£25,000. Buy a car or Btl
Discussion
Not all of it, not the excess over 20%
But I take your point on the initial 20% bit.
I guess there is an assumption that the recipient needs to save someething for retirement, so they are moving things from pot A to pot B to free up funds for pot C.
Hence OP mentions BTL, no doubt as a savings/income option.
I was simply adding a Pension as another savings/income option which allowed the freeing up of funds otherwise lost to tax.
But I take your point on the initial 20% bit.
I guess there is an assumption that the recipient needs to save someething for retirement, so they are moving things from pot A to pot B to free up funds for pot C.
Hence OP mentions BTL, no doubt as a savings/income option.
I was simply adding a Pension as another savings/income option which allowed the freeing up of funds otherwise lost to tax.
ringram said:
Not all of it, not the excess over 20%
But I take your point on the initial 20% bit.
I guess there is an assumption that the recipient needs to save someething for retirement, so they are moving things from pot A to pot B to free up funds for pot C.
Hence OP mentions BTL, no doubt as a savings/income option.
I was simply adding a Pension as another savings/income option which allowed the freeing up of funds otherwise lost to tax.
You're not freeing up anything!But I take your point on the initial 20% bit.
I guess there is an assumption that the recipient needs to save someething for retirement, so they are moving things from pot A to pot B to free up funds for pot C.
Hence OP mentions BTL, no doubt as a savings/income option.
I was simply adding a Pension as another savings/income option which allowed the freeing up of funds otherwise lost to tax.
You need to have the money in the first place to invest in the pension!!
You need to have earnt the money and paid the tax, in order to get it back ...and for most people you get 40% tax relief
You are going to have to put around £60k into your pension to get near £25k in tax relief ....but in single year you can pay in just £40k and get tax relief on it.
I dont get how the maths add up to get this £25k back? surely the max tax relief in a year is £16K ...still, its a nice target so see if you can pay £56k into your pension each year
You are going to have to put around £60k into your pension to get near £25k in tax relief ....but in single year you can pay in just £40k and get tax relief on it.
I dont get how the maths add up to get this £25k back? surely the max tax relief in a year is £16K ...still, its a nice target so see if you can pay £56k into your pension each year
I thought Ringham was merely putting forward the idea that if someone hasn't made their £40k annual pension contribution, or has the scope to make back payments (and is a higher rate payer) then slapping the £25k in and clawing back the tax that they have paid already and using that money to something etc? I.e. Just be tax efficient and buy a cheap car as that's probably the better financial move versus the other two options in investment terms?
DonkeyApple said:
I thought Ringham was merely putting forward the idea that if someone hasn't made their £40k annual pension contribution, or has the scope to make back payments (and is a higher rate payer) then slapping the £25k in and clawing back the tax that they have paid already and using that money to something etc? I.e. Just be tax efficient and buy a cheap car as that's probably the better financial move versus the other two options in investment terms?
The point is that if you've got £25k (or whatever) to invest in a pension, then you've already got the money to do something else with instead, such as buy a car. Investing in a pension doesn't 'free up' any money whatsoever!It's like going into an off licence with a £20 note, buying a £15 bottle of wine and taking the £5 change to the corner shop next door to buy £5 worth of lottery tickets.
Is the off licence owner reallly funding the lottery tickets?!
Edited by sidicks on Monday 5th December 07:18
sidicks said:
DonkeyApple said:
I thought Ringham was merely putting forward the idea that if someone hasn't made their £40k annual pension contribution, or has the scope to make back payments (and is a higher rate payer) then slapping the £25k in and clawing back the tax that they have paid already and using that money to something etc? I.e. Just be tax efficient and buy a cheap car as that's probably the better financial move versus the other two options in investment terms?
The point is that if you've got £25k (or whatever) to invest in a pension, then you've already got the money to do something else with instead, such as buy a car. Investing in a pension doesn't 'free up' any money whatsoever!It's like going into an off licence with a £20 note, buying a £15 bottle of wine and taking the £5 change to the corner shop next door to buy £5 worth of lottery tickets.
Is the off licence owner reallly funding the lottery tickets?!
Edited by sidicks on Monday 5th December 07:18
DonkeyApple said:
I didn't think that that was what he was suggesting though? It read to me as a suggestion to invest the earnt money into a pension and claim the tax back if income/allowance etc permitted?
Same difference - you still need to have the funds available to make the pension investment in the first place.so you've not 'freed up' anything.sidicks said:
DonkeyApple said:
I didn't think that that was what he was suggesting though? It read to me as a suggestion to invest the earnt money into a pension and claim the tax back if income/allowance etc permitted?
Same difference - you still need to have the funds available to make the pension investment in the first place.so you've not 'freed up' anything.sidicks said:
DonkeyApple said:
Don't get it. OP says he has £25k.
Exactly, so he's funding the car, not HMRC!Jockman said:
The way I was reading it was that he is suggesting OP put £15,000 into the pension and potentially let 40% relief take it up to the desired £25,000.
That would leave £10,000 to fund the car ????
The OP has £25k.That would leave £10,000 to fund the car ????
He can put £15k into a pension (and let HMRC top it up to £25k) or
He can spend £15k on a holiday or
He can spend £15k on coke and hookers or
He can gamble and lose £15k at the local Casino.
In all cases he will have £10k left to spend on a car.
HMRC have not funded that car or 'freed up' the capital for that car (and neither have the local travel agent, the local w
ehouse or the local Casino).If the point is that pensions are a tax efficient way of saving then I agree!
Edited by sidicks on Monday 5th December 11:23
Jockman said:
The way I was reading it was that he is suggesting OP put £15,000 into the pension and potentially let 40% relief take it up to the desired £25,000.
That would leave £10,000 to fund the car ????
Exactly. If OP desires to acquire £25k of investments, he can do so in several ways: (i) £15k into pension; (ii) £25k into BTL; (iii) £25k into ISA and so on. Only option (i) achieves the twin desires of investing £25k and having £10k cash left over...That would leave £10,000 to fund the car ????
But he'll have to pay the tax when he withdraws it, probably with no tax free cash by then if my cynicism is well-founded.
Doofus said:
It seems this thread was started by somebody posting rubbish, and after he ran away, it was picked up by somebody else posting rubbish.
Nope didn't run away , I'm just curious how people see things. Unfortunately I'm old school, brought up on a council estate, started an apprenticeship at 16 and worked bloody hard for many years. Was fortunate enough to get into purchasing property 20 years ago. Even took the odd bank loan out for deposits. Then used the banks money to self finance further purchases to 20+.
Only have 2 BTL and 6 on capital and repayment. Rest all paid for, and I'm fortunate enough to be semi retired and pay someone to manage and repair although I do have my finger on what's going on.
As for pensions I lost confidence in those years ago when after paying £200.00 month in, at the end of the year they had made nearly nothing. So went into property. Now have a small pension of ....... wait for it £145.00 per month ....
My trouble is ....... and I know u can't take it with u is I find it hard to spend extravagantly having worked hard and learnt the value of money. I have quite a large amount of savings but see this as a comfort thing if that makes sense. Could quite easily go out and buy a new super car but ...... I just cant.
Silly I know but there u go. I
I don't think that's at odds at all. I think that people who tend to work hard for their money and know the cost of having none are far less likely to suddenly go and piss a chunk away on a toy that really isn't needed.
If you've got savings and a book of unleveraged properties then that's a pretty good place to be and adding one more property has far less risk than if it were a smaller and more leveraged portfolio.
Re the pension thing, they are long term plays. One year just isn't enough time to be able to draw a proper appraisal but as property has been the defining investment asset of the last 25 years, if not longer, then anyone who went down that route (done sensibly) will have achieved much better returns than a traditional pension in all lilihood anyway.
But if you have an established and significant wealth then the choices of what to do with just £25k become far less significant or risky anyway.
If you've got savings and a book of unleveraged properties then that's a pretty good place to be and adding one more property has far less risk than if it were a smaller and more leveraged portfolio.
Re the pension thing, they are long term plays. One year just isn't enough time to be able to draw a proper appraisal but as property has been the defining investment asset of the last 25 years, if not longer, then anyone who went down that route (done sensibly) will have achieved much better returns than a traditional pension in all lilihood anyway.
But if you have an established and significant wealth then the choices of what to do with just £25k become far less significant or risky anyway.
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