Savings and Income - ISAs, BTLs, Pensions

[Seany88]

I know there's quite a few smart people on here so after a bit of advice/reassurance that I'm doing the right things with my finances. I'm early thirties, used to run a business which I sold a few years ago and put most of the proceeds into BTLs (and a car or two).

So current situation is i have 3 BTLs, one with a small mortgage on (£60k), and one with a huge mortgage on (£240k). They generate a little over £20k/year in income. I also have about £170k saved in a Share ISA (currently half invested in the market as I'm weary of a crash) which i guess I'm earmarking as my pension.

I still work as a self-employed contractor and in past years earn around £10-15k/year after tax. This year and for the foreseeable future I'm planning on working less and enjoying life more.

So is this the best strategy for me? Have i missed anything? I don't need much to live (i live in a camper van), with the new BTL tax changes in not sure it affects me because I'm a lower rate tax payer anyway, and the goal with those are to have those mortgages paid off eventually and to provide pure income. I work as little as possible, mainly to make enough each year to live and use up my personal income allowance and maximise my ISA saving, which i feel is important for the future...But I'm also always reminded that i could drop dead tomorrow! Wary of financial advisors as it's a minefield in my eyes...

[trowelhead]

Seany88 said:

I know there's quite a few smart people on here so after a bit of advice/reassurance that I'm doing the right things with my finances. I'm early thirties, used to run a business which I sold a few years ago and put most of the proceeds into BTLs (and a car or two).

So current situation is i have 3 BTLs, one with a small mortgage on (£60k), and one with a huge mortgage on (£240k). They generate a little over £20k/year in income. I also have about £170k saved in a Share ISA (currently half invested in the market as I'm weary of a crash) which i guess I'm earmarking as my pension.

I still work as a self-employed contractor and in past years earn around £10-15k/year after tax. This year and for the foreseeable future I'm planning on working less and enjoying life more.

So is this the best strategy for me? Have i missed anything? I don't need much to live (i live in a camper van), with the new BTL tax changes in not sure it affects me because I'm a lower rate tax payer anyway, and the goal with those are to have those mortgages paid off eventually and to provide pure income. I work as little as possible, mainly to make enough each year to live and use up my personal income allowance and maximise my ISA saving, which i feel is important for the future...But I'm also always reminded that i could drop dead tomorrow! Wary of financial advisors as it's a minefield in my eyes...

I think it sounds like you have a good plan.

Except the living in a van bit :-)

I'd personally work a bit harder / smarter and up the income, and buy a house. You surely don't plan to live in a camper van forever? Family in the future?

BTL tax situation won't have too much impact on your situation (there are loads of online calcs you can check this though)

[Seany88]

No plans for kids, and i have a place in France already.

Regarding the BTL changes the only thing i think that affects me is that the taxman is now charging tax on total income, not just profit? Which will push me into the higher tax bracket. =/

[trowelhead]

Seany88 said:

No plans for kids, and i have a place in France already.

Regarding the BTL changes the only thing i think that affects me is that the taxman is now charging tax on total income, not just profit? Which will push me into the higher tax bracket. =/

Have you done the calcs?

If you are paying down the mortgages the changes will affect you less as the debt is paid down. You could look at selling your properties to a newly formed LTD co but it's a bit of a pain and not worth the effort for some. You'll have to pay stamp duty again, new mortgages etc...

Others have established a LTD co to take over the "management" of their properties. This co can charge you for expenses such as management, inventories etc etc at a marked up rate - thus lowering your "profit" thus tax from your BTLs. Again up to you whether it's worth the effort.

[Seany88]

Yes i found one on Landlord Zone thanks. It depends on how much i earn each year but i can probably get away with £15k/year without pushing into the higher rate.

Interesting idea about a management company, as that'll mean i can use dividends etc to adjust my income as efficiently as possible. I'm assuming there's no HMRC tax avoidance issues with this?

[trowelhead]

Seany88 said:

I'm assuming there's no HMRC tax avoidance issues with this?

Speak to your accountant - but if you are providing the services you are charging for then i don't see any issue.