Earners Over £100,000
How to reward your management team?
As income reaches the £100,000 per year mark you lose access to a number of key tax breaks:
- Tax free personal allowance (£12,570) reduces if you earn over £100,000
- You lose access to tax free child care & 30 free hours of childcare per week
- You lose access to child benefit of £1,133 per year if you earn over £60,000 per year
This is where your workplace pension comes in.
You can make additional contributions to an employee’s or director’s pension.
The pension contribution is taken from your income prior to tax being calculated, this can bring you back under the £100,000 threshold. So you regain some / all of the tax allowance listed above.
What’s even better is that the pension contribution comes out of the business prior to corporation tax being calculated saving 19% and it has the effect of reducing the individual’s income which reduces National Insurance Tax as well.
Tax treatment varies according to individual circumstances and is subject to change.
How Cheylesmore Chartered Accountants can help?
Cheylesmore Chartered Accountants can provide assistance in managing income levels to reduce tax liabilities for individuals and businesses. Here are some ways in which they can help:
Tax Planning: Cheylesmore Chartered Accountants can help individuals and businesses plan their finances and structure their income to minimize tax liabilities. They can advise on the most tax-efficient ways to receive income, such as salary, dividends, or capital gains, and suggest strategies to reduce taxable income.
Use of Tax Reliefs: Cheylesmore Chartered Accountants can help identify tax reliefs and deductions that are available to individuals and businesses, such as personal allowances, tax credits, pension contributions, and business expenses. They can advise on how to maximize these reliefs to minimize the overall tax liability.
Investment Planning: Cheylesmore Chartered Accountants can assist in investment planning, such as choosing tax-efficient investment vehicles like ISAs or pensions. They can also advise on investment strategies that can help reduce tax liabilities, such as deferring capital gains or investing in tax-exempt investments.
Restructuring of Business: For businesses, Cheylesmore Chartered Accountants can advise on the restructuring of the business to maximize tax efficiency. This can involve restructuring shareholdings or creating separate entities to take advantage of tax reliefs and allowances.
Compliance and Reporting: Cheylesmore Chartered Accountants can help individuals and businesses comply with tax laws and regulations and ensure that all tax reporting requirements are met. They can also help prepare and submit tax returns and deal with tax authorities on behalf of their clients.
In summary, Cheylesmore Chartered Accountants can provide a range of tax planning and advisory services to help individuals and businesses manage their income levels and reduce tax liabilities. By understanding each client's unique circumstances and needs, they can provide tailored solutions that can lead to significant tax savings.
