Freelance work pushing into higher tax bracket -ISA?

[Lamb]

Hi

I earn £41,000 a year in a salaried role. I've been offered regular work in a sideline capacity which would be an additional £7,920 (as a freelance basis, paying my own tax). This would push me into the higher tax bracket and wouldn't be worth it. I've read something about freelancers using ISAs to reduce their tax bill, but I couldn't understand how would affect me being in full time salaried work and earning extra as a side line. Can i get paid the extra sideline money directly into an ISA and legally not tell the tax man?

Furthermore, I'm looking to buy another house and rent out where I currently live. It could make me £6,00 profit a year, based on calculating costs of utility bills but not interest of the mortgage (I understand being able to declare the interest part of your mortgage is being phased out in 2017 and being fully implemented by 2020, whatever that means). But again, this would take me into the higher tax bracket. Trying to earn a little extra dosh and whatever I think of it doesn't seem worthwhile after tax! I do own the house that I'd be renting out with my ex partner and I've yet to remove him from the house deeds/mortgage - he's now owed any money from this house so no need to sell. He is a basic rate tax payer (his income is around £32k). I've read you can write up an agreement when it comes to rental property, irrespective of who owns how much of a house, so that the basic tax rate payer partner can get say 90% of the rental income and pay 20% tax and the higher tax rate payer say 10% and pay 40% on it (or still 20% if stay under the higher tax rate bracket - this break down will stop me, depending what I do about the sideline money).

I've read about setting up a company to handle rental income but it sounds complicated and not sure it's worth it 9e.g. cost to set up) for just one property.

Any advice much appreciated!

[jpcentral]

There are a lot of different questions there and I don't think anyone really has the time to write a book. Best thing to do is sit down with a local accountant and explain your situation to him/her and ask for advice.

To answer your first question - an ISA is not effective in reducing a current tax liability and it would be illegal to put money into an ISA and not declare it. Pension contributions will reduce your tax bill if you are a higher rate taxpayer.