Any accountants here? Higher earners

[Scottishgirl85]

Me and DH need to get more savvy with money. He earns £120k basic (not inc bonus), but actual take home of basic income is £70k, with £50k going to taxman. DH is a rule follower (to the extreme!) and doesn't want to be a 'tax dodger', which I agree with. But I'm sure we should be making his salary work better for us? His tax code is currently 0T which I believe is due to zero personal allowance, but still seems to be an emergency code that needs fixing?
I earn around £100k, so no impact to personal allowance. But I'm the one that deals with the finances in our household, so I'm completely clueless on this one. Is it worth hiring an accountant for a few hours to take a look over things? Is this what people do? Thanks.

Jeez, op, you’re both scientists and haven’t got your heads around fincancial planning? I’m genuinely shocked as most scientist have a lot of curiosity and would be all over this.
you both need to inform yourselves urgently to make your considerable wealth work for you, including using ALL your tax allowances of which there are many . There are various good sources. Martin Lewis does an adult on line course you can both take that covers all the essentials including tax, pensions etc. there are also multiple WHICH guides that cover these topics. Then any number of other sources on line, not least of which is the governments own tax sites which are very easily explained and have examples.

really need to stop this helplessness. You’ll regret it when your older of you do. You need to be looking at all sorts of things like ISA, investments, utilising your personal allowances for dividends, interest and capital gains, and, at that sort of salary, inheritance planning.

Here’s the link I mentioned to MSE online course
https://www.open.edu/openlearn/money-business/mses-academy-money/content-section-overview?active-tab=description-tab

0T is probably correct as a code

If they have him the tax allowance he'd have to pay extra tax on the income between £100k to £126k or so.

So best he is on 0t code and maybe gets a refund if not quite at top level (Ie no bonus)
M

@Whiteroomjoy thanks so much, we'll definitely do that course!
Oh we have lots of curiosity about the world, just absolutely no interest in finances/money. My husband loves his job so much he'd happily do it for free! He has no idea when his pay day is, or how much in savings we have etc :-)

This is a great wake up call, thanks everyone.

0T sounds the right code. When you do the self assessment it sorts out anyway. Tax codes are only for collection, rather than being definitive.

As an employee there aren't really any 'dodges',

Are you in any professional bodies? If so you can claim a deduction for the cost of your membership fees

You mention young kids - if they're nursery age it's worth knowing that if you bring income under 100k by paying anything over into pension, you qualify for things like tax free childcare, 30 hours childcare etc.

You take home £5,600 pcm and he takes home £6,200. That is a good net income.

But you are working for other people. You will always make money if you work for yourself or become a business angel, especially in 40's or 50's when you harvest your knowledge. I would be investing in your own field. But via a HealthTech fund. Look at Parkwalk for EIS opportunities in cancer and genome research. Plus other funds and companies. EIS gives you up to 30% tax rebate.

Your biggest risk is that you do not take risk. Yet you are working in a high risk industry. You are doing all the safe work while others profit from your effort. Invest in what you know.

See an accountant, not an IFA.

You need to up pension quite significantly. I earn £78k and put about a third of my salary into pensions to bring me into the 21% tax bracket (Scotland). DH earns £90k and puts 15% in. If we could afford then DH would be putting more in but need to get a balance.

I'm going to read this thread fully in slow time but this is really useful information. I definitely need to do the pension bit too. Great thread. Thanks OP and pp.

Valuable thread this, MN at its best.

Though honestly there is not much you can do if earn a bit over £100k to reduce tax

I don't think it's worth paying an accountant for.

The main one is pension - see if employer does it through salary sacrifice to save you 2% ni as well as the tax. Any bonuses direct to pension.

Then maybe childcare vouchers if appropriate.

Put as much savings into tax free accounts as makes sense (as first £500 is tax free if over £50k salary, rather than first £1000). Same with any shares held, move into an isa to avoid tax (and best of all any reporting requirements)

But as an employee your tax saving options are minimal -ride to work bike scheme is very small savings if you want a new bike.

Doing your own tax return (which you must submit if earn over £100k) is fairly simple if an employee (and you have interest)

There are also 2 other tax free allowances -£1000 of self employed income and £1000 of rental income you could take advantage of if you do other types of work.

As someone also in the field, this is great advice.

So many health tech start ups now take investments in tranches down to £10k and the SEIS/EIS benefits are so good.

Obviously get the basics sorted first & take professional advice etc etc