Income Tax

[ferrelscent]

Lol personal allowance reduces by £1 for every £2 earnt over £100k, ...

There are ways to reduce that

No there aren't unless you intend to...

1) Put your money somewhere where you can't get your hands on it for years e.g. Pension, certain other investments.
2) You break the law, or
3) er...there is no option three.

 

[ferrelscent]

I'm a financial adviser, this is correct and hopefully simple to follow.

Most people have a Personal allowance so can earn £9440 tax free Or to put it another way is taxed at 0%.
The first £32010 OVER personal allowance is taxed at 20% . So 20% tax rate applies to salary upto £41450.
Tax is paid at a higher rate of 40% on earnings from £41451 and up to £100,000.

Someone earning £50k will have part of their salary taxed at 0%, part (the bulk of it) at 20% and part at 40%.

Agreed

 

[ferrelscent]

Based on the replies from this thread is anyone on here ACCA/ICAEW qualified?

ICAEW here.

 

[JaEdBa]

I'm a financial adviser, this is correct and hopefully simple to follow.

Most people have a Personal allowance so can earn £9440 tax free Or to put it another way is taxed at 0%.
The first £32010 OVER personal allowance is taxed at 20% . So 20% tax rate applies to salary upto £41450.
Tax is paid at a higher rate of 40% on earnings from £41451 and up to £100,000.

Someone earning £50k will have part of their salary taxed at 0%, part (the bulk of it) at 20% and part at 40%.

this is right...most people don't start to pay tax at 40% until over £41k or so. i'm an accountant - I've never really bothered with learning much about indirect taxes though..

 

[Anonymous]

Lol personal allowance reduces by £1 for every £2 earnt over £100k, ...

There are ways to reduce that

No there aren't unless you intend to...

1) Put your money somewhere where you can't get your hands on it for years e.g. Pension, certain other investments

Thank you :roll:

 

[Z4 Beemer]

There are ways to reduce that

No there aren't unless you intend to...

1) Put your money somewhere where you can't get your hands on it for years e.g. Pension, certain other investments

Thank you :roll:

Invest today, for the future ahead...? :wink:

 

[oli445]

I'm a financial adviser, this is correct and hopefully simple to follow.

Most people have a Personal allowance so can earn £9440 tax free Or to put it another way is taxed at 0%.
The first £32010 OVER personal allowance is taxed at 20% . So 20% tax rate applies to salary upto £41450.
Tax is paid at a higher rate of 40% on earnings from £41451 and up to £100,000.

Someone earning £50k will have part of their salary taxed at 0%, part (the bulk of it) at 20% and part at 40%.

Agreed

+1 - above is correct

 

[jimmybell]

I often get touted by 'Wealth Management' (hah i wish i had wealth..) companies offering to .. quote one caller "it's basically tax avoidance", where significant savings can be had for anyone earning over £60k a year, where said companies take their fees from the savings they orchestrate.

Now, i'm personally not a huge fan of tax avoidance, i'm happy to pay it (even if sometimes tax deducted gives you a mini heart attack..) as i think it's only fair, whether the system is fair or not.. BUT.. saying that.. what sort of things are these kinds of companies looking at doing? I'm assuming their advice wont be "go contracting, and save money through VAT free purchases.."

I probably have a relatively controversial opinion on tax.. i'm all for a flat rate based on local average incomes, similar to the Swiss etc, with a higher tax-free allowance, bringing people above the poverty line.

I'm also intrigued as to where these companies get my phone number from, so i can punch the guy that hands it out..! i think people just assume anyone working in 'The City' must have spare £millions or something ( targetting me is a waste of their time..).

* I Just did a bit of research whilst writing this and turns out these companies are much larger than i assumed, so presumably do actually make money out of this, and for their clients.

Any experience or insight appreciated!

 

[Bubble1982]

I often get touted by 'Wealth Management' (hah i wish i had wealth..) companies offering to .. quote one caller "it's basically tax avoidance", where significant savings can be had for anyone earning over £60k a year, where said companies take their fees from the savings they orchestrate.

Now, i'm personally not a huge fan of tax avoidance, i'm happy to pay it (even if sometimes tax deducted gives you a mini heart attack..) as i think it's only fair, whether the system is fair or not.. BUT.. saying that.. what sort of things are these kinds of companies looking at doing? I'm assuming their advice wont be "go contracting, and save money through VAT free purchases.."

I probably have a relatively controversial opinion on tax.. i'm all for a flat rate based on local average incomes, similar to the Swiss etc, with a higher tax-free allowance, bringing people above the poverty line.

I'm also intrigued as to where these companies get my phone number from, so i can punch the guy that hands it out..! i think people just assume anyone working in 'The City' must have spare £millions or something ( targetting me is a waste of their time..).

* I Just did a bit of research whilst writing this and turns out these companies are much larger than i assumed, so presumably do actually make money out of this, and for their clients.

Any experience or insight appreciated!

Broadly similar experience Jimmy - there's a chap from these guys http://www1.sjp.co.uk/wealth-management who attempts to call me every couple of months, touting tax efficient wealth management. The daft thing is he does it by calling the front desk of our office (having looked my name up on the company website) and tries every trick in the book to get past the secretaries...

Example

Salesman "Please could I speak to [forename] [surname]"

Assistant "where are you calling from and does he know who you are?"

Salesman in slightly aggresive tone "well I damn we'll hope he knows who I am by now..."

never met or spoken to this guy in my life - his name is "Tobias" apparently... Says it all!

To your point though... Some of these operations are seriously large

http://www.guardian.co.uk/business/2013/mar/11/lloyds-bank-sell-stake-st-james-place

While a bit of a sweeping generalisation, the irony of being offered financial advise by an outfit that ultimately originates from HBoS is not lost on me!

 

[jimmybell]

Yep - that's one of the companies..

I jsut ignore them and tell them to go away.. intregued to know how they're making money though - wonder if i'm doing everything i should be with my taxes and benefits.

 

[ferrelscent]

There are no legal routes to receiving taxable income 'today' without paying tax in full. And don't let any cold caller tell you there is. If any legitimate scheme did exist HMRC would introduce legislation to close it down.

If there was any loophole ...er...everybody in the country would be using it not just those who think they know an accountant who has had a eureka moment while studying tax legislation.

Cold callers will probably want you to have your pay channelled to a Company that they own then 'pay' you via a loan which might not count as taxable income. What a great idea ! ...until three years later when that Company or it's creditors ask you to pay the loans back !

 

[Bubble1982]

There are no legal routes to receiving taxable income 'today' without paying tax in full. And don't let any cold caller tell you there is. If any legitimate scheme did exist HMRC would introduce legislation to close it down.

If there was any loophole ...er...everybody in the country would be using it not just those who think they know an accountant who has had a eureka moment while studying tax legislation.

Cold callers will probably want you to have your pay channelled to a Company that they own then 'pay' you via a loan which might not count as taxable income. What a great idea ! ...until three years later when that Company or it's creditors ask you to pay the loans back !

Broadly you're correct - tax on income (I.e. salary and benefits) is pretty clear cut and there is generally very little you can do to optimise it, However, if your affairs begin to become even a tiny bit more complex - personal pension contributions, capital gains (and losses!) on investments, investment in small companies, partnerships, overseas income, property income, entrepreneurs relief etc there are a variety of perfectly legal (often actually described on the HMRC website) ways to arrange your affairs in order to optimise your tax position. You're quite right that this isn't some sort of eureka moment from an accountant, often times they're just trotting out the same tried and tested advice acros a variety of situations across which they / their firm have knowledge.

from my experience this has been very valuable advice - for reasons I won't bore your with I receive a proportion of income from the United States, while i rate myself as pretty savvy on Uk tax I completely gave up when trying to decifer a multitude of state / federal tax returns that needed filing and hired a decent Uk based accountant to help out - he's been fantastic, added value even on both the UK side and the US quagmire.

I think there's a big distinction between taking advice from a sensible accountant to taking advice from a cold caller with the latest 'hot' scheme entailing an upfront fee.