How to pay yourself a £98,100 salary without paying any tax


By exploiting an array of both new and old tax breaks, you will soon be able to draw an annual income from your investments of £98,100 – tax‑free


For many people the thought of not having enough money to retire on is enough to keep them up at night. This isn’t an unfounded fear for almost half of all UK citizens nearing retirement age don’t have enough savings to retire.

British pre-retirees are in even worse shape than their American counterparts when it comes to saving enough for retirement. According to new research from J.P. Morgan Asset Management, retirees are counting on state benefits and part-time work to fund their retirement; and almost half of the pre-retirees have admitted to currently saving nothing for retirement, despite two-thirds expecting to rely on a pension for income.

“I’ve been putting money into my pension, but I know that it’s time to focus on building my retirement fund. I’m just afraid about losing money I’ve worked hard to earn” Moreton Watson from Wimberley told us.

What You Need To Know

April 2015 saw the most radical changes to private pensions in a generation. The new changes that are taking place is called the “Freedom & Choice In Pensions.” At first glance, this appears to be a positive change. Indeed, there are many more options, which is great for those who know what they’re doing, but it also means it’s easier for mistakes to be made.

The big advantage of saving for retirement in a pension is that it comes from your pre-tax income. In other words, to save £100 only reduces most people’s take home pay to £70 or £80, so you’ll save more money overall.

Once it’s time for you to use your pot of pension savings, you can take a quarter of it as a tax-free lump sum. That hasn’t changed. The difference is what you can do with the rest of it. 

For decades, most people have effectively needed to use the money to buy an annuity, which is a product that pays you an income each year until you die. That’s not a bad idea in and of itself, because you get the security of knowing exactly how much you can spend.

The problem is that in recent years annuity rates have been rubbish – so rubbish that someone trading in £100,000 of their pension money may get as little as  £5,500 a year.  To compound the problem, instead of shopping around for better rates, most people went with the firm they saved in, locking in a far lower rate than what they could have gotten, ultimately losing out every year for the rest of their lives.

What You Can Do About It

“In April we enter a completely different tax regime,” said Nigel Neville, a technical tax director at RSM UK, an accountancy firm. “Many people will fall out of the tax net altogether, and will no longer have to submit returns. For others, tax will be collected in a different way.”

Starting in April, basic-rate taxpayers will be able to earn £1,000 savings interest tax-free thanks to the new “personal savings allowance”. Taxpayers with income below £11,000 can enjoy a further tax-free £5,000 income thanks to the “nil-rate savings bond”.

The new regime for dividends allows investors to earn £5,000 tax-free. This opens the door to £11,000 worth of tax-exempt earnings, before even thinking about Isas.

After April, personal allowances, the amount of income anyone can earn before tax is due, climbs to £11,000. Annual capital gains tax allowances can be used to release a further £11,100 tax-free “income”.

Thus the running tally of tax-free shelters has reached £33,100 per individual or £66,000 per couple per year, but you could go even further. Provided that you have large Isa savings (and hundreds of lucky investors now have Isas worth £1m or more), additional tax-free income is possible.

Resources For Your Consideration

For many pensioners speaking with a pension professional will help them navigate this new “tax regime” better and steer them away from potentially losing tens of thousands dollars in income.

To access your complimentary pension review visit: