To ask for ideas on how to pay less tax

[FleetwoodMacNCheese]

I earn £55k. Don't live in London. My take home is less than £40k per annum.

I've got a huge mortgage, long drive to work therefore spend a fortune on fuel. Is there a legal way I can reduce my tax as I really need to start saving for retirement. Could I ask for part of my salary to be paid in dividends as I've heard less tax is/NIC are paid on these?

Any ideas much appreciated.

Pay enough into a pension as salary sacrifice that would reduce your taxable salary to the lower rate. Does your workplace make contributions to employee pensions, because if they do then that's definitely free money you want to be getting.
Speak to a pensions adviser & get details of your workplace pension from HR.

Why should you pay less tax?

Yes, on retirement if you chose to buy an annuity you can purchase one which provides a payment to your spouse if you die first.

I also think you should get proper financial advice, not ask Mumsnet! It's quite simple really. You need to earn more or spend less and get pension advice for your specific situation. Or move to a lower tax country but then you'd probably have to pay for things out of income that are funded here.

I am just posting to query the comment on the previous page about different taxes. They all go to the same place: HMRC and thence to the government to fund government spending. With some minor exceptions, we don't have 'hypothecated' taxes like some other countries do (e.g. in America, local property taxes fund the local school board etc).

Smallish very profitable private company hoping to double in size. Thought they could give me some shares to show the love

Dividends have to be paid in proportion to shareholding, so if they gave you 1%, your dividends would be so small it'd make no difference. You're not going to get them to "give" you, say 25% of their shares which you'd need for dividends to be big enough to make a difference.

Get an IFA.

Get a pension.

Get a savings account (LISA) and cut your outgoings.

Don't try and join in any dodgy tax avoidance schemes.

This will make you jealous, OP - I pay far less tax than you do.

I earn half as much though

Adjust your living standards if you don't have the cash to live the way you want to and save for your retirement.

This makes me sad. We all look at the tax on our payslip think how much better off we would be if we didn't pay it, but then there would be no NHS, schools or anything else. At 55k I suspect you are not yet a net contributor (i.e. Pay more than you take out in services) so it makes me even more sad- like you want something for nothing

Put more into your pension

My company has the auto-enrolment pension but I just pay the minimum at the moment (£100 ish?). Should I top this up or are they a bit crap and would I be better off starting a private pension I am 50 so probably too old

My main priority is paying off mortgage before interest rates rise.

Ultimately the best option here is likely to come from cutting outgoings (more fuel efficient car, smaller house, no holidays?) and then paying into a pension - work will often match contributions and they are tax free so sometimes every £1 yhat ends up in your pension might only cost you about 30p.

I don't know what age you are, but it's essentially irrelevant. A pension is The most important thing you can be saving for and the older you are the more you need to be saving. Either you need to increase your income or decrease your outgoings (stating the obvious!) but other than some lovely tax efficient pension savings you're not going to have much luck cutting tax.

However: if you already make any donations that you gift aid you can claim back some extra tax on those. I can't remember the rules round donating part of your personal allowance to your partner but if your partner is a low earner you could also look into that.

And just to back up phineyj's point, road tax doesn't cover the cost of maintaining roads, so every time you step out of your front door or get into your car you're using a service that tax pays for.

How do you not have a pension?

Tell your employer you want a salary sacrifice one. They will save on NI contributions and you will save on tax/NI and may have to pay less tax on CB (not 100% on this- you would need to check)

I am a tax advisor but I still get infuriated when people tell me they want to pay less income tax, thinking that I can just magic up a way of knocking a few thousand off their tax bill.

It really doesn't work like that any more.

Even if you were able to persuade the owners to give you shares, the shares will have a value, and you will have to pay income tax on the value of the shares you receive.

Sorry just seen update- ask if you can swap pension to salary sacrifice- You should be able to up contributions but take home be the same

Workplace pension
Maximise isa allowance (& look for the best rate)
Fuel efficient car / zero band road tax.
Don't smoke
Don't drink
Don't buy luxuries (or sanitary protection)
Don't buy any hot food
Don't fly
Don't have insurance

Note the above may not be fun, sensible or legal. They will reduce your tax though.

Sleepinghooty - I think gross salary of £40k makes you a net contributor. Don't really care at this moment in time. Will rediscover my socialist values when I can afford them!

Thanks to those who have said pension contributions might reinstate my CB - didn't know about that.

On top of salary, I get a bonus of £3,000 at Xmas - could that be paid into pension instead?

This has got to be a joke for fodder for the Daily Mail...............

Moneysaving Expert is better place to ask your Q, Fleetwood.

Why are you asking the lovely but unqualified Mumsnetters for financial advice???? Book an appointment with a financial advisor and learn how to make your money work harder for you, not reduce your tax contributions. I earn a fraction of your salary but contribute to a pension, a mortgage and savings because I get good advice.

No, it's not a bleeding joke.

Will look into transferring some of personal allowance to DP --who is not very good at earning money__

strikethrough fail!

You could move to a country with lower tax levels. You should be aware though, that there will probably not be a cost free health service and subsidised medicines, or education if you have DC. There may well be other things, like ambulance services fe, that are not provided due to lack of revenue.