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

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!


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.

1 Like

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.

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.

1 Like

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

Not for tied products

What are they?

St James Place etc

Oh you mean where an IFA offers their own funds?

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.

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.

1 Like