If your adjusted net income is over £100k, you will lose £1 from your personal allowance for every £2 you go above £100k. For example if your adjusted net income for the year was £110k, your personal allowance would go from £12,570 to £7,570. This works the same all the way up to £125,140 where you lose all of your personal allowance and all of your income is taxable (the additional rate tax bracket also comes into effect at 45%).
With pension contributions you can effectively change your tax brackets and reduce your adjusted net income. This works differently for employed individuals and self employed.
Need advice, call the team at Holmes and Company on 01525 851101 or contact us here
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