I recently had a call with a prospective

client, a gentleman in his 50s who had a

few questions about investing and saving

tax. And it turned out that he was not

aware or had misunderstood some of the

essential tools and strategies you can

use. So I spent a bit of time with him

on the phone helping him fill in the

gaps. And at the end of the call, he

said, "Thank you. If only I had known

about this stuff 30 years ago, I would

be in a completely different position

today." And it's true. If he'd had the

knowledge that he has now and acted on

it, he might be hundreds of thousands of

pounds better off today, perhaps already

retired, but instead he's likely to have

to be working for another 10 years, if

not more, which in my opinion is a

travesty. You can have two people who

throughout their lives earn exactly the

same amount, even spend similar amounts,

but the amount of tax they pay and when

they can afford to retire can be

completely different simply because one

person knows the rules and opportunities

there are for saving tax and building

wealth and the other doesn't. The other

way to look at this is as a tax on

financial literacy that can cost the

average person thousands of pounds per

year simply because they don't know the

rules. rules that were never explained

to them in the first place. And because

income tax bans have been frozen again

and we're all having to pay more and

more tax, this means that there are even

more opportunities to save tax. So the

gap between the average person and

someone who is fully optimized is only

going to grow and grow and grow. But

simply being aware of these tactics is

not enough. You need to be reminded of

them again and again and again because

not only do they change, but what may

seem irrelevant one year and then at the

back of your mind may suddenly be really

important the next. So that's what I'm

going to do today. I'm going to run you

through eight key strategies for saving

tax and building wealth. The ones that I

am continually reminding my financial

planning clients about because they can

really move the needle. These are

strategies that you can consider at any

time of year. But given that we're only

a few weeks away from the end of the tax

year, I'm going to focus on the key

opportunities that we lost if you don't

act on them soon. In the UK, we're

supposed to have a progressive income

tax system where those that earn more

pay more with the top rate being 45% for

those that earn over 125K. But we have

this mad system that means that people

who earn less often pay more. As an

example, I can remember speaking with

somebody, let's call her Jess, who was

earning just over £80,000 per year and

paying an effective top rate of tax of

almost 60%. Jess had two kids, one 12

and another 18, and still in school. So,

both would qualify for child benefits,

which would total a payment of £2,251

per year. But as her household's highest

earner, for every £200 Jess earns over

£60,000,

1% of her child benefit gets clawed

back. So her effective rate of tax on

the portion of income she earns between

60K and 80K would be about 51%.

If she was in England, but she's in

Scotland where the income tax rate jumps

to 45% after 75K. and add national

insurance on top of that, she's paying

almost 60% tax on this portion of her

income. But it can get even worse than

this. For every two pound of income you

receive over £100,000, you lose one

pound of your personal allowance, which

gives an effective tax rate of 60% on

the portion of income earned up to

£125k,

62% if you include national insurance,

and 67% if you're in Scotland. If

however you're also repaying a student

loan for every£1 that you earn over

£100,000 only 29p of that will find its

way into your pocket. But we're not done

yet. If you have a child under the age

of 11, you can qualify for tax-free

child care, which is essentially a

£2,000 per year contribution from the

government to help to pay for childare.

And if you have a child between the ages

of 9 months and 5 years old, you can

qualify for up to 30 hours of free child

care if both parents are still working.

However, if either you or your partner

earn over £100,000, you lose both of

these benefits. The value of these will

depend on which local authority you're

in, but based on average nursery fees,

the IFS estimates them to be worth about

£14,500

per year, assuming you have two children

under three who qualify, which means

that your income would need to jump to

£134,000

for you to be better off than someone

earning £99,000 and still being able to

retain those benefits. In London, the

estimate is more like £144,000.

So clearly our income tax system is

anything but progressive. But what can

you do about it? Well, the obvious

solution is to work less. Take Jess for

example. In effect, she's being paid a

much lower hourly rate for that final

portion of income that she earns. So if

she has control over her working hours,

she may choose to cut back. If she's

employed, she's going to have less

direct control of her working hours, but

she could choose to take unpaid parental

leave, which is a little known right

employees in the UK have where they can

take up to 4 weeks unpaid leave a year

per child under the age of 18 to spend

time supporting them. Of course, both of

these options will leave Jess with less

money in her pocket. But for someone who

expects to earn just over £100,000 and

thus lose eligibility for these child

care benefits, they may actually be

significantly better off by choosing to

work less, which might be a good thing

for them, but that's bad for the economy

and bad for the government, which

demonstrates just how poorly designed

the system is. But there are other

strategies that can help you save tax

and reduce your taxable income that

don't involve working less. Number one,

firstly, there are various salary

sacrifice schemes that may be available

through your employer. The two big ones

being cycle to work schemes or electric

vehicle leasing schemes, which allows

you to get a bike or lease a car that

meets certain emission standards and pay

for it out of your gross salary. In

Jess's case, paying for a bike out of

her gross salary would give her an

effective discount of 58%.

With electric vehicles, there are

additional benefit in kind charges to

pay and these are actually going up. But

depending on your tax band and the car

in question, these schemes can still be

very tax efficient. You just got to do

your research. Another salary sacrifice

scheme that you may have access to is a

workplace nursery scheme that in effect

enables you to pay nursery fees from

gross salary, which can be a huge

benefit for young families struggling

with these costs. However, you can only

take advantage of these benefits if

firstly you're aware of them and

secondly if your employer has taken the

initiative to set them up and

importantly, especially with the nursery

scheme, it's got to be done correctly

because HMRC has warned that some of

these schemes are not set up correctly.

This is a classic example of what is so

frustrating about our tax system. There

are millions of people missing out on

potential opportunities to save

thousands of pounds in tax simply

because no one has told them that they

exist or their employers have not set

them up. Although that's often because

employers are not even aware of them in

the first place. However, when it comes

to salary sacrifice schemes, you just

got to be mindful that not only will

this reduce your net pay, but you're

contractually reducing your salary,

which can affect other workplace

benefits like insurance and your ability

to get a mortgage. The other problem is

that these things can take a while to

set up. So if you have just got a bonus

towards the end of the tax year that

pushes you into a higher tax threshold,

then they may not be much use. But how

about this? Number two, let's say you're

earning £60,000 per year and get a

£10,000 bonus at the end of the tax

year. Firstly, well done you. Secondly,

let's work out how much of that is

actually going to end up in your pocket.

You'll pay 40% income tax plus 2%

national insurance. And then let's say

you have two children eligible for child

benefits, which would normally pay about

£2,251.

But because you're now earning £70,000,

half of that is going to get clawed

back, assuming you're the highest earner

of the couple, which means that this

bonus would only leave you £4,674

better off. That's an effective tax rate

of 53%.

But if you instead decided to make a

£10,000 gross pension contribution, it

would reduce your taxable income by

£10,000, enabling you to retain that

child benefit and get income tax relief.

How that income tax relief is applied

will depend on how you make that

contribution. If you sacrifice this

bonus into your workplace pension, it

would avoid income tax and national

insurance. So, you're saving 42% tax

there, plus reclaiming child benefit.

So, the effective cost of this £10,000

contribution is only £4,674.

However, unless your employer is really

flexible, changes to salary sacrifice

can be hard to orchestrate right at the

end of the tax year. So, another more

flexible option would be to make a

personal pension contribution of £8,000

either to a private pension or to your

workplace pension if they allow it. The

provider will then add basic rate tax

relief on top of this, leaving you with

£10,000 in your pension. This has the

effect of reducing your taxable income

by £10,000, which would enable you to

reclaim child benefits. And as a higher

rate taxpayer, you could then reclaim

the higher rate tax relief via a self-

assessment tax return or by calling HMRC

and asking them to adjust your tax code.

With personal contributions, you may

have to find more cash to make that

initial contribution. But after you've

claimed back any higher rate tax relief

and factored in that you're retaining

your child benefit, the effective cost

of that contribution comes to £4,874,

just slightly more than salary sacrifice

because you're not also saving on

national insurance. You need to think

carefully before making any pension

contribution. But alongside getting any

employer contribution match, making

additional pension contributions during

these tax pinch points can be some of

the most tax efficient you'll ever make.

For example, according to the IFS,

someone who lives in London with two

children under three and who earns

£139,000,

they may actually end up with more

disposable income by making a £40,000

pension contribution than by making no

contributions at all if they're then

able to restore these child benefits.

Over your lifetime, you're going to be

able to save a set amount of money.

Let's say that's £100,000. and you use

that to make pension contributions along

the way. The higher tax relief that you

can get when you make those

contributions, the further your money is

going to go. So, it often pays to look

ahead and be taxical with when you

choose to make them. And given that

income tax bands have been frozen, just

with inflationary uplifts, people are

going to start moving through tax bands

much faster. So, opportunities to make

contributions and get higher tax relief

that may be there today may be gone

tomorrow, whilst others might be just

around the corner. In most situations,

making pension contributions is going to

leave you with less disposable income or

require you to sell other assets like

ISIS to fund them, which is again why

it's important to think ahead and make

sure that you have the ability to take

advantage of these opportunities when

they arrive. Although, there's a few

things that you do need to consider

before you start putting more into a

pension. Firstly, you won't be able to

access that money until 55 at the

earliest, although that is set to rise

to 57 in 2028 and could rise even

further. Any investment growth or income

you receive inside the pension won't be

taxed, but you may have to pay income

tax when you withdraw it. But given that

at retirement you can typically draw up

to 25% of the value of your pension

tax-free and that most people move down

a tax bracket in retirement, the tax

that you're likely to pay on withdrawal

is likely to be significantly less than

the tax relief that you get on the way

in, especially if you're getting as high

tax relief as you can in these tax pinch

points. The other thing to be mindful of

is the pension annual allowance. The

maximum that you can personally

contribute to a pension each year and

receive tax relief is a lower of your

relevant earnings or £60,000. So if you

earned £40,000 per year from employment,

the maximum you can contribute is

£40,000. It is possible to carry

forwards unused pension allowances from

the last three tax years. So if say

someone had contributed £20,000 into

their pension over each of the last

three tax years, this person could in

theory contribute up to £160,000 to a

pension this tax year. But and this is

the part that people often miss, they

would only be able to do that and get

tax relief if they had at least £100,000

of relevant earnings this tax year. You

also need to be mindful that for every

two pounds of adjusted net income

someone has over £260,000 per year, they

lose one pound of their pension annual

allowance. So if they earn more than

£360,000,

the maximum that they can contribute to

a pension is just £10,000 per year. Go

over this and you could face punitive

tax charges. So if you think that your

career is on a trajectory where your

allowance may end up being tapered, you

may want to make larger pension

contributions whilst you still can. Most

people assume that if you're not

working, you can't contribute to a

pension. But even if you earn nothing,

you can still contribute up to £2,800

per year and get 20% tax relief added on

top. This applies even if you are

already retired and already drawing

money from your pension which is an

opportunity which some people often

miss. Pensions are one of the trickiest

parts of financial planning. So if

you're unsure about anything and you're

looking for advice, there is a link in

the description of the video where you

can book an initial call with my team

and find out how we can help. Number

three, the other main tax efficient

rapper in the UK is the ISER within

which money can be kept as cash or

invested and whilst it's inside it's

protected from capital gains and income

tax. There are multiple different types

of ISER and you can contribute up to

£20,000 per year as a cumulative amount

across them. Unlike a pension, there is

no option to carry forwards unused ISRE

allowances to future tax years. So, if

it's appropriate, make use of these ISAR

allowances whilst you can. And remember

that some providers offer flexible ISAs,

which means that if you've had to take

money out of your ISA this tax year, for

any reason, perhaps to help you bridge

buying a property, you're allowed to put

that money back into the ISA, and it

won't count towards your ISA allowance

so long as you do it within the same tax

year. Number four, from next tax year, a

full state pension will pay £12,547

per year, and that's only set to

increase in future tax years. According

to the DWP, in 2024, the state pension

made up more than half of the income

received by retirees who are single and

around about 36% of the income received

by couples. It's an incredibly valuable

benefit, but to qualify for it, you need

at least 35 years of qualifying national

insurance contributions or at least 10

to get anything. Most people earn these

through their working life. But if you

think there is a chance that you could

be short, it may be worthwhile making

voluntary contributions to top up your

record. But you can only go back and

fill holes in your record over the last

six tax years. So if you have a gap in

your record in the 2019/20 tax year, you

only have until the end of this tax year

to make it up. Number five, once someone

has maxed out their ISA and pension

allowances, or at least put in as much

as they're happy to tie up at this

point, the next step is often to start

investing through a general investment

account, an account with no tax

advantages. But that doesn't necessarily

mean it can't be tax-free, at least in

part. Firstly, depending on which tax

band you're in, you may have a personal

savings allowance, which means that the

first portion of savings income, which

includes income from bonds, may be

taxfree. You also have a dividend tax

allowance of £500 and a capital gains

tax allowance of £3,000. Unfortunately,

these have been reduced significantly

over the last couple of years. But

still, if you do find yourself in a

position where you've got holdings that

have a capital gain, you may want to try

and realize those gains to make use of

these allowances to prevent you having

higher tax bills in the future. The

thing to remember is that you can't just

sell your holding and then buy it back

again immediately afterwards. You need

to wait 30 days before you can buy that

specific holding back again if you want

this sale to count from CGT purposes.

You can, however, buy it back

immediately if you're instead buying it

back within an ISA or a pension. And the

30-day rule only counts for that exact

same holding. If, for instance, say you

sold an S&P 500 fund from one provider,

you could immediately buy another S&P

500 fund from another provider and the

gain would still stand, just as an

example. And remember, transferring

assets between spouses does not trigger

a capital gain, which makes it

relatively easy to make use of each

other's capital gains tax allowances.

Which brings us to number six, making

use of other people's allowances.

Remember, if you're married, you have

two sets of allowances that you can make

use of. Pensions, ISAs, personal

allowances, capital gains tax allowance,

dividends, the lot. So when you're

considering what to do with your money,

think about whether a contribution to

perhaps your partner's ISA pension or

perhaps making NI contributions for them

could actually be the most effective

thing for you guys to do as a couple. Or

maybe even think further a field to

other family members. Yes, there are

things like junior ISES and junior sips

that you can use to invest for young

children, but if you have adult children

who are currently in one of these tax

choke points, gifting them the money so

that they can make additional pension

contributions and potentially reclaim

these benefits could be some of the most

powerful gifts you'll ever make. Number

seven, if you're concerned about

inheritance tax, remember to make use of

your gifting allowances. You can gift up

to £3,000 per year either to one person

or spread across several with this money

immediately outside of your estate for

inheritance tax purposes. You can also

carry forwards unused allowances from

the past tax year. So you may be able to

give £6,000 away this tax year or

£12,000 if you're a couple assuming

you've not made any gifts over the last

two years. But other than that, if you

don't use these allowances, you lose

them. There's also a small gift

exemption that allows you to give up to

£250 to as many people as you can, but

you can't give one person £3,000 and

then £250. They can't be used in

conjunction with the same individual.

Number eight, beyond pensions and ISIS,

there are other tax efficient investment

schemes that exist. Three of which are

government initiatives to encourage

retail investors to invest in earlystage

British businesses by giving tax breaks

with enterprise investment schemes.

Investing in qualifying businesses can

offer up to 30% income tax relief. So,

for example, if you made a £100,000

investment into one of these, it could

reduce your income tax bill by £30,000

in the year that the investment was made

alongside other benefits like loss

relief. Seed EIS schemes target smaller,

riskier businesses and offer even larger

tax breaks in EIS. Whilst venture

capital trusts are private equity funds

that invest across a portfolio of

earlystage businesses again offering

investors tax relief. Now I don't have

time to go into the pros and cons of

these in detail but I do just want to

say two things. Firstly, these are

extremely illquid, high-risk investments

where especially with EIS, there is a

high chance that you could lose all of

your money and as a result, they are not

appropriate for the vast majority of

people. But if you have the investment

horizon and risk tolerance and want

exposure to smaller companies, they can

be an effective way to reduce your tax

bill this year. And from the 6th of

April, so from next tax year, the tax

relief on VCTS is reducing from 30% to

20%. These are not the type of

investments that should be rushed. But

if you are considering using them, just

be mindful that that is going to change.

So, as you've seen, there's lots of

different ways here that you can invest

and save tax. But if, say, you only have

£1,000 to invest, you may be wondering,

should I be putting this into a pension

or an ISO? using it to pay down your

mortgage or perhaps one of these other

tax efficient tools. If that's the case,

you need to watch this video here where

I reveal what I think is the optimal

order for investing money from the

first,000 to the first million. I'll see

you there.