Situation and what options

debthelp1

Homeowner with mortgage and approx 70k in savings

Salary 105k plus a 5k bonus (don't always get it)

Put 15k into a pension and 20k into ISA

For years haven't bothered to try to reduce what income tax/N.I. is paid over the year but never been so unhappy about the way the country is run and where the money is going so looking to reduce the amount the Govt take on a monthly basis. I don't want to get into any political chat and appreciate others will disagree which is fine.

Tried a financial advisor and got very little in way of advice but instead felt like I was just being asked for money to give over him to invest. That may be an option later but mainly I want to maximise my income first.

Are there any options out there, maybe even asking the company to reduce my salary to take me into a different tax bracket?

Exodi

Salary sacrifice would be the obvious solution - is that something your company is able to offer?

sheramber

debthelp1 said:

Homeowner with mortgage and approx 70k in savings

Salary 105k plus a 5k bonus (don't always get it)

Put 15k into a pension and 20k into ISA

For years haven't bothered to try to reduce what income tax/N.I. is paid over the year but never been so unhappy about the way the country is run and where the money is going so looking to reduce the amount the Govt take on a monthly basis. I don't want to get into any political chat and appreciate others will disagree which is fine.

Tried a financial advisor and got very little in way of advice but instead felt like I was just being asked for money to give over him to invest. That may be an option later but mainly I want to maximise my income first.

Are there any options out there, maybe even asking the company to reduce my salary to take me into a different tax bracket?

Reducing your income to pay less tax will  not maximise your income. 

You will receive less money. 

debthelp1

Exodi said:

Salary sacrifice would be the obvious solution - is that something your company is able to offer?

Yeah I think they would be open to it

Albermarle

. I don't want to get into any political chat 

That is a good sentiment, but then you do the opposite and make a potentially controversial political comment !

 but never been so unhappy about the way the country is run and where the money is going 

flaneurs_lobster

Albermarle said:

. I don't want to get into any political chat 

That is a good sentiment, but then you do the opposite and make a potentially controversial political comment !

 but never been so unhappy about the way the country is run and where the money is going 

Indeed, a simple "I wish to reduce the amount of tax that I pay" would have been a perfectly reasonable objective, no need for the political sniping.

Yorkie1

If you've already filled this year's ISA then pension is, as you say, the other option for reducing the amount of income tax you will pay.

Salary sacrifice means your salary is reduced so that you don't pay NI and income tax on that amount.
Net pay (deduced from salary before tax) means you don't pay income tax on that amount.
For both of these, it's done through pay roll so there isn't any messing around with tax reclaim from HMRC. If you're happy with the funds that your work pension is invested in and the underlying charges, this is probably most straightforward.

Paying into a SIPP means you need to do the reclaiming of excess tax which you paid over the basic rate. (I think). But greater choice of investments and charges.

debthelp1

As they knew was in the market for a new car the company have offered to buy a car as salary sacrifice and said if pay back £450 a month then the tax code will come down from the 40% it currently is.

I haven't heard of this before so completely oblivious, if paying back the money for the car isn't it just a company loan anyway?

molerat

Sal Sac for a car can have both positive and negative effects.  The co give you access to a scheme to buy / lease a car and you pay for it by sal sac meaning you have reduced your pay so do not pay tax and NI on that amount ........ but ....... the car is treated as a company car and you are taxed on the BIK of that car - which is effectively additional pay - at somewhere between 3% and 37% of the car list price depending on the particular car so you need to find out the BIK rate of he car. 

HedgehogRulez

Plop £60k a year into pension. Ding you’re now a basic rate tax payer.

debthelp1

molerat said:

Sal Sac for a car can have both positive and negative effects.  The co give you access to a scheme to buy / lease a car and you pay for it by sal sac meaning you have reduced your pay so do not pay tax and NI on that amount ........ but ....... the car is treated as a company car and you are taxed on the BIK of that car - which is effectively additional pay - at somewhere between 3% and 37% of the car list price depending on the particular car so you need to find out the BIK rate of he car. 

Thanks for that, have looked on Gov UK for BIK rates and I find it all very confusing.