Legally Take Home 100% of your Earnings

[krytonsheep]

I've managed to get a take home pay of 103% thanks to flat rate VAT, the bench and doing the accounts myself

[rootsnall]

1. Become self-employed
2. Take earnings of say £5400 per annum so that you are below the tax threshold
3. Put all remaining income into a pension scheme.

I'm not far off this but can't quite convince myself it won't fire up Hector if I paid absolutely zip tax and NI next year. I also can't believe Hector won't quickly clamp down on this if more than a handful do it !? That is unless some rich and powerful party donors do it also, then it'll probably be OK.

TheFaQQer, you got me Sort of shows how easy it is to lure people into 'schemes'. I tell myself I'd never do it, but always have a sneaky read up when they are mentioned.

[ASB]

I was thinking personal pension where you make contributions from your net income and then the pension Co claims the basic rate on your behalf, and you claim any 40% relief through your SA.

It's worth considering for anyone over 50 because you can extract 25% after 5 years.

Example

Pay in £30k/year.

Pension Company claims 20% tax back from HMRC, making it up to £37.5k.

You claim the other 20% back through your SA. (£12.5k p.a.)

Pension pot = 5*£37.5k = £187.5k

After 5 years, take out 25%*£187.5k = £46.8K tax free lump sum.

Total amount paid in = 5 * £30k = £150k

With 40% tax relief = £150k / 0.6 = £250k

Actually if you play your cards completely right with a limited and a working (but only "myco") spouse or partner and a stakeholder for them you can improve on that via immediate vesting and "de minimus" limits. You can get tax relief on 3600 of income going in that has never had tax paid on it (of any description). Not a viable strategy except for very limited circs though. Of course from a personal view I'd never ever do that. Except by by accident.

In terms of Lisa's original post this can potentially give > 100% retention.

ps. I **think** your example with higher rate relief is only valid if you have salary. Dividends aren't (or least for some time wern't) relevant income and you couldn't get higher rate relief - though this might have changed. It would be broadly valid if it was a salary sacrifice and the contributions were company. It's the NI that screws it up with personal contributions.

[DonkeyRhubarb]

I'm pretty sure that pension contributions come out pre NICs as well, so the plan would work - assuming you can live on the peanuts.

I was thinking personal pension where you make contributions from your net income and then the pension Co claims the basic rate on your behalf, and you claim any 40% relief through your SA.

It's worth considering for anyone over 50 because you can extract 25% after 5 years.

Example

Pay in £30k/year.

Pension Company claims 20% tax back from HMRC, making it up to £37.5k.

You claim the other 20% back through your SA. (£12.5k p.a.)

Pension pot = 5*£37.5k = £187.5k

After 5 years, take out 25%*£187.5k = £46.8K tax free lump sum.

Total amount paid in = 5 * £30k = £150k

With 40% tax relief = £150k / 0.6 = £250k

[VectraMan]

I take home 1 million % of my earnings. 1 million %, 100%, 85%, 0%, infinity %, it's all the same amount.

Are we labouring the point?

[RichardCranium]

I take home 100% of my current earnings, and have done for the past three months. This is 100% legal - there is a dead easy, no-quibble way to do this. HMRC can't catch me - there is no scam, there is nothing offshore. And none of it goes into a pension pot. You just need to know exactly what you are doing.

Ya boo sucks to you! I've been doing that since April. (using the same scheme )

[Tingles]

I operate through my own limited. I am an employee, and so is my wife. I am the sole shareholder.

I take home 100% of my current earnings, and have done for the past three months.

This is 100% legal - there is a dead easy, no-quibble way to do this. HMRC can't catch me - there is no scam, there is nothing offshore. And none of it goes into a pension pot.

You just need to know exactly what you are doing.

You are Phillip Green - I claim my £5 Burtons tokens...

[Maslins]

You just need to know exactly what you are doing.

My guess is not a lot?

[TheFaQQer]

I operate through my own limited. I am an employee, and so is my wife. I am the sole shareholder.

I take home 100% of my current earnings, and have done for the past three months.

This is 100% legal - there is a dead easy, no-quibble way to do this. HMRC can't catch me - there is no scam, there is nothing offshore. And none of it goes into a pension pot.

You just need to know exactly what you are doing.

[Peoplesoft bloke]

Legally Take Home 100% of your Earnings

Be a very rich person like most top business dudes.

[centurian]

Not a bad idea as you get older though, especially as you can take a 25% tax free lump sum once you are over 55.

It would work pretty well for employees too, except for NICs.

I'm pretty sure that pension contributions come out pre NICs as well, so the plan would work - assuming you can live on the peanuts.

[ilovehr]

Legally take home 110% of your earnings....

Join an umbrella that promises 85% then go out and steal enough to make up the extra 25%.

Simple......

[DonkeyRhubarb]

1. Become self-employed
2. Take earnings of say £5400 per annum so that you are below the tax threshold
3. Put all remaining income into a pension scheme.

Not a bad idea as you get older though, especially as you can take a 25% tax free lump sum once you are over 55.

It would work pretty well for employees too, except for NICs.

[HairyArsedBloke]

OK, how about: having a business that distributes it's products over the net, moving the whole operation to one of the tax-havens with 0% and keep everything you earn.

N.B. Not that it's anything like what I do. I am purely in the UK to receive medical treatment and not working in anyway.

[LisaContractorUmbrella]

1. Become self-employed
2. Take earnings of say £5400 per annum so that you are below the tax threshold
3. Put all remaining income into a pension scheme.

Upside - you will be very rich when you retire
Downside - you will have a very boring life for many years trying to live on £103.84 per week. Possibly you may starve and/or be forced to live in a cardboard box.

OK, how about 85%. As above but you will have slightly more to live on OR you will need to spend 50% of your income each week on business expenses. Alternatively you could lie about your expenses, claim 50% of your income anyway and then expire early having worried yourself to death for many years about the prospect of being bankrupted by HMR&C when they find out what you have been doing.

OK, how about 80-85%. As above, but forget the expenses and use a dodgy offshore scheme instead - for more information about the wonderful financial incentives surrounding this scheme please see any threads on this site with BN66 in the title.

HTH