10/12/2024
Increase in number of people paying Income Tax at an effective 60% rate
Although the published rates of Income Tax (non-dividend) are 20% (basic rate band), 40% (higher rate band) and 45% (additional rate band), there is actually a fourth ‘effective’ rate of 60%, which applies in relation to income in the window between £100,000 and £125,140. This is because in this window, for every £2 of income you receive you lose £1 of personal allowance.
It is possible to mitigate your exposure to this rate by making further pension contributions, or gift aid payments. Alternatively, you may wish to gift income producing assets to a spouse, who may not have as much other income, or has already exceeded the £125,140 threshold.
If you would like to discuss your personal tax options, please get in contact with Gemma Hedges on 023 8046 1259 or email Gemma Hedges.
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