- After 6 April more people will pay 45 per cent tax
- Pension contributions can reduce your taxable income
- Splitting assets between spouses enables couples to make full use of tax allowances
From 6 April, the level at which you start to pay additional rate income tax of 45 per cent falls from the current level of £150,000 to £125,140. HM Revenue & Customs estimates that this will result in around 232,000 more additional rate taxpayers, taking the total to 792,000. Someone earning £150,000 will pay an additional £1,256 in income tax, on average.
If your adjusted net income is above £100,000 you already face a particular problem: for every £2 of taxable income above £100,000 you lose £1 of your personal allowance for income tax, which is currently £12,570. The loss of the personal allowance in addition to a 40 per cent income tax rate means that if you earn between £100,000 and £125,140 you, in effect, pay 60 per cent income tax. And if you earn £125,140 or more you have no personal allowance.