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WORK BONUSES - ACTION TO REDUCE THE TAX HIT?

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Moots2024
Moots2024 Posts: 29 Forumite
10 Posts First Anniversary
My daughter received a hefty bonus last year in the form of a phantom option. She took no action to try and reduce the tax hit and so has received a demand for a large sum of unpaid income tax as at end of year she was in higher tax band and as her total annual income was in excess of £100k her Personal Tax Free Allowance reduced.

I don't believe there is any retrospective action she can take to reduce said hit on respect of the tax year that has passed. However, the company concerned has been the subject of a takeover the terms of which I understand include for my daughter receiving further lump sum payments over the next two or three years. I don't have the precise figures but from what I know the payments in themselves will be considered as income for income tax purposes.

I would be grateful for any advice/thoughts on action that may be worth my daughter looking into help avoid so much of any future bonuses going to the taxman. 

Thanks.

Comments

  • eskbanker
    eskbanker Posts: 37,214 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    Pension contributions will usually be the most effective way of reducing adjusted net income, assuming that she doesn't need to access the funds until she reaches the relevant age.
  • Dazed_and_C0nfused
    Dazed_and_C0nfused Posts: 17,609 Forumite
    10,000 Posts Fifth Anniversary Name Dropper
    edited 24 July at 2:52PM
    Moots2024 said:
    My daughter received a hefty bonus last year in the form of a phantom option. She took no action to try and reduce the tax hit and so has received a demand for a large sum of unpaid income tax as at end of year she was in higher tax band and as her total annual income was in excess of £100k her Personal Tax Free Allowance reduced.

    I don't believe there is any retrospective action she can take to reduce said hit on respect of the tax year that has passed. However, the company concerned has been the subject of a takeover the terms of which I understand include for my daughter receiving further lump sum payments over the next two or three years. I don't have the precise figures but from what I know the payments in themselves will be considered as income for income tax purposes.

    I would be grateful for any advice/thoughts on action that may be worth my daughter looking into help avoid so much of any future bonuses going to the taxman. 

    Thanks.
    Does she make any Gift Aid donations of note?
  • Moots2024
    Moots2024 Posts: 29 Forumite
    10 Posts First Anniversary
    No Gift Aid donations that I am aware of

  • Dazed_and_C0nfused
    Dazed_and_C0nfused Posts: 17,609 Forumite
    10,000 Posts Fifth Anniversary Name Dropper
    Moots2024 said:
    No Gift Aid donations that I am aware of

    Shame, that was her only realistic option for 2024-25.
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