pslewis

Salary Sacrifice is my favoured device ... may even need to go offshore ... what tricks are you employing?

chocolate_o_brian

iTrader: (22)

Not earning enough works well for me.

zip106

50%?
Pah!
Some of us earn enough not to worry about it.

FlightMan

I'm investing in axes, machetes and Samurai swords.

dpb

'may even need to go offshore ... '





see yer

madscoob

iTrader: (3)

if you want advice on this subject contacting your local MP/ 1st class passanger on the platform of life would be a good starting point

SPEN555

Yup Salary Sacrifice into another pot for someone else to pi$$ away

PaulC72

I wouldn't know what to do with the money so they may as well have it in taxes to support all the scroungers.

Devildog

Lets look at the numbers

Someone earning £175k a year basic (without any existing tax saving methods) will be £5k a year worse off.

You'll be fine Pete - even if we "accept" that you are earning over £150k a year - yes, I know, its stretching the imagination a bit, to consider going "offshore" (do you even know that that entails, by the way?) for that amount of additional tax is laughable.

baldfox

iTrader: (1)

Moving abroad mate, going in the summer, all signed up.
My other friends have defected to asia, dubai and switzerland...

Leslie

Would you like to be in the same position as that Non Dom that you were decrying for avoiding paying his taxes in this country?

Les

baldfox

iTrader: (1)

Where did you get £1800 worse off from it's more than that

2010/11
Earnings Summary Yearly Monthly Weekly
Gross Pay £175,000.00 £14,583.33 £3,365.38
Tax Free Allowances £0.00 £0.00 £0.00
Total Taxable £175,000.00 £14,583.33 £3,365.38
Tax Due £65,020.00 £5,418.33 £1,250.38
National Insurance £5,509.60 £459.13 £105.95
Total Deductions £70,529.60 £5,877.47 £1,356.34
Net Earnings £104,470.40 £8,705.87 £2,009.05
Employers National Ins £21,667.84 £1,805.65 £416.69



2009/10

Earnings Summary Yearly Monthly Weekly
Gross Pay £175,000.00 £14,583.33 £3,365.38
Tax Free Allowances £6,475.00 £539.58 £124.52
Total Taxable £168,525.00 £14,043.75 £3,240.87
Tax Due £59,930.00 £4,994.17 £1,152.50
National Insurance £5,509.60 £459.13 £105.95
Total Deductions £65,439.60 £5,453.30 £1,258.45
Net Earnings £109,560.40 £9,130.03 £2,106.93
Employers National Ins £21,667.84 £1,805.65 £416.69


(sorry about the formatting)

john banks

Maybe I'm being simple Devildog, but an extra 10% tax on the £25k over £150k is £2.5k. Additionally they would lose all their personal allowance so are going to pay about another £3k on top of that. £5.5k in all, but still not worth moving for.

What might affect more people is the loss of personal allowance just over £100k of taxable income. This is apparently a marginal 62% rate of tax. That is a disincentive to work for many who might aspire to increase their income.

Hanley

So they only take home £8705 a month instead of £9130

How will they manage without that extra £425???

Maybe they'll need to start buying Tesco Value Beans

baldfox

iTrader: (1)

If you earnt £250k which is a lot of money, and am sure the person is very comfortable, net to them (after they've had their pants pulled down) - they're going to be about £12k worse off, you can see why the bigger earners are jumping ship... thing that makes me laugh is the people at this end of the scale and more, must be paying a lot in stamp duty, VAT for purchases (higher end cars, more fuel tax), they would no doubt be paying for private health/schooling/dentists etc etc and so are hardly a drain on the system, and even on any savings they'll be paying this silly rate too... so it's not just on salary.

Kind of doesn't make sense to **** these people off too much for the sake of an extra 5k on 175k that person was already paying 60k in income tax alone and 21.6k on national insurance ! As soon as that person moves to dubai where they pay 0%, all of this is gone ! Cutting your nose of to spite your face methinks...


(for tax calc's I was looking at Free UK Tax Calculator. Updated for 2010/2011 Tax Year.)

BlkKnight

Set up a small LLP company.

Paying the directors dividends (and withhold tax for repayment)
Paying profits into pension

baldfox

iTrader: (1)

Trouble with that is a lot of people will be paid via PAYE, not sure how many companies are going to entertain that sort of arrangement. Might be ok for your typical "contractor" (IT, or a tradesman) but for your average employee am thinking they're not going to entertain that. Especially as it will reek of tax avoidance...

Any other ideas though ?

BlkKnight

Both the company and the staff have to be willing - there are potential gains for both in terms of cost savings.

The company sets up a holding company which the staff are all partners in - they get paid via the holding company & the company withholds their TAX & NI contributions and pays their bill for them at the end of the year. Simples.

Only potential drawback is that the staff are not counted as "Employees" in terms of employment protection so the company could potentially do the nasty on them - This however is down to the morals of the company.

baldfox

iTrader: (1)

Ah I see... nice idea, I'd be willing to forego the employment protection for the "benefits" but am sure others wouldn't. As I mentioned above, working for a bank makes this arrangement somewhat unlikely unfortunately.

Best of luck to everyone that goes this route though... give nothing back

Devildog

John,

Agreed- my calculation was wrong as it included an individuals personal tax allowance -I hadn't taken account of the reduction in personal allowance

Even so, as you point out, £5k pa is not worth the upheaval, unless you were moving anyway.

Not sure I agree with your disincentive point, though. The loss of personal allowance is tapered, so you may pay more tax over £100k, but will still increase your earnings by more than the tax cost for every additonal £1 earned, just by not as much as you would have done last year. The allowance reduces by £1 for every £2 of earnings over £100k

Hence my point about the benefit attached to salary sacrifice versus the additional tax.

At least we don't have a 90% tax band as we did under old labour (yet!)

STi wanna Subaru

iTrader: (1)

Watch all the top Prem players move to Spain and pay just over 20% tax on their earnings.

mamoon2

Some clubs (i.e Arsenal) have a system where players are payed offshore and avoid paying massive tax

john banks

For every pound of taxable income you earn between £100k and £112k, you keep 38p I gather. That is a disincentive if you are self employed and wondering about taking on more work when you are interested in work:life balance and for various reasons don't find this easy to avoid as they don't want to set up a limited company or put more in a pension.

Most people in this income range work long hours, have sacrificed a lot to achieve, they are the aspirational middle classes. For this group, this threshold is a glass ceiling that would mean they'd rather take another day off!

Myles

iTrader: (40)

Are you the first rent boy to do a tax return? More fool you.....

Hanley

This loophole should be closed immediately.

Why should we pay our taxes and yet these people earning 100k a week are not paying their fair share.

Devildog

Is that such a bad thing though John?

If they *need* the extra cash they would work the hours, albeit with a higher tax penalty. And if they didn't, then they should probably be taking that day off anyway and enjoying life a bit more.

I would also question whether the jump to 50% tax and tapering PA is any different to someone about to breach the 40% tax band

john banks

Having a marginal rate that goes 40 to 62 to 40 to 50 over a £50k range is madness. This is very different to going from basic rate to 40 and the sticking there. The bump to 62% is quite bad psychologically as you know that just in income tax the treasury is taking more of your income than you are.

People may not work because they *need* extra cash at this level unless they have huge commitments. They work because the reward for their work is worthwhile. The 62% tax in a range that you could decide to work your *** off to earn just makes you want to stay in bed.

There is I gather reasonable evidence that cutting taxes can increase the tax take. This is a perfect example.

MJW

That's all well and good getting paid from the director's loan account (this is how I paid myself for a while) but your small LLP company has to be seen to turn a profit or someone will still end up with a massive PAYE bill !!

Martin2005

Good!! Bloody immigrants coming over here and stealing all our jobs

GC8

Shut up.