how can i avoid paying 40% tax if im paye??
how can i avoid paying 40% tax if im paye??
Author
Discussion

sirhc

Original Poster:

268 posts

232 months

Saturday 19th January 2008
quotequote all
I know some bright spark will just tell me not to earn so much money but seriously, is there a way out of havin to pay 40% tax once you earn over 39k?
Really bugs me workin so many hours then bein stung for it in tax.
Bit of a workaholic & work as a 24hour breakdown engineer so working less hours isn't really an option.
Any ideas from the worldly wise??
CC

Eric Mc

125,784 posts

295 months

Saturday 19th January 2008
quotequote all
Personal Pension Contributions
Enterprise Investment Scheme

Mattt

16,664 posts

248 months

Sunday 20th January 2008
quotequote all
Go self-employed is the obvious answer and take dividends at only 10% tax (IIRC) - but watch out for IR35 wink

Edited by Mattt on Sunday 20th January 00:03

Eric Mc

125,784 posts

295 months

Sunday 20th January 2008
quotequote all
Matt - that's being not self employed.

That's being a director/shareholder of your own limited company.

True, if you run your own business (whether as a self-employed sole trader or through a limited company) you have more flexibility in deciding how you wamt to extract money from the business and what types of costs can be offset against business profits. However, the main savings (especially in the case of limited companies) are not in tax but in National Insurance.

trunnie

317 posts

287 months

Sunday 20th January 2008
quotequote all
I agree with Eric, Personal Pension/low cost SIPP. Venture Capital Trusts are less attractive than they were, but still interesting, provided (!!) that you pick the right one.

Also make sure that you gift aid/reclaim tax on any charitable contributions as you can now afford to give more.

russ_a

4,725 posts

241 months

Monday 21st January 2008
quotequote all
i thought that the threshold was 34k not 39k ??

Vixpy1

42,699 posts

294 months

Monday 21st January 2008
quotequote all
russ_a said:
i thought that the threshold was 34k not 39k ??
+ the personal allowance.

philelmer

195 posts

245 months

Monday 21st January 2008
quotequote all
I may be wrong, but I think that you can offset any loss you make on holiday flats against your personal tax. Not on residential lets, just holiday flats. Some sort of government initiative to encourage people to take holidays in England I guess.

Or only spend 90 days in the UK, then you don't have to pay any tax at all.

Vixpy1

42,699 posts

294 months

Monday 21st January 2008
quotequote all
philelmer said:
Or only spend 90 days in the UK, then you don't have to pay any tax at all.
Ah, a win win situation there hehe


Eric Mc

125,784 posts

295 months

Monday 21st January 2008
quotequote all
Renting of holiday homes is treated as a "trading" activity. Trade losses can be offset aginst other income in the same tax year.

Normal letting income is not considered to be a "trading" activity. Losses derived from ordinary letting can only be carried forward for offset against future letting profits from the same property.

dbroughton

304 posts

244 months

Monday 21st January 2008
quotequote all
Birth, death and taxes.

get used to it!

allgonepetetong

1,188 posts

249 months

Tuesday 22nd January 2008
quotequote all
Eric Mc said:
Personal Pension Contributions
Enterprise Investment Scheme
PPC is all well and good, but you're just deferring paying tax until later. You still pay tax when you are a pensioner after all.

Eric Mc

125,784 posts

295 months

Tuesday 22nd January 2008
quotequote all
There will be tax free lump sum paid out on retirement so it's not all going to be taxed.

Deferring taxes is still better than paying them now.

And, you may be deferring taxes at a higher rate now so that you pay taxes at lower rates later in life - depending in your overall finnacial circumstances, of course.