How to Cut Tax on £90k pa Income ?

CKhalvashi

thequant wrote: »

Hi All, I've been offered a new position for £90k pa, this is a big jump from my previous wage of £60k pa.

Although gross this seems like a big jump, once tax is taken into account the net differnce in pay is a lot less. And maybe a factor in wether I take the position or not.

Anway what are the best and main ways to cut tax on this income ?

So far all I have is to put 5% of my salary into my pension as this will be matched by the employer and i can claim tax releif on this.

Also I will put in the max allowed into my ISA (both cash and shares)

My "running costs" are 20k a year, £10k a year rent, £5k bills, £5k Luxuries.

I have no debt and am aiming to save as much as possible tax efficently.

I live with a partner who is disabled and unwaged, although he claims a pension of £50 a week and £70 a week DLA.

What other ways are there to cut tax to allow us to save more efficently ?

I need more info to give a precise answer, however some pointers are below;

Share schemes (possibly with matching, I know some companies do), as has already been mentioned.

If you put business expenses through personally, stuff them on a cashback/Avios card, so you’re earning free money on them.

If expected to visit others on a regular basis, ensure that 40% of 45p/mile is claimed back.

Professional expenses (e.g organisation membership as a statutory requirement).

Another general pointer here would be to take a look at the best-buy ISA and savings sections, or fill the ISA and put the rest into a pension. If the share situation is applicable, it may also be worth using the full amount (£5640) with half cash each, and putting these in the best investment ISA. I use my bank for these, and someone on the Investments board will be able to advise of the charges involved (I know that mine are 0.5%).

Best of luck with the job!

CK

Randvegeta

I see nothing wrong with people trying to find a legal way to avoid taxes.

If you didn't have to pay tax, YOU WOULDN'T. Eveyone else is the same. Given the OP would STILL have to pay tax, the wingers and moners on this forum/thread seem to be speaking purely out of jelously, and nothing more.

If not, let me ask you this. If the OP's partner stop taking benefits, would it then be okay for the OP to pay less tax? I think I can guess your answer.

That being said, I do think benefits should be used only by those who really need it. I am probably eligible for all kinds of benefits but I do not want to take any since I do not need it. I do feel somewhat that those who do not NEED benefits, but take it anyway, is somewhat wrong. That being said I am a non taxpayer so by taking benefits I would feel that I would be putting an uneccesary strain on the government's budget. Someone paying 31k+ in taxes to recieve less than 4k in benefits still means over 27k in tax. This represents about 30% of the OPs total income, paid IN TAX.

On the other hand, someone earning 30k without benefits would pay roughly 23% of their income in tax.

Only jelous people thing paying more tax, both as a percentage of income and as an amount is unfair to the poor.

Nine_Lives

Randvegeta - i agree with the majority of what you're saying. The only thing i would differ really on is the taking of benefits viewpoint. You're not right, i'm not right, but also neither of us are wrong.

My personal viewpoint is if you don't qualify then you don't qualify. Don't break rules & cheat the system. I think most of us will agree on that. However if you do qualify, then my view is to take it. Regardless of what you earn. Ever since i went full time i've paid my taxes. There's people up & down the land who cheat the system daily. If i am ever eligible to claim something then i will do - as it would become my RIGHT to do so. I pay into the system, so why not take back whenever i am eligible to do so?!
Some people are too proud though. When my sister left school & she had no job, she was too proud to claim JSA. Didn't want to be known as a "dole dosser" was her words. My partner is of the same viewpoint.

I can see where they're coming from, but i don't share the view. If i pay into the system, a system which people abuse daily by cheating it, then i will take what i am eligible for which is my right to do.

Randvegeta

K_P83 wrote: »

If i pay into the system, a system which people abuse daily by cheating it, then i will take what i am eligible for which is my right to do.

I understand your viewpoint, and were I a tax payer, I may do everything I can to snatch back what I paid in.

However, I am not a tax payer. I choose not to take an income to avoid all forms of income tax. By having no income, I am probably opening myself up to a number of benefits.

BUT, I won't take them! Why?

I am anti-tax, so I am therefore anti-benefit. I am against most forms of benefits that are handed out to the masses. Who really likes the idea of a welfare state. AND, this country has numerous problems, of which debt is major one. I do not wish to be responsible in any way for the national debt.

On the other hand, I could take all the benefits I am eligible for, in the hopes that by abusing the system, it would force policy makers to ultimately change the system to ensure only those who really need it, take it.... But I think there are plenty of those already so I vote against this plan.

We need more people to feel ashamed of being on JSA and other forms of benefits. Get those layout abouts working again! Lazy !!!!ers!

Savvy_Sue

GOING OFF-TOPIC

Hi, Martin’s asked me to post this in these circumstances: While it’s easy to wander off-topic that often prevents newbies finding the information they want quickly and easily (please see this rule). Please keep this thread on topic. If you’d like to discuss non-MoneySaving related topics please continue your discussion in The MoneySavers Arms or Discussion Time. If you have any questions about this policy please email [EMAIL="forumteam@moneysavingexpert.com"]forumteam@moneysavingexpert.com[/EMAIL].

There might be some mileage in consulting a financial adviser for general tax and financial planning: the obvious areas have been covered here, but as well as thinking about pensions and ISAs, the OP should probably be giving thought to IHT issues and - key question - making a will ...

thequant

I renegotiated my salary to £110k, someone said to me I will pay 60%, is that correct ? I thought the top rate was 45% (from 50%) and that only applied to the super rich ?

jem16

thequant wrote: »

I renegotiated my salary to £110k, someone said to me I will pay 60%, is that correct ? I thought the top rate was 45% (from 50%) and that only applied to the super rich ?

from £100k you start to lose some of your personal tax-free allowance.

With £110k you will only have a personal allowance of £3105 as opposed to £8105 so you will pay tax on £5000 more than you would if you only had a salary of £100k.

So it's your marginal tax rate that is higher and may well go to 60%.

Have a play here and see for yourself.

http://listentotaxman.com/

Of course you can avoid all of this extra tax by contributing at least £10k to your pension.

ceeforcat

jem16 wrote: »

Of course you can avoid all of this extra tax by contributing at least £10k to your pension.

Spot on - at £110k - a GROSS contribution of £10000 attracts the maximum tax saving possible.

Voyager2002

Don't forget that tax relief is still available on charitable donations: and with all the cuts, good causes are in need as never before. So identify groups that do things that you value and donate to them in the most tax-efficient way possible: to maximise your tax relief, give away the full fifty thousand each year.

Suffolk_lass

thequant wrote: »

Hi All, I've been offered a new position for £90k pa, this is a big jump from my previous wage of £60k pa.

Although gross this seems like a big jump, once tax is taken into account the net differnce in pay is a lot less. And maybe a factor in wether I take the position or not.

Anway what are the best and main ways to cut tax on this income ?

So far all I have is to put 5% of my salary into my pension as this will be matched by the employer and i can claim tax releif on this.

Also I will put in the max allowed into my ISA (both cash and shares)

My "running costs" are 20k a year, £10k a year rent, £5k bills, £5k Luxuries.

I have no debt and am aiming to save as much as possible tax efficently.

I live with a partner who is disabled and unwaged, although he claims a pension of £50 a week and £70 a week DLA.

What other ways are there to cut tax to allow us to save more efficently ?

You don't make it clear if your post is with the same or a different company but if it is with a different company you should seek professional advice to compare the new OP scheme with your previous (current) one. Many offer the option in the first few months to combine. You may also have the opportunity to "buy extra" pension - public sector would call it buying added years.

Additional voluntary contributions have also been mentioned but these effectively are a second pension scheme in addition to your OP scheme. Before doing this your pensions advisor (a professional, not we amateurs on here) should be able to advise on whether your OP scheme is a better bet (only one set of fees is just one criteria to consider). As you say, if the OP scheme is decent, they will match your contributions.

In your original post you say your partner is claiming a pension which may mean you are closer to pension than starting employment. As others have said, the pension is the area to concentrate on - but with professional advice to ensure you are max-ing your opportunities.

You could also make tax deductable charitable contributions if your employer offers this facility. Good luck!