Are tax/financial advisors useful?
Discussion
Bit of an obtuse question but...
Thinking whether i should reach out to one to help be a bit more proactive on managing my tax liability. Keeping things high level but if you are a additional rate tax payer (last year effectively paid almost 50%) mainly coming from one source (employment contract), are they able to structure ones affairs to be smarter about that liability- obviously within the law ?
I hesitate as i want to avoid going to one be told “have you considered maxing out your pension and ISA contribution sir?”- thx, i can figure that basic stuff myself.
Thinking whether i should reach out to one to help be a bit more proactive on managing my tax liability. Keeping things high level but if you are a additional rate tax payer (last year effectively paid almost 50%) mainly coming from one source (employment contract), are they able to structure ones affairs to be smarter about that liability- obviously within the law ?
I hesitate as i want to avoid going to one be told “have you considered maxing out your pension and ISA contribution sir?”- thx, i can figure that basic stuff myself.
R33FAL said:
Bit of an obtuse question but...
Thinking whether i should reach out to one to help be a bit more proactive on managing my tax liability. Keeping things high level but if you are a additional rate tax payer (last year effectively paid almost 50%) mainly coming from one source (employment contract), are they able to structure ones affairs to be smarter about that liability- obviously within the law ?
I hesitate as i want to avoid going to one be told “have you considered maxing out your pension and ISA contribution sir?”- thx, i can figure that basic stuff myself.
Short term, pension and ISA, if you're a higher rate payer though, there's possibly more at state later on in life with inheritance tax etc, so it's not all about the immediate yearly tax bill.Thinking whether i should reach out to one to help be a bit more proactive on managing my tax liability. Keeping things high level but if you are a additional rate tax payer (last year effectively paid almost 50%) mainly coming from one source (employment contract), are they able to structure ones affairs to be smarter about that liability- obviously within the law ?
I hesitate as i want to avoid going to one be told “have you considered maxing out your pension and ISA contribution sir?”- thx, i can figure that basic stuff myself.
As mentioned however, PAYE earners have a hard job. If you have a proactive employer (who also has a decent accountant or it's own decent finance department) perhaps set up share schemes that allow accrual of shares in the company in exchange for salary, possible share buy backs to utilise capital gains allowances instead...you need to start getting creative to stay within the rules, but it can be costly for businesses to have these set ups and depends ultimately, if it's worth it to retain talent by working on competitive packages that help them too.
It can be complex but not impossible.
Most just max pension, use ISAs and Premium Bonds and invest the rest wisely though!
I broadly agree though my IFA has been a real help over the last couple of years...I quit full time work two years ago. A big part of me doing that was sitting down with them and a pretty sophisticated piece of forecasting software working out my financial plan for the rest of my life. If you were s
t hot on Excel you could do it yourself but you’d have to really, really know your stuff. Have also been very helpful along with a really good lawyer they recommended for planning in terms of IHT.
Broadly though when you are on PAYE as others have said there is very little you can do. The various tax mitigation strategies which were all perfectly legal and HMRC approved are now much harder to do and you have the risk of retrospective changes of legislation as happened after the GFC and I suspect will happen in the next two or three years when they start trying to work out how to pay for Covid.
t hot on Excel you could do it yourself but you’d have to really, really know your stuff. Have also been very helpful along with a really good lawyer they recommended for planning in terms of IHT. Broadly though when you are on PAYE as others have said there is very little you can do. The various tax mitigation strategies which were all perfectly legal and HMRC approved are now much harder to do and you have the risk of retrospective changes of legislation as happened after the GFC and I suspect will happen in the next two or three years when they start trying to work out how to pay for Covid.
JulianPH said:
btdk5 said:
EIS/VCT?
High risk, but good call!I'm in a similar boat. Max out the pension, I stick a little into VCT most years.
Considering SEIS this year to make a capital gain from last year a little easier to swallow. Realistically it looks more like gambling than investing!!!
Thanks for the comments.
Indeed 90% PAYE but perhaps there are things at the margin that could help reduce the liability, so might have a look for one. Any recommendations gratefully received.
Random one but Just read about being able to claim incidental expenses for working from home during Covid. Not a bad idea- need to look into it
Indeed 90% PAYE but perhaps there are things at the margin that could help reduce the liability, so might have a look for one. Any recommendations gratefully received.
Random one but Just read about being able to claim incidental expenses for working from home during Covid. Not a bad idea- need to look into it
R33FAL said:
Thanks for the comments.
Indeed 90% PAYE but perhaps there are things at the margin that could help reduce the liability, so might have a look for one. Any recommendations gratefully received.
Random one but Just read about being able to claim incidental expenses for working from home during Covid. Not a bad idea- need to look into it
How old are you? The simple way to not pay 40% tax is to put it into your pension at zero tax. Later on a quarter will be tax free and the rest at 20%, so a marginal rate of 15%. Of course it depends how much you need to live on, but that's an easy way to do it. Indeed 90% PAYE but perhaps there are things at the margin that could help reduce the liability, so might have a look for one. Any recommendations gratefully received.
Random one but Just read about being able to claim incidental expenses for working from home during Covid. Not a bad idea- need to look into it
otherman said:
R33FAL said:
Thanks for the comments.
Indeed 90% PAYE but perhaps there are things at the margin that could help reduce the liability, so might have a look for one. Any recommendations gratefully received.
Random one but Just read about being able to claim incidental expenses for working from home during Covid. Not a bad idea- need to look into it
How old are you? The simple way to not pay 40% tax is to put it into your pension at zero tax. Later on a quarter will be tax free and the rest at 20%, so a marginal rate of 15%. Of course it depends how much you need to live on, but that's an easy way to do it. Indeed 90% PAYE but perhaps there are things at the margin that could help reduce the liability, so might have a look for one. Any recommendations gratefully received.
Random one but Just read about being able to claim incidental expenses for working from home during Covid. Not a bad idea- need to look into it
anonymous said:
[redacted]
I’d say with most you’ll get your principal investment back if you’re lucky as that’s kind of what they aim for if they’re going after tax money. Trouble is with EIS/VCT is the Fund Managers don’t really have the resources to manage the investments or research the investment sectors etc. To put it brutally if you’re good at managing or analysing those kind of risks there are much better (much higher paid) places to work than an EIS/VCT manager.
Cheib said:
I’d say with most you’ll get your principal investment back if you’re lucky as that’s kind of what they aim for if they’re going after tax money.
Trouble is with EIS/VCT is the Fund Managers don’t really have the resources to manage the investments or research the investment sectors etc. To put it brutally if you’re good at managing or analysing those kind of risks there are much better (much higher paid) places to work than an EIS/VCT manager.
Very good point. In addition I think they overvalue the share price of companies eligible for this tax break.Trouble is with EIS/VCT is the Fund Managers don’t really have the resources to manage the investments or research the investment sectors etc. To put it brutally if you’re good at managing or analysing those kind of risks there are much better (much higher paid) places to work than an EIS/VCT manager.
By the time you finally exit you could have got better performance from an equity fund.
otherman said:
How old are you? The simple way to not pay 40% tax is to put it into your pension at zero tax. Later on a quarter will be tax free and the rest at 20%, so a marginal rate of 15%. Of course it depends how much you need to live on, but that's an easy way to do it.
35 but already maxing out the £10k allowance. otherman said:
R33FAL said:
Thanks for the comments.
Indeed 90% PAYE but perhaps there are things at the margin that could help reduce the liability, so might have a look for one. Any recommendations gratefully received.
Random one but Just read about being able to claim incidental expenses for working from home during Covid. Not a bad idea- need to look into it
How old are you? The simple way to not pay 40% tax is to put it into your pension at zero tax. Later on a quarter will be tax free and the rest at 20%, so a marginal rate of 15%. Of course it depends how much you need to live on, but that's an easy way to do it. Indeed 90% PAYE but perhaps there are things at the margin that could help reduce the liability, so might have a look for one. Any recommendations gratefully received.
Random one but Just read about being able to claim incidental expenses for working from home during Covid. Not a bad idea- need to look into it
btdk5 said:
Cheib said:
I’d say with most you’ll get your principal investment back if you’re lucky as that’s kind of what they aim for if they’re going after tax money.
Trouble is with EIS/VCT is the Fund Managers don’t really have the resources to manage the investments or research the investment sectors etc. To put it brutally if you’re good at managing or analysing those kind of risks there are much better (much higher paid) places to work than an EIS/VCT manager.
Very good point. In addition I think they overvalue the share price of companies eligible for this tax break.Trouble is with EIS/VCT is the Fund Managers don’t really have the resources to manage the investments or research the investment sectors etc. To put it brutally if you’re good at managing or analysing those kind of risks there are much better (much higher paid) places to work than an EIS/VCT manager.
By the time you finally exit you could have got better performance from an equity fund.
Learnt the hard way.......
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