What's the best way of learning to be tax efficient?


(Morty) #1

Having had to categorise myself to read Monzo’s latest prospectus, it turns out that I’m a ‘High Net Worth Individual’ as I earn over £100k/year.

It’s been something on my mind for a while now given that a 5% or 10% pay rise at work doesn’t haven’t the same impact on my take home pay as it used to given that most of it goes in tax … so I need to change mindset a bit about how I can more efficient around my take home value (e.g. asking for extra pension contributions perhaps or a travel bursary rather than a direct pay rise).

I guess over the last 12 months though I’ve come to realise that I’m really naive in this area. So how do you suggest I learn about being more tax efficient? Are there specific books/podcasts/websites that I should look at?

Thanks in advance!


#2

If you’re earning over 100.000£ a year I’d suggest you get a personal financial adviser and ask them as they’ll be able to look at your finances exhaustively and tell you exactly how you should be going about everything :ok_hand:t2:

Edit: alternatively give me it until you knock yourself back to the point of needing proper raises again :wink:


(Morty) #3

Thanks Reechan - and apologies, I was desperately trying not to sound like a dick. But I think I might have failed :wink:

I’m not getting raises. I just meant if/when I get to that point (if that were to happen), there are probably better ways of doing things.


#4

I read the Telegraph Tax Guide from the perspective of trying to understand the tax system in general, but it does promote itself as a book for those who want to become more tax efficient. It’s not exactly a page turner - but it was useful and not overly long.


#6

Your marginal tax rate between 100k and 120k is over 60%. Putting anything over 100k into your pension is a big win, you get all that tax back

Be very wary of IFAs, they are adept at separating the naive from their money. Always know who’s paying the bill.


(Excited about Christmas) #7

Usually the customer these days. I think commissions are illegal now…


#8

Not for tied products


(Excited about Christmas) #9

What are they?


#10

St James Place etc


(Excited about Christmas) #11

Oh you mean where an IFA offers their own funds?


(Drew sanders) #12

I look at your pension savings first. Do work offer a scheme where you can pay more in - will they match to a certain level?
Start a private pension- such as a SIPP - you could save thousands in tax relief. I use low cost funds - generally under 0.6% management fee.

Financial advice is important however don’t be fleeced so personal recommendations are best.
I did my own SIPP but I spent hours (50+) researching the options in terms of must tax efficient and investment choices.

This may help you start to understand.


(Danny) #13

SIPPS and EIS/SEIS investing are the big ones. Definitely start with the former, and I’d encourage you to avoid financial advisors, the information is all available online. I’d encourage you to read A random walk down Wallstreet and start with the asset allocation suggested at the end of that.

A small (probably single digit %age of your portfolio) of EIS and/or SEIS shares can be quite tax efficient and you may hit on a diamond. It is high risk but the generous tax breaks mitigate a lot of that.


#14

No worries, I understand it’s hard to talk about a 6 digit salary and not sound like a bit of a plank, but for what it’s worth I didn’t see it that way. You’re working hard for your money and I don’t begrudge anyone working hard for a good paycheque.