With 2010/11 income tax codes landing on doormats at the moment, anyone with total earnings of £100,000 plus could be forgiven for thinking that less is certainly not more…

As we have reported previously on this site, anyone with total earnings (including rental & investment income) will see their income tax personal allowance reduced by £1 for every £2 earned over the threshold, meaning that it will disappear once earnings reach £112,950. This creates a marginal rate of tax on the band of income £100,0000 - 112,950 of 60% resulting in an additional income tax bill of  £2,590 where the entire allowance is removed.

The good news is that there are prudent financial planning decisions which can be taken to reclaim this valuable allowance. If you or your organisation would like to learn more, please get in touch.

Whilst we’re dishing out the good news, please don’t forget that for anyone with earnings of £130,000 or more (including in any one of the previous 3 tax years - this figure includes the taxable element of redundancy payments) there could be restrictions placed on the amount of money which can be invested by them or their employer into pension arrangements from 6th April 2010 (for anyone earning £150,000 plus) or 9th December 2010 (£130,000 plus) without creating an income tax-charge. Again, for full details please speak to EBS.

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