How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Sam Your Own Question
Sam
Sam, Accountant
Category: Tax
Satisfied Customers: 13938
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
16196420
Type Your Tax Question Here...
Sam is online now

I earned £99,4500 of salary in tax year 2013/2014. However

Resolved Question:

I earned £99,4500 of salary in tax year 2013/2014. However I received c.£13,000 in benefits in kind due to my car. Does this meant that my personal allowance will be reduced as I have exceeded £100,000 of income in that tax year?
Submitted: 2 years ago.
Category: Tax
Expert:  Sam replied 2 years ago.

Thanks question - I am Sam and I am one of the UK tax experts here on Just Answer.
Yes I am afraid it does and of the £9440 awarded you will lose £1 of tax allowance £2 of excess income/benefits over £100,000
So approx. £6500 (£13000/2) leaving £2940 (will be a little higher but not sure of your correct annual salary as an extra digit put in!)
Thanks
Sam
Customer: replied 2 years ago.

Thanks Sam, I thought that might be the case but wanted to double check. My salary is actually £99,450 (although £994,500 would be nice :)).

Kind regards

Kate

Expert:  Sam replied 2 years ago.
Kate
£994500 would be just lovely!
Then you will have a total income of £112450 so will lose £6225 allowance leaving £3215
There might have been a way to mitigate this, if you had not made full use of the annual allowance into your pension scheme - which is £40,000 /2014. As you would have attracted a further 20% tax relief from HMRC (as a 40% taxpayer) as 20% is awarded by the pension plan at source, but you then are due relief at your highest rate of tax, so worth considering if this situation might arise /2015, so tat a contribution can be considered and made prior to 05/04/2015.
Let me know if you have questions, but it would be appreciated, if you could rate the level of service I have provided (or click accept)
Thanks
Sam
Customer: replied 2 years ago.

Thanks Sam,

That all makes sense.

My salary /15 increased to £130k plus £14k of benefits. If I pay more into my pension scheme would this enable me to claim any of the personal allowance back, or would the level of salary negate this? In which case would it be just claiming back the relief higher rate of tax?

Best regards

Kate

Expert:  Sam replied 2 years ago.
Kate
Its not so much that you reclaim any of the personal allowance just that the rate at which you pay tax at 20% is extended to take into account the pension contributions
So - lets say you had a total income (salary and benefits) in 2014.2015 of £120,000 - so this would mean that your personal allowances would be wiped out to zero (as excess income of 20,000/2 = £10,000 from personal allowances £10,000 (which as a 40% taxpayer costs you £4000)
So you still lose the allowances - BUT if you then placed up to £40,000 into a pension plan, and lets call this £20,000 then in essence you are due a further 20% on this which equals £4000 refund back (which wipes out the £4000 lost)
But of course the main thing to be mindful of, in this example, is whether its viable to then end up with less money to live on as £20,000 would have been paid into the pension plan.
Thanks
Sam
Sam and other Tax Specialists are ready to help you
Customer: replied 2 years ago.

Thanks Sam

Expert:  Sam replied 2 years ago.
Kate
You are very welcome and thanks accept/rating, much appreciated
Thanks
Sam