Pension LTA under threat?
Discussion
It is all a bit of a shame.
1. Earn over £100k and loss your PA. 60% effective tax rate for you. So put in to your pension.
2. But don’t overdo it as £40k+ and it’ll get clobbered. So you end up maxing out on annual allowance and then just accepting a loss in your PA.
3. But great news, tax efficiency means your pension pot is growing. Oh dear it is close to £1m and this may be lowered still.
I often wonder if working in the private sector on PAYE is a mugs game and I should go solo to benefit from all the covid grants, bounce back loans etc. I have a mate who took everything available just to buy premium bonds and will pay it back interest-free when he’s asked fo. I must be in the wrong game.
This is a car forum after all and I wish I could get that tax dodge EV deal only available to company directors etc etc.
It just makes me wonder where it all went wrong.
1. Earn over £100k and loss your PA. 60% effective tax rate for you. So put in to your pension.
2. But don’t overdo it as £40k+ and it’ll get clobbered. So you end up maxing out on annual allowance and then just accepting a loss in your PA.
3. But great news, tax efficiency means your pension pot is growing. Oh dear it is close to £1m and this may be lowered still.
I often wonder if working in the private sector on PAYE is a mugs game and I should go solo to benefit from all the covid grants, bounce back loans etc. I have a mate who took everything available just to buy premium bonds and will pay it back interest-free when he’s asked fo. I must be in the wrong game.
This is a car forum after all and I wish I could get that tax dodge EV deal only available to company directors etc etc.
It just makes me wonder where it all went wrong.
And if you have a partner who drops out of work for childcare reasons, you get hit. You can't play the games that people with their own company do.
Whilst my pension is nowhere near the LTA, some projections show it hitting it as I'm contributing 25%. My wife is however earning nothing.
To avoid the LTA hit, I was thinking either about opening a lifetime ISA - I have to pay in net of tax but then the government adds 25%. When we retire we have the whole pot to spend free of tax.
If I pay into her pension, I gather I can pay up to £2880 p/a and the pension provider will add 20% onto that, even though she isn't paying any income tax right now. But then she will have to pay income tax (potentially) on her pension income.
So it would seem maxing out the lifetime ISA or at least starting one would be sensible and better than the pension contribution?
Obviously hitting my LTA depends on growth assumptions and LTA inflation (or reduction) assumptions over 25-30 years which is anyone's guess.
Whilst my pension is nowhere near the LTA, some projections show it hitting it as I'm contributing 25%. My wife is however earning nothing.
To avoid the LTA hit, I was thinking either about opening a lifetime ISA - I have to pay in net of tax but then the government adds 25%. When we retire we have the whole pot to spend free of tax.
If I pay into her pension, I gather I can pay up to £2880 p/a and the pension provider will add 20% onto that, even though she isn't paying any income tax right now. But then she will have to pay income tax (potentially) on her pension income.
So it would seem maxing out the lifetime ISA or at least starting one would be sensible and better than the pension contribution?
Obviously hitting my LTA depends on growth assumptions and LTA inflation (or reduction) assumptions over 25-30 years which is anyone's guess.
Gassing Station | Finance | Top of Page | What's New | My Stuff