 | CAUGHT BY THE PERSONAL ALLOWANCE TRAP? | | | | | You May Not Even Know It ... | Posted by Nigel Adams on 27/03/2012 @ 08:00 |
Do you know whether you are one of the 700,000+ people paying a marginal income tax rate of 60%? This is an increasingly unfair trap which exists if your income is just over £100,000. That means you are a 40% taxpayer, but some of your income will (amazingly) be taxed at 60% ...
 don't get caught out by tax changes - speak with us and know your options
You may not even realise this as it is not absolutely clear from the tax computation we produce for you each tax year!
How can this happen? It's all down to the withdrawal of the personal tax allowance by £1 for every £2 that your income exceeds the magic figure of £100,000. And with the large increase in the personal allowance (the plan is to get that up to £10,000 eventually), it is a tax trap that will affect more and more people each year.
Here is what it means in figures for 2011/12:
Taxable income: £100,000 to £114,950 Marginal rate: 40% Taxable income: £114,951 to £149,999 Marginal rate: 40% Taxable income: £150,000 + Marginal rate: 50%
And for the next tax year 2012/13, it is even worse in terms of the number of people affected:
Taxable income: £100,000 to £116,210 Marginal rate: 60% Taxable income: £116,210 to £149,999 Marginal rate: 40%
As if the above was not bad enough, add in your National Insurance contributions at 2% if employed or self-employed and you suffer a marginal rate of 62%!
There are several techniques available to avoid this unacceptable tax rate. Please contact us for help on +44 (0) 1908 219100 and ensure you're fully aware of your options!
Until next time ... 
NIGEL ADAMS
|
 | MANAGING DIRECTOR Nigel formed Ad Valorem in April 2001 with a commitment to working with companies of all sizes, just the one common goal though the ambition to succeed and make the best of every opportunity that is presented.
Nigels strengths are thinking outside the box and using his practical and down-to-earth approach to help business owners maximise their potential. He will tell you what you need to know but not baffle you with accounting jargon.
Ad Valorem continues to grow and still fosters the family atmosphere with both its team and clients that is core to his business vision.
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