60% tax trap - any way out (other than pension conribs)? 13 July 2022 at 8:39AM in Cutting tax 16 replies 546 views

boomboomboom

Is there any magic way out of it other than to maximise pension contributions?

What if you've already done that, paying the yearly max into a pension, and you're in the 60% trap?

Is there any wizardly left to do?

I am not self employed and I have maximised any pre-tax benefits from my employer.

Thank you

Flugelhorn

can't think of anything - I was stuck with not being able to pay more into the pension owing to AA  - just paid up in the end (oh and declined work and had some more time off)

Dazed_and_C0nfused

Gift Aid.

The gross contribution increases your basic rate band and reduces your adjusted net income.

There's also things like EIS and VCT investments but they don't prevent the 60% issue, they just reduce your overall liability.

biscan25

Perhaps allowable expenses? These are fairly hard to come by though. Mine was just my £800 professional subscription.

Jeremy535897

The only way to make a meaningful difference is to start a commercial sole trade, buy capital items you need, and set the loss from the capital allowances against other income. Unfortunately you need the time and knowhow to set a new business up, rather than just push money into a pension scheme.

boomboomboom

Jeremy535897 said:

The only way to make a meaningful difference is to start a commercial sole trade, buy capital items you need, and set the loss from the capital allowances against other income. Unfortunately you need the time and knowhow to set a new business up, rather than just push money into a pension scheme.

Actually that is genius. Set myself up a nice loss-making business that somehow has no expense!!

Joking aside, my wife has her own business but she is a sole trader. It feels like if she were to become a Limited company perhap there is some way I can invest in that?

I need to be more intelligent is what I need.

Damn the tax man.

Jeremy535897

If your wife needs capital items that qualify for capital allowances, you could become a partner, and if the capital allowances create a loss, allocate 99% of that loss to you in the tax year it arises (but only from the date you become a partner). When the business makes a taxable profit, allocate 99% of the profits to her, assuming she is a basic rate taxpayer.

There is no point buying things just to get a tax deduction. You would also become jointly and severally liable for the partnership debts.

lisyloo

Check if your employer does salary sacrifice for cars?
if you have genuinely exhausted salary sacrifice and pensions then the only other option I’m aware of is to work less.

penners324

Work less and get less take home pay?

Albermarle

Or realise you are better off than 99.5% of the world, and stop worrying about tax.

As they say only two things certain in the world- Death & Taxes.

EdSwippet

Albermarle said:

As they say only two things certain in the world- Death & Taxes.

Except that death doesn't worsen with each successive government.