Reply With QuoteI highly doubt it, a bonus forms part of your taxable income and will be treated as such. What you suggested with the DSSD is tax evasion.
I’ve done a deal at work whereby if the company hits 10% pre tax profits I get a bonus
Should work out at £15k
I don’t want to sound ungrateful
But by the time the tax man and NI gets his its worth I would guess £9k max
If I spend that I pay 20% Vadim down to £7200
Is there any way I can maximise my ££
Could I ask my employer to buy me something say a dssd at least he could claim vat back ( or could he. )
Never had a rise in 5 yr and been instrumental in doubling turnover
Any ideas greatly welcome
I highly doubt it, a bonus forms part of your taxable income and will be treated as such. What you suggested with the DSSD is tax evasion.
Give it to charity and fill in the form so that charity gets 25% on top too. You get your bit back from the taxman, which goes to the charity, and do good at the same time.
Last edited by Templogin; 18th April 2018 at 16:59.
Anything they bought for you would be a benefit in kind, which might be worse than just paying the tax.
Unfortunately, the higher tax bracket you hit the more you pay - I pay little attention to headline salaries, as the only thing that matters is take home, and then you see what everything really costs.
Your DSSD as part of your salary is a hell of a lot more expensive in reality.
It's just a matter of time...
Depends on your personal tax situation i.e. how near to various tax bands are you.
If no bonus going to be due the year after, then can they split the payment across 2 tax years keeping you in a lower band, if you have any lower band left to use pre-bonus of course.
Look at Salary Sacrifice schemes.
Get the company to put it all in your pension directly or put it all in a SIPP.
Invest in an EIS or SEIS scheme and get tax benefit (30% and 50% respectively set off against income tax) - crowdcube and seedrs have loads of choice
Pay it all into a pension for 100% tax relief.
Count yourself lucky as I’m whacked by a 60% marginal tax rate on my bonus, given loss of personal allowance
Originally Posted by noTAGlove
Certainly worth considering, but pension income is ultimately taxable (subject to current 25% tax free cash) so tax is more deferred than relieved (again subject to rates now vs in retirement).
Think of it as a £7k tax-free bonus.
This. That’s such a huge amount of bonus it really isn’t worth worrying about the elements you can’t change such as tax. As for putting it into your pension, bugger that, you might never get your pension.
Enjoy £7k now
Yes that band from £100,000 to £123,000 is a killer
Certainly is - that’s the main reason I retired. I’d been putting more and more into a SIPP to try and avoid it. Eventually decided I didn’t need the hassle.
I’m glad I’m not taxed in the UK!
Monaco looks appealing...
It's just a matter of time...
the most tax efficient thing you can do with it is put it all in your pension, assuming you are not up to the £40k tax free pension payments allowance for the year
If you don’t need it now pension is the only way to go. Seriously, absolute no-brainer
You’d be better off asking for shares in the company if applicable. Keeps you incentivised long term and some tax efficiencies for both parties (reduced NI etc)
Pay your way and enjoy your £7k.
Being blunt and stating the obvious here, whether it’s a bonus or part of your salary, almost everyone would take it in a tax free way if they could! And every member of this forum would buy their watches as part of their wages if it could be tax free.
There really is no way to avoid it as others have said. Pay into pension and donate to charity. In case of charity you pay more from your pocket than you would in tax but the satisfaction may be worth it.
Very important to remember the £40k annual allowance, especially keep in mind that means sum of regular and lump sum employer AND employee contributions for the year. However, if you haven’t used the full allowance from the past (3?) years, you can carry the unused portion forward and exceed the £40k barrier for the current year.
Last edited by FK77; 18th April 2018 at 22:57.
Are you married? Get your wife to set up a charity and give it to that.
If anyone here can put away nearly 4k a month into a pension, I would assume they have a decent financial advisor already.
Cheers..
Jase
You don’t need an advisor just the raw salary to start withIf anyone here can put away nearly 4k a month into a pension, I would assume they have a decent financial advisor already.
That’s the point some people miss. YOU don’t have to put in £40k a year into a pension to reach the limit. The £40k limit is made up of any employer contributions (matching or else) plus employee’s own contributions. Imagine a very common scenario: employer pays a certain percentage into a pension regardless of employee doing anything, employee pays a certain percentage and the employer then matches that too. It all adds up.If anyone here can put away nearly 4k a month into a pension, I would assume they have a decent financial advisor already.
Not saying it is easy to hit the limit for everyone but certainly not as far fetched as it might seem.
EDIT: Add any lump sum pension contributions like people (including me) have suggested the OP does. This is on top of the 3 regular elements in my example.
Last edited by FK77; 19th April 2018 at 08:33.
A lot of people who bump up to, or fall foul of the £40k limit don’t actually put a penny if their own money into a pension.You don’t need an advisor just the raw salary to start with
It comes from being part of a non contributory final salary pension scheme. And we are not talking rich people, but comfortably off people like doctors, head teachers and middle managers for blue chips.
It’s one of the reasons why the NHS are losing experienced doctors in large numbers, as they’d rather retire, given they can’t contribute to their pensions any further.
First world problems I know, and anyone in this situation is still incredibly fortunate and well off.
My former employer encouraged staff to put bonuses into shares. I lost a lot more than the tax, I can tell you!
This.
How long have you worked there ? If 20 years they can give you 1k tax free (by buying you something) as long Service award apart from that it is tax and NI payable If is cash. The only other option could possibly be shares but again they will be subject to CGT
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As others have suggested, pension. I put all my bonus into my pension until I hit the £40k annual allowance. It’s the most tax efficient use if you can afford to defer it.
I'd say pension as well, if you can afford to and don't need the cash.
You could look at putting it into a VCT or EIS if you are upto you’re limit on
pension contributions, but it’s more risky and you have to leave it there for a certain
period of time to keep the tax relief. Can’t remember the exact details.
Be a man take the hit then party it out in cancun
This is worryingly true.
Not only are people retiring early, but for many well paid workers in the public sector the fall in lifetime allowance means that they will likely breach lifetime allowance and potentially face 55% tax on pension beyond the lifetime allowance. Couple this with tapered loss of tax relief on pension contributions for those earning >150k from all source income means that significant numbers of the highest earning ( and therefore highest contributing) pension scheme members are choosing to come out of the pension scheme. Their contributions are significant, and are used to pay the pensions of retired members of the schemes.
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