Salary Sacrifice to Avoid 40% TB

markuss91

Thanks all, the SIPP is an excellent idea and on the same lines of what I’m trying to achieve - a better financial future for my family.

It turns out my wife has a SIPP but doesn’t pay much into it, so I’ll help her top this up to £240pm to get the 20% tax relief (is this the max, seems like it is?).

Understood about pensions not increasing themselves and it’s the investing that does this, but kept this out in order to keep it short as my original post was getting long with lots to cover

I’ve usually found myself ‘good with money’ but the last week or so has been a real eye opener that I could be much smarter with where my money is going to make it work the best for me/avoid on tax instead of simply overpaying my mortgage by default.

Dazed_and_C0nfused

markuss91 said:

Thanks all, the SIPP is an excellent idea and on the same lines of what I’m trying to achieve - a better financial future for my family.

It turns out my wife has a SIPP but doesn’t pay much into it, so I’ll help her top this up to £240pm to get the 20% tax relief (is this the max, seems like it is?).

Understood about pensions not increasing themselves and it’s the investing that does this, but kept this out in order to keep it short as my original post was getting long with lots to cover

I’ve usually found myself ‘good with money’ but the last week or so has been a real eye opener that I could be much smarter with where my money is going to make it work the best for me/avoid on tax instead of simply overpaying my mortgage by default.

If she has either no earnings for pension purposes or does have earnings but less than £3,600 then yes £2,880 (net) is the most she can contribute per tax year.

Which will be £3,600 with the tax relief added.

Qyburn

markuss91 said:

Thanks all, the SIPP is an excellent idea and on the same lines of what I’m trying to achieve - a better financial future for my family.

Worth checking whether your employers plan allows you to make contributions yourself. My Royal London did, it just needed a bit of identity verification the first time. That way you could put your bonus into the same place.

Either way if the bonus pushes you into HR tax you would need to reclaim from HMRC.

Or you could make a guess at the bonus, and salary sacrifice down so that even the bonus doesn't mean you pay HR.

jamesd

markuss91 said:

I’ve usually found myself ‘good with money’ but the last week or so has been a real eye opener that I could be much smarter with where my money is going to make it work the best for me/avoid on tax instead of simply overpaying my mortgage by default.

You could always look at some of our past posts, my own first being in 2006. Those replying to you have typically been at it a long time so no need to worry about getting caught up taking a while.