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?
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.
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.
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.