How to minimise tax as a first year IBD analyst? (UK)
Have you all got strategies to minimise the amount of tax you end up paying as a first year analyst?There are the obvious stuff like maxing out ISA for no capital gains, but any other ideas?
Probably committing tax fraud would do the trick
Tax evasion baby. That shit is theft/robbery anyways.
^ Answers like these are why 90% of prospects don't break in
Jesus man, lighten up a bit you fucking downer
Set up a freelancing company, invest in it and deduct all your personal (and arguably business) expenses like meal and travel allowances against a non-existent taxable income to enjoy tax credits
Just kidding pls don't try
Save enough money to leave your high tax jurisdiction in a few years. No one is tax optimal by being an employee in the UK (or the US or most other developed countries). Check out the company / book / YouTube channel Nomad Capitalist.
Dude what, the US is probably the most tax optimal country that has a very strong IB presence and is developed. Hong Kong and Singapore would be better though.
Compared to Europe, yea you can consider the US tax optimal. Which is like saying “Yea I mean Bill Cosby wasn’t that bad compared to Harvey Weinstein.” Reread my original comment: you’re not gonna be tax optimized an an employee. Aka, you need to be an entrepreneur who can be tax-domicile-flexible.
If you want to avoid income tax, just quit your job.
If you want to avoid income tax, just quit your job.
maximise your pension contributions. you have a limit of £40k / year (£120k over 3 years max so can do some phasing).
you can set contribution to be everything in higher tax band ie every £ above 50k (or w/e) goes into pension contribution..including your bonus. you can do it at the 20-25% band as well but its less beneficial...might as well keep that money for ISA contribution.
This - in your first 2 years max out your ISA, once you hit associate and the money starts to flow just max out the delta for the lag of the 40k allowance.
Math goes as follows - you get 8% of base from your employer as first year (based on 50k - I KNOW SOME BANKS PAY MORE NOW BUT WHATEVER) - that is 4k - so you have 36k of free allowance. Max out your ISA - and if you have incremental savings you don’t know what to do with (i.e. you have your rainy day pot of money set) maybe chuck it to your pension. However the ideal Plan is to pay in these 36k when you are an associate where your effective tax rate would be higher (i.e. make sure that the money you put into your pension is at the max tax rate, else not tax efficient if you can carry it forward) - but then as an associate you start having to max out that pot earlier - that is before you start getting hit with the reduction in tax free pension allowance for above 240k income?
Hi, I can tell this comment is really useful but I can't quite follow everything. My plan was to do the following:
- Max out the 20k ISA
- Contribute any income above the current 40% tax rate threshold (i.e any earnings above £50,270) to my pension. As a first year, I do not expect to hit the maximum 40k pension contribution, even following this plan
Could you please explain what you're referring to the lag of the 40k allowance? Will my current plan limit my ability to contribute in future years?
Thanks
bump :0
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