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.

Re paying down the mortgage advice from Jojo, I don't agree.

We're paying massive chunks off our big nortgage, rather than putting into pensions.

Mainly because Interest rates ARE going to go up. So the lower you can get your mortgage now, the less interest you will be paying for years to come and the more you'll have to put into any future pension.

It may make sense to do some pension and a bit of mortgage, but to do all pension is wrong Imo.

I did read it OP. You earn a good wage and want to pay less tax. Like everyone would like to. Your partner being fairly useless doesn't mean much in this context.

I'm sorry OP- there really is a very limited amount you can do as a full time employee as PAYE means you pay more or less the right amount of income tax per year. Increasing pension contributions would be the way forward. In terms of expenses, do you incur any genuine business expenses (NOT your ordinary commute) that your employer does not reimburse? If so, you could claim tax relief on those.
You were interested in share schemes. There are a couple of HMRC approved share schemes (which means are tax efficient so long as certain conditions are met) which were designed to help smaller companies reward their staff with shares, so staff could share in the rewards of company growth. EMI and CSOP (if memory serves, it's been a while since I looked at them). However, it's really up to a- whether your employer would qualify for the conditions to offer them and b- whether they would want to bother with setting them up if they don't currently offer it, as it's a fair amount of work in terms of annual filings and you'd incur accountants fees. They can't just give you shares in lieu of salary (or they could, but you'd pay income tax on the market value so you'd be in the same position really). This is all assuming there is an actual market for the shares and it's not just a family owned business- shares might be worth a heap but you'd need a market to realise their value.
Other than that there really is no way for a regular full time employee on PAYE to legitimately reduce their tax bill.

Thank you.
Useless DH owns a house (no mortgage) worth around £300k. We want to leave that to one side though with a view to putting it into trust for DD at some point.

Will chat to work's accountant next week about pension.

So your 'useless' partner owns a 300 grand house outright in addition to the house you live in and you want to put that 'to one side' and you're a high earner and still think you should be able to find a way to pay less tax?

Aww.

but most tax planning is for people who do not get Employers pension contributions, holiday pay, sick pay and the security that PAYE folks get.

For most individuals, tax planning involves inheritance tax. It's fairly straightforward to avoid, and perfectly legal too, with a bit of planning.

Other than paying more into your pension, there's nothing you can do to change how much tax you pay on employment income, short of moving to Dubai (0%) or to the Isle of Man or Jersey (top rate 20%).

Well, he's not always been useless!

Yes, I want to ring fence the £300k house for DD (13) so she's got that if the family home needs to be sold one day to pay for care in our dotage.

t may make sense to do some pension and a bit of mortgage, but to do all pension is wrong Imo

It depends on your tax position. It's certainly not daft if you're in the 60% bracket.

We want to leave that to one side though with a view to putting it into trust for DD at some point

As someone who also advises on tax for trusts, I'd think very carefully about that move.

But the OP is only a minor distance into the 40% band.
And the money saved on mortgage interest in the next few years can then be ploughed into the mortgage.

But as her "useless" DH has a house worth £300 k that is presumably being rented out to generate some income that uses up his personal allowance then he's not so useless after all

and frankly the OP is in for rather a nasty shock if she thinks that handing a house to a child will get past the DWP rules for care homes

Yes I know talkin, more the wider point. I won't be giving free advice to someone so ungracious

Uhh get yourself a pension quick smart then!!! How old are you? Pensions work best when they're paid from early in your career

Moose
Please read what OP has said.
She is in an AE pension but does not seem to "get" that she can top it up to her own tax benefit
she just cannot expect her employer to help her get below the 40% boundary

dontcallmethat - I've already taken legal advice on the trust.

Thanks to all who've given useful tips re. pension.

Ta1kinPeece - I didn't get it before but, thanks to this thread, I do now. The Power of Mumsnet 😀

I'm a Chartered IFA, we look at different things to lawyers. who I've seen do dreadful things with trusts Speak to a specialist accountant, it's more about the tax implications.

I'm surprised you've taken preemptive legal advice, but haven't spoken to someone about your tax... strange

Not strange at all. Protecting my daughter's future is my priority. Now I'm sorting mine out.

How do you know I'm not usually an arse?

Which bit of what I said was arsey?

BTW - one piece of advice I will offer for free... if someone on the internet can come up with an answer to your question with the amount of information you've given then for the love of god don't take it. I don't know a single accountant or IFA who will give competent advice based on what you're said so far.

and certainly not for free

OP I would be questioning the advice you've had from that lawyer (and I speak as a lawyer). It really isn't as simple as that. If it was then everyone would be doing it.

Start your own business and say you earn hardly anything. Then you can bank all the money. Seriously thought there isn't many ways. You could put more into a pension scheme but even that's being clamped down on.

OP you have been given some good sound options to look at by posters so far.

Don't be put off by investing in a pension which can benefit your dp and dd and be much more tax efficient for you. The changes to accessing your pension mean you can take your savings much more flexibly eg. 25% tax free at 55 onwards and you can choose a flexi access drawdown option when you retire (which can also be passed on in event of death).

Cannot believe some of the comments on here! This is a money matters section on a forum and you've asked a perfectly legitimate question regarding your money matters!

Mint - to be fair, I did start this thread in AIBU - didn't realise there was a Money Matters board but it appears MNHQ have moved me there.

I've had some arsey replies but that's the risk you take if you post anything on MN.

With regards putting the other house in trust for my DD - that's inheritance tax planning and I've consulted professionals who specialise in that.

Of course this sort of question gets arsey replies. Only a complete idiot would expect anything else.

Thanks for proving my point 😀