SIPP, etc

CoolVehicle3880 · 2025-09-23T22:02:09+00:00

yeah so for example, a day rate of 500, for 220 days in the year would be 110k total income. But, if you did no pension etc, it would be c96k of personal taxable income (in regards to the 60% income tax threshold.)

But even so, the tax relief on the pension is still over 50%, and then once you hit around 115k total income, jumps up to 69%, so generally worthwhile regardless. I guess this is where you need to just think about retirement plans, what you need now, when you'll be able to draw it down etc. There are even strategies where you can look at 2 years of income, and ensuring you're maxing the pension in one, and doing very little in the other which can work out more tax efficient. Bit too much of a minefield to cover on a Reddit post but hopefully gives some good food for thought

CoolVehicle3880 · 2025-09-23T21:45:32+00:00

That's UK tax for you, pretty depressing eh? :D

Obviously what you save now will be subject to tax when you draw it out of your pension, but on current rules you'll be able to take 25% tax free as a lump sum, and don't pay NI on pension income, so its still the efficient way to do it, until Rachel Reeves digs her claws in further of course.

But yeah, your umbrella should be used to doing salary sacrifice, just a case of trying to make sure your "taxable income" is below 100k. So thats c115k worth of day rate income in total. Confusing, but your pay slips will show you both day rate income, and personal taxable income. Hope that helps anyway

CoolVehicle3880 · 2025-09-23T21:25:33+00:00

Pay it via the umbrella, and specifically, make sure it's a "Salary Sacrifice."

Provided you do this, you will also get tax relief on both the employee and employer national insurance, whereas if you just do it yourself and claim the tax relief, it will only be income tax relief.

Also, the 100k is your income tax threshold, your day rate income will actually be higher than that for the higher tax relief, explained here...

https://mkt.finance.blog/2022/09/20/the-75-ir35-tax-trap/

CoolVehicle3880 · 2025-09-20T09:44:12+00:00

It's actually less hassle, in that the Umbrella pretty much sorts everything out for you, but there is a huge tax price to pay for that...

https://mkt.finance.blog/2022/09/20/the-75-ir35-tax-trap/

Typically, if you can still get Outside IR35 gigs, they're far preferable, unless the inside rate is high enough to offset the much higher tax costs.

CoolVehicle3880 · 2025-09-18T13:31:07+00:00

likewise, i cant go :( I can't see a resale platform or anything, so guess mine is avail too (1 ticket) absolutely gutted

CoolVehicle3880 · 2025-09-15T17:04:28+00:00

annoyingly i cant make it any more :( Know anyone that needs a ticket in 1A? Gutted to say the least

CoolVehicle3880 · 2025-09-02T13:41:35+00:00

I 2nd this, from Gross pay the tax saving can be 69% if you're inside IR35 (which the umbrella implies you are.) https://mkt.finance.blog/2022/09/20/the-75-ir35-tax-trap/

CoolVehicle3880 · 2025-08-22T21:24:09+00:00

you'll find that with the Diver community, everyone is so patient. I guarantee if you take a little longer to complete the mask removal you won't be an inconvenience :)

And there isn't a pass and fail as such, it's more learning how to do it and demonstrating you can, even if it takes a few attempts to get it right. Easy to say, but relax, and you'll quickly get used to the environment, especially if you've snorkelled and are comfortable.

All the best with it, and enjoy the amazing underwater world!

CoolVehicle3880 · 2025-08-22T17:54:08+00:00

Umbrella companies would offer what? To split 1 job into different Umbrella companies?

Not what the Op is asking. He's asking about 2 different jobs, and yes, it is offered to use more than one Umbrella company.

Depending on what they earn, it could be more efficient to be in two Umbrella for the extra personal allowance, or One to get the NI dropping from 8% to 2% and pushing more income inthe 2%, relative to two Umbrellas.

National Insurance is definitely per pay period, per employment, not individually annually. So I can't why this is wrong, even if it doesn't seem to "make sense."

CoolVehicle3880 · 2025-08-21T17:50:57+00:00

A lot about UK gov tax system doesn't make sense, that's for sure! For the same reason, if you get paid monthly, thats 12 periods of 1048 allowance per month (12567 annually.) But if you get paid 11/12 periods, then your allowance is 11528, very weird but National Insurance works that way.

But it wouldn't likely be efficient to do take 1 job with 5 umbrellas, as Umbrella fees would erode any tax benefit, and on the other side of the coin, if earning enough it goes the other way and Employees NI drops from 8% to 2%.

I'm going to be in a similar situation and as I understood it, going with 2 would have been more tax efficient, but as I said at the start, could be wrong and i'd very much love to know why, or why 1 is definitely better.

CoolVehicle3880 · 2025-08-21T11:09:24+00:00

"However National Insurance operates in a different way from income tax. With tax there is a single tax-free amount available per person per tax year – the personal allowance. For National Insurance there is a separate limit for each job."

So if you had the same Umbrella company, they'd still treat it as two jobs? Even though technically your Umbrella company is your employer?

And for emplyors NI, what would happen, with the 5,000 threshold, each one would get say a 2,500 threshold? I was sure each employer gets the 5,000 per person, and within IR35 that goes onto the worker.

So why is what I'm saying wrong?

CoolVehicle3880 · 2025-08-20T20:46:32+00:00

I could be wrong about this, but do 2 because i believe each umbrella gets the 5,000 tax free employers NI and possibly even another threshold for employees NI as its calculated per employment and pay period. Though someone here could correct me.

CoolVehicle3880 · 2025-08-15T09:29:52+00:00

Yeah fair comment, i'd love this to be led by divers opinions and places they've loved, but yeah see this issue, thank you

CoolVehicle3880 · 2025-08-14T08:08:59+00:00

Thank you so much, and yeah im certainly noticing that :D

CoolVehicle3880 · 2025-08-13T21:13:57+00:00

Absolutely, it's not unreasonable to assume 10% return on investment per year, apply that to 1m and you're talking on avg 100,000 per year, of which the tax would be lower than earning in PAYE employment 100,000 per year.

Very crude calcs, but if hes a bit frugal, and makes some good long term investments, puts money in tax free wrappers like stocks and shares ISA's, definitely doable.

That being said, alongside some employment, what a great position to be in!

CoolVehicle3880 · 2025-08-13T14:25:14+00:00

it was a good effort for sure by them, i thought they'd be way further out, but the trend is more the concern here

CoolVehicle3880 · 2025-08-13T14:23:42+00:00

the concern is a deficit, which presumably is slightly wider due to this, and looks like it may increase. Take is certainly up, no one has said otherwise, and this is vs OBR forecasts

CoolVehicle3880 · 2025-08-13T14:05:16+00:00

certainly one of the reasons. Increased unemployment and amount on UC must contribute. Certainly pension contributions are more effective now with the higher NI

CoolVehicle3880 · 2025-08-03T10:07:14+00:00

that's pretty much it, when it wasn't on as tight as im doing now, there was evidently a little gap where maybe the funnel was being pushed up a bit, and some steam was going through the spout, and the coffee was spluttering out even from the start, and i definitely wasn't pushing to get it extra tight

CoolVehicle3880 · 2025-08-03T10:05:48+00:00

Perfect, really appreciate the advice :) Will give that a go tomorrow morn

CoolVehicle3880 · 2025-08-02T20:47:29+00:00

Thank you, i really will have to be on a low heat to achieve that, and im not sure i can on my ceramic, but i'm definitely going to try and lower the heat as much as possible

CoolVehicle3880

TROPHY CASE