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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15915
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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If I get paid a bonus at the end of 2016, is there

Customer Question

Hi. If I get paid a bonus at the end of 2016, is there anyway to pay this into a pension before being taxed? This is in the UK.
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
Hi. Tell your employer that you want to sacrifice the bonus and have them make a similar payment into a pension plan instead. They should have no problem with that as they won't have to pay employer's national insurance contributions on a pension contribution whereas they will on a bonus. That will save them 13.8%. I hope this helps but let me know if you have any further questions.
Customer: replied 1 year ago.
Isn't this losing its effectiveness due to tapering? I have an income over 150k per year, and I read that there are Measures coming in after April 2016 that mean I will be taxed at 45% if I contribute over 40k into my pension. Can you confirm?
Expert:  TonyTax replied 1 year ago.
That is the case for those with "adjusted net incomes incomes" of more than £150,000 but there was no mention of your earnings level in your question. However, the government wants to reduce the tax relief costs of pension contributions and so they have introduced the measures you have heard about. If you look here, here and here, you will see how the tapering works. You can still use unused relief from the three previous tax years where the annual allowance for the current year has been used. These rules are new and you should consult an independent financial adviser if you have a private pension plan or your employer's pension scheme administrators if you are a member of their scheme for a detailed appraisal of your options.
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Customer: replied 1 year ago.
Thanks Tony that does answer my question, I would like to point out that not being an expert on tax it is difficult to know the best way to ask a question, hence the need to bounce back and forth to arrive at a suitable answer.
Expert:  TonyTax replied 1 year ago.
Thanks for accepting my answer. I completely understand your point As Donald Trump said, there are known unknowns and unknown unknowns!.

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