2015/16 Year End Strategies – Are you liable to the ‘hidden’ tax rate?
This means that an individual with adjusted net income of £121,200 or more will not be entitled to any personal allowance, resulting in an effective tax rate on this slice of income of 60%!
If you are likely to be affected by this, you might want to consider strategies to reduce your taxable income and retain your allowances, for example delaying income into the next tax year or increasing your payments into a pension.
If you want to avoid the 60% ‘hidden top rate’ you will usually need to act before the end of the tax year on 5 April. However, there is one ‘adjusted net income’ reducer which can be arranged after the end of the year – a Gift Aid carry-back. Subject to making a qualifying donation to charity and the associated claim no later than when you file your 2015/16
Tax Return, a donation which would otherwise fall into 2016/17 can be claimed for 2015/16.
Certain rules apply, so please talk to your accountant first about your particular circumstances.