📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!

Being Tax Efficient with Bonus

Options
Gareth77
Gareth77 Posts: 50 Forumite
Part of the Furniture 10 Posts Name Dropper Combo Breaker
If I get paid £132 + 25K bonus - what is are the best tax efficient decision I can make (I guess pension contributions are the best option)

Thanks everyone in advanced!

Comments

  • eskbanker
    eskbanker Posts: 37,282 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    Gareth77 said:
    If I get paid £132 + 25K bonus...
    Shouldn't be too much tax payable on £25,132 ;)

    But yes, pension contributions, especially if it's viable to get down below £100K.
  • TheSpectator
    TheSpectator Posts: 862 Forumite
    500 Posts Name Dropper
    Hopefully you already had plans in place to mitigate the loss of your personal allowance on your existing £132k?
  • Exodi
    Exodi Posts: 3,963 Forumite
    Eighth Anniversary 1,000 Posts Name Dropper Combo Breaker
    edited 19 March at 4:56PM
    Depends on how much you income you want to retain. Initial thought would be to salary sacrifice below £100k to retain the persona allowance. Depending on your pension situation, there may be some mileage to SS'ing much further than this (claiming higher rate tax relief), if are expecting to be a basic rate tax payer in retirement or are not expecting to hit the LSA.
    Know what you don't
  • Gareth77
    Gareth77 Posts: 50 Forumite
    Part of the Furniture 10 Posts Name Dropper Combo Breaker
    Hopefully you already had plans in place to mitigate the loss of your personal allowance on your existing £132k?
    Hi no I didn't - a bit new to all this. I do pension contribution - but I was wondering should I increase that?

  • Gareth77
    Gareth77 Posts: 50 Forumite
    Part of the Furniture 10 Posts Name Dropper Combo Breaker
    What is LSA?
  • 400ixl
    400ixl Posts: 4,482 Forumite
    1,000 Posts Third Anniversary Name Dropper
    Lifetime saving allowance for pensions I would have thought.

    How much are you and your employer currently putting into your pension and is it salary sacrifice?
  • eskbanker
    eskbanker Posts: 37,282 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
  • Veteransaver
    Veteransaver Posts: 776 Forumite
    500 Posts First Anniversary Name Dropper
    Hopefully your firm will allow you to salary sacrifice it, but if it's for this tax year it might be too late. When is the bonus being paid?
    You could pay a substantial amount into a SIPP still in this tax year, note you can also use 3 previous year pension allowances so potentially you could put your entire high rate tax bit of your income into the pension (depending obviously on what you put into pensions in those previous years)
  • Bookworm105
    Bookworm105 Posts: 2,016 Forumite
    1,000 Posts First Anniversary Name Dropper
    edited 19 March at 9:20PM
    best tax efficient option would be to donate it to charity, but that isn't the answer you were looking for  :D
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 351.1K Banking & Borrowing
  • 253.2K Reduce Debt & Boost Income
  • 453.6K Spending & Discounts
  • 244.1K Work, Benefits & Business
  • 599.1K Mortgages, Homes & Bills
  • 177K Life & Family
  • 257.5K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16.1K Discuss & Feedback
  • 37.6K Read-Only Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.