Effing pensions taper

[Hitch]

I got promoted last year so have just smashed the pensions taper. I hadn't touched it before, but in the next year I'll go down to £10k allowance which is not far off pointless. I max both our ISAs each year and my wife earns a pittance so I can't squirrel much into her pension.

So where else do I put the money that is low risk and tax/IHG sensible?

I was thinking of getting a much more expensive family home that has an option to downsize within it (e.g. a farm with a barn, or a plot that can be subdivided or something like that) so that I can eventually sell the main house, barn or plot and use those funds as a pension, or starting to invest in BTLs through a Ltd co each year.

Have I missed anything?

[Somebody]

EIS, VCT & SEIS for up front tax relief?

[Hitch]

Yes, looked at that but doesn't float my 'low risk' boat. That might be a further phase if things continue to go well and my earnings increase.

[mikees]

Welcome to the club. But to be honest it is a first world problem. You have to be between 260 and 360to get the taper and upper end to get to the 10k mark. That’s 13-17k a month take home. Which is nice.

This is getting a bit philosophical but I view tax as my payment to society for an environment where I can earn so much. I had a free first class education. My late wife had ‘00s of k spent on cancer treatment. We are just bigger cogs in a machine with lots of wheels. My sister in law was head of cancer treatment at a big trust. I like to think I’d bought several of their big linear accelerator cancer treatment machines.

As biggbn on np&e forum says “ peace man “

[Hitch]

I have no problem paying tax. But I've hit this point prior to saving enough to mean that I don't now have to find a different way to fund my retirement.

That first world problem comes off the back of lots of sweat, stress and sacrifice, so I intend to retire at a reasonable age and afford a comfortable lifestyle, else what's the point of it all?!

I also work on the basis that the state pension will move to a similar means-tested taper before I get there.

[stanlow45]

Basically, if you are allowed to fund your SIPP then you are poor…

[okgo]

Hitch said:

I have no problem paying tax. But I've hit this point prior to saving enough to mean that I don't now have to find a different way to fund my retirement.

That first world problem comes off the back of lots of sweat, stress and sacrifice, so I intend to retire at a reasonable age and afford a comfortable lifestyle, else what's the point of it all?!

I also work on the basis that the state pension will move to a similar means-tested taper before I get there.

Did you fill pension the previous years? Could be some carry over you could use up?

Car scheme?

My wife and I have this issue if things go alright at work but we did have some carryover which helped get a lump in. It’s a grim reduction as if you were previously maxing your pension I think there’s almost no point taking the cash as it cancels itself out.

[Atlantis67]

I’m in pretty much the same situation. If you have children then make use of JISAs. Outside of that, for low risk, you could buy short dated gilts with a low coupon and hold to maturity. No CGT on gilts so you would just be paying tax on the small amount of income.

https://www.yieldgimp.com/

If you have a financial advisor then it might be worth asking them about structured products.

Edited by Atlantis67 on Wednesday 3rd April 22:44

[Darlo74]

I'm in the same position. I keep paying into my pension as the company match my contribution up to 10% so it just about works out as beneficial to me, and means the pension keeps increasing nicely. Beyond that, as others have said:

- Max out you and your wife's ISA
- Wife's SIPP
- JISA if any kids
- Junior SIPP

I invested in some SEIS & EIS opportunities, but the risk is very high and I've seen no return. So I've just gone for a GIA which obviously has limited tax benefits (CGT limits) but I'm working on the fact that if I have to pay some tax beyond that then the investments will be doing ok.

After that I was into once in a lifetime travel/holidays and buying a nice car!

[alscar]

Darlo74 said:

I invested in some SEIS & EIS opportunities, but the risk is very high and I've seen no return. So I've just gone for a GIA which obviously has limited tax benefits (CGT limits) but I'm working on the fact that if I have to pay some tax beyond that then the investments will be doing ok.

When you say no return on those EIS investments do you mean no return on the 70% post tax relief number or the investments are totally gone and / or still relatively early days ?

[SDoran]

If you are on a company scheme, which matches contributions, the benefit of contributing up to the maximum matching amount and paying the tax still makes sense.
The input amount is still great than the tax you have to pay. Worked example is in the link below.

As mentioned earlier, you may have unused allowances from previous 3 years that you can carry forward.

Any salary sacrifice schemes may help at the margins. Car schemes/cycle to work etc.

It’s probably best to seek financial planning advice when at that kind of ‘cliff edge’. The cost of the advice will probably be easily offset by the savings you make elsewhere.


https://adviser.royallondon.com/technical-central/...

[brickwall]

Note also you can carry over unused portions of previous years’ allowances. You can go back up to 3 years IIRC. So if it’s your first year smashing the annual limit you may have a stay before the tax pain hits.

[ChocolateFrog]

Sounds like you're already pretty comfortable, why not just start spending it today? You might not wake up in the morning.

[Unexpected Item In The Bagging Area]

Have you filled all available premium bonds?

[Darlo74]

alscar said:

Darlo74 said:

I invested in some SEIS & EIS opportunities, but the risk is very high and I've seen no return. So I've just gone for a GIA which obviously has limited tax benefits (CGT limits) but I'm working on the fact that if I have to pay some tax beyond that then the investments will be doing ok.

When you say no return on those EIS investments do you mean no return on the 70% post tax relief number or the investments are totally gone and / or still relatively early days ?

I invested in two. One is still an active company, one has gone into liquidation. I've got the full tax relief, including the loss relief on the company that went into liquidation and the initial tax relief on my investment into the still active company.

[Defcon5]

If you are an employee (and not a workaholic, company can’t spare me type) can you buy more annual leave?

Extra fortnight off a year seems better than giving it to the taxman

Combine that with the fancy holiday suggestion above for maximum effect

[RSTurboPaul]

Long term low-risk wealth storage?

Gold Britannias held physically, surely.


No VAT, No CGT.

And once in-hand, who can prove is to say that you didn't give them away as gifts to helpful strangers throughout your life so have none left to include in your estate that goes to your wife...?


Although get in quick if you are buying, seeing as it appears we are on an upward trend right now and there are talks of the BRICS nations revaluing / announcing a new gold-backed currency to replace the USD as a World Reserve Currency...

Edited by RSTurboPaul on Monday 8th April 08:55

[alscar]

Darlo74 said:

I invested in two. One is still an active company, one has gone into liquidation. I've got the full tax relief, including the loss relief on the company that went into liquidation and the initial tax relief on my investment into the still active company.

Ah noted. When I've also done a few direct company investments my success rate is mediocre at best -investing in EIS Funds has seen a lot better results perhaps unsurprisingly. VCT's might also be worth a look but again via Fund investment - the dividends alone can be decent on these.

[GraemeP]

My partner and I will have this problem, but only for one year! We are both PAYE, and for a few reasons will both have bumper cash years this FY. Can you recommend any good PAYE financial advisors that can help us maximise tax relief and investments?