Having recently done some work for one our clients on this, I thought it maybe useful to share this with you all.
The bit of earnings between £100,000 and £114,950 is one of the most highly taxed bits of income you have. Not only do you pay 40% tax on it, but for every £2 earned over £100,000 you also lose £1 of your personal allowance (to £7,475). Therefore if you earn £114,950 or above, your personal allowance will be completely lost.
Her Majesty’s Revenue and Customs do not like tax avoidance and whilst we all try to do what we can to reduce our liabilities to tax through fair means, we must always be aware that not everything that is promoted as tax efficient is always with the agreement of the taxman.
Suppose that every day, ten men go out for beer and the bill for all ten comes to £100. If they paid their bill the way we pay our taxes, it would go something like this…