Please ignore if you are a non-Brit as this is a UK taxation question.....
I am suffering mental contortions weighing up pulling the rip cord too early versus 'just one more year' syndrome. I am thankfully late in the process and pretty close to FIRE. In a nutshell I earn very well, spend more than I should (partly to enable the earnings) and am in a career which is most likely a one-way door when I leave (thus the cost of being wrong is high).
I am trying to consider UK tax as one thing which will meaningfully improve when I stop earning as we will be able to spread our earnings between me and my wife (as equal shareholders in a company we have set up to hold property). I have built a spreadsheet comparing split earnings to a single salary on an after tax basis, mostly to try and make me feel better about a large drop in pre tax income. The numbers are quite powerful.
A single earner on £130,000 gross, who therefore loses their personal allowance and pays 40% tax on a large portion of their salary as well as national insurance seems to be equivalent to earning about £92,000 gross through the company and shared equally. The biggest element of this is income tax which is c.£45,000 in the former but just c.£11,000 in the latter situation. Both end up as about £80,000 net with some other tweaks related to our situation.
I am pretty sure the numbers are about right, but would love to know if anyone else has benefited from this taxation 'dividend' or has any challenges / comments about the subject.
Many thanks....
