Change from 42% to 41% marginal rate

A

aidan119

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For people on the higher band rate, the tax advantage for 2007 is 1% less than in 2006 due to 42% rate falling to 41%.

Under the PAYE system the monthly pension/avc deductions are relieved at 41% rate.

Is there any way to reclassify the Jan to Oct deductions for 2007 as 2006 deductions and then claw back an extra 1% tax relief on them i.e. utilising the Oct 31st deadline.

Has anyone done this before in the year when the marginal rate fell ?
 
No exactly sure what you are asking? Marginal Relief rate is 40%. There should be no need to claim it back anymore, as it 'should' have been automatically applied by your Payroll System/Department/Pension Company since 2006.

Towger
 
Marginal tax rate in 2007 is 41%.
In 2006 it was 42%.
So less tax relief for pensions

Pension contributions in 2007 go through PAYE system at 2007 rates.

Revenue allow you to make pension contributions for 2006 up to 31st Oct 2007.
Therefore its better to class your payments for Jan-Oct 2007 as being for 2006 tax year.

But deductions are already going through PAYE with 41% relief so how do I get the extra 1%.

Could stop all pension payments going through PAYE for Jan-Oct 2007 and make an equivalent once-off lump sum payment and then claim tax releif manually against 2006 tax return.
But if I do this at start of 2007 I haven't got the cash yet and if I save up and do it in Oct I've lost 9 mths investment return.

Just wondering if anyone has tried it before.
 
A ha, You mean the Higher Tax rate. There is also rate of 40% called the Marginal Relief Tax Rate [broken link removed].

Towger
 
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