A taxing time

By THIS IS MONEY
Updated:

 

I am due a bonus of up to half my salary from my employer. I'm already a top rate taxpayer. Is there any way I can receive the money without paying 40% tax on it? RP, no location given.

Accountant Maurice Fitzpatrick at Chantrey Vellacott DFK says: Lucky you! However, there is almost no way you could get your hands on this money tax-free. The only way may be to put it into a pension fund. If you are in a money-purchase occupational pension scheme you could get your employer to put it straight in the scheme. That would boost your pension and you'd pay no tax on it. Make sure it does not go through your hands on the way - if it does it is taxable.

On the other hand, if you have a personal pension you could pay the equivalent sum into that and get the usual tax breaks on pension contributions. If you want to do this, check with the taxman that you will not be exceeding your contributions limit. This varies according to your age and whether you took advantage of your full contributions limit in previous years. For details ask at your tax office.

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