How to spend (invest) my £75k
Discussion
Behemoth said:
simong800 said:
It really is a long game, but all my funds chosen are accumulation ones - so instead of taking dividends as income, the dividends are reinvested into buying more units if that makes sense. Compound interest is king, this statistic has always stood out for me;
Neil Woodford joined Invesco Perpetual 25 years ago and has managed the company's High Income fund since then, during which time he has turned a £1,000 investment into about £23,000.
So a long game, like a pension then? 25+30 = 55 Neil Woodford joined Invesco Perpetual 25 years ago and has managed the company's High Income fund since then, during which time he has turned a £1,000 investment into about £23,000.
o/p By all means buy a car & watch if you can afford them. Plenty of us did the same. But these are toys, not investments. If they come good, wonderful.
For proper investments, spread your risks and spread your liquidity. Do a few different things and grab the pension wrapper, too, because it's a bargain and trust me you will still be full of life at 55 wishing you'd done exactly what Neil Woodford did but x about 50 or 100.
trowelhead said:
To get around the principle activity stuff:
Setup another ltd
Trading company loans cash to the new company
This cash is used as deposits for buy to let property or to invest in shares or P2P lending etc
This does not help extracting the cash, but the idea is to grow it in a tax advantaged way for the long term
Then you can pay it into a pension (SSAS/SIPP) tax efficiently when old from the company
Or draw it and take the tax hit.
If you have enough coming in then why draw the cash at all?
Good shout this, going to run this by my accountant. Cheers (even though it wasn't intended for me!) Setup another ltd
Trading company loans cash to the new company
This cash is used as deposits for buy to let property or to invest in shares or P2P lending etc
This does not help extracting the cash, but the idea is to grow it in a tax advantaged way for the long term
Then you can pay it into a pension (SSAS/SIPP) tax efficiently when old from the company
Or draw it and take the tax hit.
If you have enough coming in then why draw the cash at all?
You could look at taking the cash out of the company as dividends, much lower tax rate than the 40% you quote and then, risk/timescale etc dependant chuck a chunk in EIS each year for the next year or two, potentially carry back to last year as well.
Once you've got a rolling three/four years, maturity is a minimum of 3 years, going it can effectively self fund and you can reclaim 30% income tax relief, up to the total amount you pay, each year. You'd pretty much be able to wipe out your tax bill totally going forward with a bit of work.
Not without its risks, seek professional advice etc etc
Once you've got a rolling three/four years, maturity is a minimum of 3 years, going it can effectively self fund and you can reclaim 30% income tax relief, up to the total amount you pay, each year. You'd pretty much be able to wipe out your tax bill totally going forward with a bit of work.
Not without its risks, seek professional advice etc etc
Thanks for all the replies. Ive spoke with my IFA and he thinks that VCT's and EIS's are too advanced/risky for me (I have never ever invested a penny in the past).
He has mentioned peer-to-peer lending and also building a portfolio of investments to suit my risk level.
Interestingly, he also mentioned my LTD company buying my BTL property. Ive started a new thread for that one so it doesnt become too confusing. See link below;
http://www.pistonheads.com/gassing/topic.asp?h=0&a...
Thanks again
He has mentioned peer-to-peer lending and also building a portfolio of investments to suit my risk level.
Interestingly, he also mentioned my LTD company buying my BTL property. Ive started a new thread for that one so it doesnt become too confusing. See link below;
http://www.pistonheads.com/gassing/topic.asp?h=0&a...
Thanks again
JapanRed said:
drainbrain said:
Why don't you use your limited company's spare funds as a lender / part lender replacing the current loan on your btl?
This sound ideal but how do I do that?(there will probably now be a hail of posts telling you why not/all the pitfalls/legal issues etc etc.)
drainbrain said:
Send a payment from the ltd to the lender reducing or fully redeeming the loan, then start paying it back to the ltd at whatever rate, method and speed you like.
(there will probably now be a hail of posts telling you why not/all the pitfalls/legal issues etc etc.)
I'm sure that would be classed as a directors loan and at the very least will require an interest charge?(there will probably now be a hail of posts telling you why not/all the pitfalls/legal issues etc etc.)
JapanRed said:
drainbrain said:
Send a payment from the ltd to the lender reducing or fully redeeming the loan, then start paying it back to the ltd at whatever rate, method and speed you like.
(there will probably now be a hail of posts telling you why not/all the pitfalls/legal issues etc etc.)
I'm sure that would be classed as a directors loan and at the very least will require an interest charge?(there will probably now be a hail of posts telling you why not/all the pitfalls/legal issues etc etc.)
Thinking of the 75k as an 'investment' I'd have thought some interest would be in order.
Ash170990 said:
I need to get myself in this position. Fair play to you. Personally, id enjoy the money with like you say an F430 or similar, youve worked hard enough to earn the money, and you cant take it with you when youre 6ft under. enjoy it while you can.
This is my thought. Both me and the missus work in the NHS and see death and destrucion on a daily basis. I'm trying to strike a fine balance between saving for the future (retirement and future-childrens security) whilst also enjoying it while we can. Hard to get that balance just right though...JapanRed said:
This is my thought. Both me and the missus work in the NHS and see death and destrucion on a daily basis. I'm trying to strike a fine balance between saving for the future (retirement and future-childrens security) whilst also enjoying it while we can. Hard to get that balance just right though...
Maybe something not quite as exotic as the Ferrari then, maybe an Audi RS4/6 BMW M4 etc for a bit of fun and hide some cash away for the future/a rainy day.Keep the money to one side ready for when HMRC come a knocking joke (but possible), I don't know your status but if you contracting by looking at the IR35 changes coming into public sector and assuming they will get applied to private sector contracts in 2018, I would be looking at getting my cash out now and taking the hit on the divs or doing an MVL if you still can.
PostHeads123 said:
Keep the money to one side ready for when HMRC come a knocking joke (but possible), I don't know your status but if you contracting by looking at the IR35 changes coming into public sector and assuming they will get applied to private sector contracts in 2018, I would be looking at getting my cash out now and taking the hit on the divs or doing an MVL if you still can.
I'm not subcontracting. My accountants are aware of IR35 and I am fine.Firstly well done - sounds like a great position to be in! Being nosey, what do you do via your LTD company? That's essentially the dream to have a decent income from essentially a side project!
In your position I would look at the SIPP route to take advantage of the relief for high earners while it's still in play. The compounding of 40% tax advantage plus annual growth (capital and reinvested dividends) would grow hugely. Even if you did it for a few years (think maximum tax free annual contribution is c.£40k) you would be looking at a maxed pension pot - so well worth doing.
In the SIPP, if you're new to investing, I would go with something quite simple and pre-diversified - Vanguard Lifestrategy 80/20 is popular on MSE forums.
In your position I would look at the SIPP route to take advantage of the relief for high earners while it's still in play. The compounding of 40% tax advantage plus annual growth (capital and reinvested dividends) would grow hugely. Even if you did it for a few years (think maximum tax free annual contribution is c.£40k) you would be looking at a maxed pension pot - so well worth doing.
In the SIPP, if you're new to investing, I would go with something quite simple and pre-diversified - Vanguard Lifestrategy 80/20 is popular on MSE forums.
Thanks guys. Ive abandoned the idea of my company buying the property (see other thread if interested).
So I am left with investments and pensions. Ignoring pensions for the minute, say I want to invest £50k, am I better investing through my company, or drawing dividends and then investing personally?
So I am left with investments and pensions. Ignoring pensions for the minute, say I want to invest £50k, am I better investing through my company, or drawing dividends and then investing personally?
JapanRed said:
Thanks for all the replies. Ive spoke with my IFA and he thinks that VCT's and EIS's are too advanced/risky for me (I have never ever invested a penny in the past).
He has mentioned peer-to-peer lending and also building a portfolio of investments to suit my risk level.
Interestingly, he also mentioned my LTD company buying my BTL property. Ive started a new thread for that one so it doesnt become too confusing. See link below;
http://www.pistonheads.com/gassing/topic.asp?h=0&a...
Thanks again
P2P? This month's review from FOS might be useful to you then.He has mentioned peer-to-peer lending and also building a portfolio of investments to suit my risk level.
Interestingly, he also mentioned my LTD company buying my BTL property. Ive started a new thread for that one so it doesnt become too confusing. See link below;
http://www.pistonheads.com/gassing/topic.asp?h=0&a...
Thanks again
http://www.financial-ombudsman.org.uk/publications...
ellroy said:
You could look at taking the cash out of the company as dividends, much lower tax rate than the 40% you quote and then, risk/timescale etc dependant chuck a chunk in EIS each year for the next year or two, potentially carry back to last year as well.
Once you've got a rolling three/four years, maturity is a minimum of 3 years, going it can effectively self fund and you can reclaim 30% income tax relief, up to the total amount you pay, each year. You'd pretty much be able to wipe out your tax bill totally going forward with a bit of work.
Not without its risks, seek professional advice etc etc
Can you give us an example with some figures?Once you've got a rolling three/four years, maturity is a minimum of 3 years, going it can effectively self fund and you can reclaim 30% income tax relief, up to the total amount you pay, each year. You'd pretty much be able to wipe out your tax bill totally going forward with a bit of work.
Not without its risks, seek professional advice etc etc
Speak to an advisor chap, but in short you can get tax relief assuming you've paid sufficient income tax, at 30% on up to £1m. It's not without risks, but a good EIS could return between, say 90p and 110p, after you've already had 30p in relief and the return is also free of all tax. So a return in total of between 120-140p free of tax after approx 3 years for example. Remember, there are no guarantees with this and they are high risk.
If you took funds out of a business, £5k nil rate allowance for divs, basic rate at 8.5% etc you could use the funds to offset your income tax bills each year, in part or full, going forward. As some of these aim to mature after 3 years you can get to a point where they self fund, as each year you can roll the money back into a new one and accrue the tax relief afresh.
Seek advice, you need a specialist with these things, as well as a decent appetite for risk.
If you took funds out of a business, £5k nil rate allowance for divs, basic rate at 8.5% etc you could use the funds to offset your income tax bills each year, in part or full, going forward. As some of these aim to mature after 3 years you can get to a point where they self fund, as each year you can roll the money back into a new one and accrue the tax relief afresh.
Seek advice, you need a specialist with these things, as well as a decent appetite for risk.
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