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WORK BONUSES - ACTION TO REDUCE THE TAX HIT?
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Moots2024
Posts: 29 Forumite

in Cutting tax
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.
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.
0
Comments
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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.1
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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.1 -
No Gift Aid donations that I am aware of
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Moots2024 said:No Gift Aid donations that I am aware of0
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