Your questions answered Vol 2 - IM Private Clients

[tight fart]

After some advice please as I ponder what to do.
I have a fully crystallised pension pot and I’m looking at tax and efficiently moving the pot over the next few years.
And assuming I move it from PHrocket sipp to PHrocket in an isa wrapper will I be worse off?
I know the implications for my wife changes should I depart this promised land but I’m thinking,
Should I kneed quick access to funds to buy that F40 for only £80k I don’t want to fall into the higher tax bracket.
I have a small unearned income so I’m still a tax payer and if I’m still here in 2 years my state pension starts.
Also should I take £20k in April the tax won’t be due till Jan 26 or is it deducted on withdrawal?

[markiii]

theres no IHT between spouses anyway is there?

[Car bon]

Tax is due whenever you make a SIPP withdrawal - and if it's your first one, then emergency tax is likely and you'll need to reclaim.

You should certainly ensure that you utilise your zero tax band of £12,570, so if your unearned income is less than that, then you should most likely withdraw the rest from your SIPP and stick it into an ISA. That applies for the current tax year too if you can withdraw it in time.....

[JulianPH]

tight fart said:

After some advice please as I ponder what to do.
I have a fully crystallised pension pot and I’m looking at tax and efficiently moving the pot over the next few years.
And assuming I move it from PHrocket sipp to PHrocket in an isa wrapper will I be worse off?
I know the implications for my wife changes should I depart this promised land but I’m thinking,
Should I kneed quick access to funds to buy that F40 for only £80k I don’t want to fall into the higher tax bracket.
I have a small unearned income so I’m still a tax payer and if I’m still here in 2 years my state pension starts.
Also should I take £20k in April the tax won’t be due till Jan 26 or is it deducted on withdrawal?

Hi Richard

Nik will be able to give you chapter and verse, but given how busy he is with tax year end requests I thought I would cover some ground. All of this is rule of thumb stuff that you can bring to apply in different ways.

For the benefit of others more than yourself;

Once you have got the maximum into your pension and enjoyed the tax free growth on both your contributions and those of the tax man (plus employer contributions where relevant) the work begins in best getting your money back out again!

Obviously you have your tax free allowance and the rest is taxed as income (whether you take it as income or a lump sum).

The key is to try to take it out at a lower tax band that you put it in. Where this is not possible then takingit out at the same tax band still leaves you up on the deal (as you have had years of growth on the reclaimed basic rate tax and any higher rate tax came back to your pocket anyway).

To your more specific points, taking from your pension tax efficiently and placing into your ISA can be an excellent idea and leave you better, not worse, off. Remember ISA withdrawals are not only tax free, but don't count against various allowances or even have to be declared on a tax return.

Regarding IHT implications for your wife of you moving funds from pension to ISA, as has been said there aren't any as there is no IHT between spouses.

Your state pension kicking in in 2 year's time will obviously increase your income and therefore reduce what you can draw from your pension in the most tax efficient manner. Looking at this now is a very good idea and you may even want to defer taking your state pension.

This would enable you to draw more from your personal pension more tax efficiently with the added benefit of an uplift to your state pension when you do start to draw from it.

As I say, going though the specifics with Nik is your best bet, but if it is of any further help I can assure you that you will not need to quick access to any pension funds to buy that £80k F40 - as I would have already beat you to it!

Cheers

Julian

[tight fart]

Thanks Julian

[Simpo Two]

JulianPH said:

Your state pension kicking in in 2 year's time will obviously increase your income and therefore reduce what you can draw from your pension in the most tax efficient manner. Looking at this now is a very good idea and you may even want to defer taking your state pension.

This would enable you to draw more from your personal pension more tax efficiently with the added benefit of an uplift to your state pension when you do start to draw from it.

Evening sir. Question from Simpo HQ if I may:

I thought the state pension had a fixed maximum (last time I looked about £185pw) and it said that you couldn't get more even if you paid in more. So what happens when you defer it?

[Jasey_]

https://www.gov.uk/deferring-state-pension/what-yo...

Example
You get £203.85 a week (the full new State Pension).

By deferring for 52 weeks, you’ll get an extra £11.82 a week (just under 5.8% of £203.85).

Doesn't seem like a generous deal to me !!

[Sheepshanks]

Simpo Two said:

Evening sir. Question from Simpo HQ if I may:

I thought the state pension had a fixed maximum (last time I looked about £185pw) and it said that you couldn't get more even if you paid in more. So what happens when you defer it?

It's £203.85 a week now and increases to £221.20 in April.

If you defer it goes up 1% for every 9 weeks. A few yrs ago it was 1% every 5 weeks!

Oddly the general advice seems to be to take it when it's due but it doesn't make a lot of sense if you're paying higher rate tax now, but might not later.

Edited by Sheepshanks on Tuesday 19th March 21:46

[Sheepshanks]

Jasey_ said:

Doesn't seem like a generous deal to me !!

It's more than you'd get risk free anywhere else, and if you're a 40% tax payer it's like getting 10%.

[mikeiow]

Sheepshanks said:

Jasey_ said:

Doesn't seem like a generous deal to me !!

It's more than you'd get risk free anywhere else, and if you're a 40% tax payer it's like getting 10%.

Very true.
The psychology of numbers can be curious indeed!

[Car bon]

You can't compare it to savings rates - You're getting 5.8% more, but you're getting it for a year less..... but getting that increase for as long as you live.....

[Sheepshanks]

Car bon said:

You can't compare it to savings rates - You're getting 5.8% more, but you're getting it for a year less..... but getting that increase for as long as you live.....

Yes, that’s the reason why people say take it when available - you might croak before you break even. Feels like tempting fate!

[2Btoo]

Any comment from the IM chaps about the NVIDIA event, or the SMCI share sale?

[bogie]

How long is it taking for other members direct debit payments in to IM to show up ? I see my monthly direct debit payments go out on the 14th of the month but 5 working days later they are still not showing up in my IM account.

[AdamIM]

2Btoo said:

Any comment from the IM chaps about the NVIDIA event, or the SMCI share sale?

Hi O,

The Nvidia GTC event is still running. it is worth watching the CEO Keynote (2 hours) https://www.youtube.com/watch?v=Y2F8yisiS6E

The takeaway from what we see is further confirmation that the company is the most important tech company in the world and is light years ahead of the so called competition (there is none). In fact Jensen Huang said last week, even if AMD gave away their GPU's FOC they wold not be cheap enough!

Pervasive would be an apt term. Every single industry will be touched by their products and services and it's just getting started. BYD, the largest EV car manufacturer in the world have adopted Jensen-Thor autonomous systems. Will Tesla move back to Nvidia chips? Big investment in humanoid robots, Omniverse digital twins are becoming the industrial standard. Nvidia enterprises software starting to snow ball. Every major player is adopting is as the standard. Excited about Nvidia NIMS. They are building dozens and dozens of Sovereign super computers this year. On stage he showed one rack which had more power than the number 1 super computer which is housed in a giant warehouse (1000's of racks) and consumed 4% OF the power and this is key in understanding the total cost of operation.

Regarding SMCI, their latest and third capital raise was a surprise. I think it was handled badly but it's done now and clearly they need the capital for their extreme growth. The timing of the raise is not ideal however it's a strong signal that their growth has most likely found another gear, hence the knee jerk(?) capital raise. They could have issued debt but rates are high, they don't want to be paying 6-7% in coupon on 1.8B when they need all the cash they can get to obtain preferential access and pricing to scarce components. We believe this will improve margins via their speed to market and first mover advantage.

The stock has been very volatile over the last two quarters as speculators gambled on the share price direction. We hope it settles down. In terms of valuation it has a very bright future ahead of it. Their quarter end is 31 March and Id expect another early earnings announcement around the 3rd week of April. Guide Rev was 3.9B(mid point) and i wouldn't be surprised if they report close to $5B and guide higher.

It's very difficult to know what the revenue numbers will look like because they sell a lot of racks. These racks used to sell for 100's of thousand (classical)then $1M, $2M and with Blackwell GB200 (NVL72) which contains 72 GPU's, 36 CPU together with NVLink(very expensive) and HBM3e (very very expensive) these racks could be $10M each so revenue is naturally tough to forecast. A lot and growing very fast is my call. And of course you have product mix and timing of chip access, memory access etc which are all scarce.

[2Btoo]

AdamIM said:

Interesting Stuff.

Thanks Adam. That stuff was interesting.

[AdamIM]

bogie said:

How long is it taking for other members direct debit payments in to IM to show up ? I see my monthly direct debit payments go out on the 14th of the month but 5 working days later they are still not showing up in my IM account.

HI M,

As discussed

[AdamIM]

2Btoo said:

AdamIM said:

Interesting Stuff.

Thanks Adam. That stuff was interesting.

There really is so much 'stuff'

This is a cool clip https://www.youtube.com/watch?v=QY87rRTrJlE

[Ducati996R]

I’ve just watched some of the you tube clips ….if only I understood it all…🙄.looks amazing thou ,,the main man comes across very well

[bogie]

AdamIM said:

HI M,

As discussed

yes, thanks Adam