947.60 for 2013/14.
You can claim expenses against your consulting income if you incurred any but you cannot backdate any such expense incurred after 5 April 2014 now to reduce your tax for 2013/14. Once the tax year is over, thats it. Take a look here for information on self-employed expenses.
An accountant or tax adviser might be able to give you some advice based on your circumstances to help you mitigate your tax exposure. To keep your income below £100,000, you could increase your pension contributions.
I hope this helps but let me know if you have any further questions.
If it makes a difference, turns out my tax code was 982T/1.
From what I understand of the above, the effective result is that for anything I earn above £100,000, I am paying more than 50% tax on it.
Does that basically sum it up?
You lose all your personal allowance at £120,000 (the PA for 2014/15 is £10,000) so that means it will cost you £4,000 in tax. On £100,000, you would pay £29,627 in tax so the extra £20,000 in salary suffers tax of £12,000 which equates to 60%.If your income was £150,000, you would pay tax at 20% on £31,865 (£6,373.00) and at 40% on £118,135 (£47,254.00). The total tax liability would be £53,627 so your effective rate of tax would be £35.75%. You pay tax at 45% on income above £150,000 per annum.
Thanks for this, but I'm afraid it confuses rather than clarifies. I'm not at £120,000 or even £150,000 but just over £100,000. So, for the part thats over £100,000, I'm paying closer to 60% tax by the looks of things. Is this right?
And/or, is it that my tax code was wrong?
So, should I just pay it or is it worth me talking with a specialist (and paying for that)?