Tax advice - sort of - well live work balance advice

[London Calling]

Me and Ms LC believe in putting family before work.

Whilst she is on maternity leave she will in January go back to either a 3 day or 4 day week.

I am also opting to reduce my hours. Basically, so we can be with our kids when they leave school and not dumping them into childcare etc.

My salary also goes into the higher 40% tax band, I was just wondering , what is the threshold is b4 your salary goes into the 40% band.

I reckon I will roughly work my hours out to that level.

Why work extra hours to be taxed at 40%, NI and then pay childcare?

LC

 

[El Presidente]

£34,800

 

[Gazwag]

£34,800

+ your personal allowance

Why work extra hours to be taxed at 40%, NI and then pay childcare?

If you are a higher rate earner you pay 40% Tax + 1% NI on the excess of the above but under it you pay 20% Tax + 11% NI so its comparing 41% and 31% therefore only actually paying 10% extra. You might also qualify for Tax Credits which will pay part of the child care

 

[London Calling]

+ your personal allowance



If you are a higher rate earner you pay 40% Tax + 1% NI on the excess of the above but under it you pay 20% Tax + 11% NI so its comparing 41% and 31% therefore only actually paying 10% extra. You might also qualify for Tax Credits which will pay part of the child care

Is that really the case?

So its 31% until 34,800 and then 41%

 

[Herr Tubthumper]

34,800 plus you personal allowance...which will bring it up to around 40k salary before you pay the upper band

 

[London Calling]

34,800 plus you personal allowance...which will bring it up to around 40k salary before you pay the upper band

Chhers mate, I hear you had a great party. Sorry I couldn't make it,it was too close to the hols. Hope to see you soon.

 

[chip]

If you are contributing to a pension scheme, it could well be worth your while paying just a little tax at 40% as you will then get tax relief on all your pension contributions at that level.

 

[London Calling]

If you are contributing to a pension scheme, it could well be worth your while paying just a little tax at 40% as you will then get tax relief on all your pension contributions at that level.

Obviously I will be talking to HR and our account/ finance boffins but these are great tips.

 

[El Presidente]

Subcontract some of the work to your wife, pay her about £5,500, and it will all be tax free.

 

[Herr Tubthumper]

Chhers mate, I hear you had a great party. Sorry I couldn't make it,it was too close to the hols. Hope to see you soon.

Not a prob. It was good fun, and I think everyone enjoyed it. I certainly did.

 

[Adam Virgo's Shirt]

Also, if you will be using a registered childcare facility at all, don't forget the nursery vouchers scheme. You will need to ask your employer to register with the scheme first though, but it carries benefits for both parties.

For you, it works as a salary sacrifice. You opt to receive a sum of money per month (£243 each, so you and the missus can both do it and get £486 benefit between you) You are not taxed, nor pay NI on the sacrificed amount. Each month you will receive the sacrificed amount in vouchers which can be used at any Ofsted approved childcare facility (Childminders/Nurseries etc)

The one thing to consider though, is that generally speaking your 'pensionable pay' is the salary LESS the sacrificed amount, so you will also be contributing slightly less to your pension scheme. Schemes do vary though as to whether they allow contributions on the sacrificed amount so check with your Payroll Dept.

For the Employer, although they have to pay a 7% service charge to partake in the scheme, they do not have to pay Employers NI on the sacrificed amount representing an approx saving to them of 5% of your salary. So it is worth it for them too