Basic Simple Pension Plan
Discussion
Asking for an extended family member.....honest.
He's mid 50s. A bit of an oddball, quite academic, one of these cerebral types with lots of knowledge about obscure nonsense and limited life skills. He has a "proper" job 3 days a week and earns about £20K. In addition to this, he has various "sidelines". He's a prolific seller on ebay and other similar sites. Buys books, clothing and classical music vinyl at car boots and charity shops and sells for a profit. He does a bit of gardening and odd jobs for elderly neighbours, for which charges ridiculously low money, because basically, tax evasion aside, he's a decent bloke. Plus a few other similar low key money making activities. All this stuff brings him in about £1000 / month. This addition income of circa £12K a year had never been declared as taxable income. (I know, don't shoot the messenger).
This has been going on for about a decade, and he's a little nervous about it. Not nervous enough to put it right though! Thing is, he has a house he bought for buttons 30 years ago with no mortgage, and lives quite easily off his legitimate income. The extra is just saved, or spent on travel. I suggested he pay his sideline activity into a pension. Not only would he then not be liable for tax on it, one assumed if he paid in a grand, the pension co would actually add 25%, as they would assume the grand was paid out of £1250 of taxed income on which he paid 20%! Or have I got that wrong? He likes the idea of getting tax relief on untaxed income.. But he'd prefer not to get it so thus legitimising the extra earnings. But I assume it'll be added anyway.
He's quite happy to wrap the money up for 12 years or so until he retires (his SP age is 67 I think). But there's no way he's sitting down with an IFA or similar. They will ask how he can pay £12K a year in pension on a £20K income and he's not getting into it with anyone "official". He doesn't really trust banks/HMRC/pensions, but realises they are a necessary evil.
So, my question. Is there an online pension plan he can start up, with minimal interaction with humans, where he can pay in whatever he wants each money by a bank transfer? One month its might be £1200, the next month £500. Or is it a complete non starter?
He's mid 50s. A bit of an oddball, quite academic, one of these cerebral types with lots of knowledge about obscure nonsense and limited life skills. He has a "proper" job 3 days a week and earns about £20K. In addition to this, he has various "sidelines". He's a prolific seller on ebay and other similar sites. Buys books, clothing and classical music vinyl at car boots and charity shops and sells for a profit. He does a bit of gardening and odd jobs for elderly neighbours, for which charges ridiculously low money, because basically, tax evasion aside, he's a decent bloke. Plus a few other similar low key money making activities. All this stuff brings him in about £1000 / month. This addition income of circa £12K a year had never been declared as taxable income. (I know, don't shoot the messenger).
This has been going on for about a decade, and he's a little nervous about it. Not nervous enough to put it right though! Thing is, he has a house he bought for buttons 30 years ago with no mortgage, and lives quite easily off his legitimate income. The extra is just saved, or spent on travel. I suggested he pay his sideline activity into a pension. Not only would he then not be liable for tax on it, one assumed if he paid in a grand, the pension co would actually add 25%, as they would assume the grand was paid out of £1250 of taxed income on which he paid 20%! Or have I got that wrong? He likes the idea of getting tax relief on untaxed income.. But he'd prefer not to get it so thus legitimising the extra earnings. But I assume it'll be added anyway.
He's quite happy to wrap the money up for 12 years or so until he retires (his SP age is 67 I think). But there's no way he's sitting down with an IFA or similar. They will ask how he can pay £12K a year in pension on a £20K income and he's not getting into it with anyone "official". He doesn't really trust banks/HMRC/pensions, but realises they are a necessary evil.
So, my question. Is there an online pension plan he can start up, with minimal interaction with humans, where he can pay in whatever he wants each money by a bank transfer? One month its might be £1200, the next month £500. Or is it a complete non starter?
TwigtheWonderkid said:
Asking for an extended family member.....honest.
He's mid 50s. A bit of an oddball, quite academic, one of these cerebral types with lots of knowledge about obscure nonsense and limited life skills. He has a "proper" job 3 days a week and earns about £20K. In addition to this, he has various "sidelines". He's a prolific seller on ebay and other similar sites. Buys books, clothing and classical music vinyl at car boots and charity shops and sells for a profit. He does a bit of gardening and odd jobs for elderly neighbours, for which charges ridiculously low money, because basically, tax evasion aside, he's a decent bloke. Plus a few other similar low key money making activities. All this stuff brings him in about £1000 / month. This addition income of circa £12K a year had never been declared as taxable income. (I know, don't shoot the messenger).
This has been going on for about a decade, and he's a little nervous about it. Not nervous enough to put it right though! Thing is, he has a house he bought for buttons 30 years ago with no mortgage, and lives quite easily off his legitimate income. The extra is just saved, or spent on travel. I suggested he pay his sideline activity into a pension. Not only would he then not be liable for tax on it, one assumed if he paid in a grand, the pension co would actually add 25%, as they would assume the grand was paid out of £1250 of taxed income on which he paid 20%! Or have I got that wrong? He likes the idea of getting tax relief on untaxed income.. But he'd prefer not to get it so thus legitimising the extra earnings. But I assume it'll be added anyway.
He's quite happy to wrap the money up for 12 years or so until he retires (his SP age is 67 I think). But there's no way he's sitting down with an IFA or similar. They will ask how he can pay £12K a year in pension on a £20K income and he's not getting into it with anyone "official". He doesn't really trust banks/HMRC/pensions, but realises they are a necessary evil.
So, my question. Is there an online pension plan he can start up, with minimal interaction with humans, where he can pay in whatever he wants each money by a bank transfer? One month its might be £1200, the next month £500. Or is it a complete non starter?
Seriously. He's mid 50s. A bit of an oddball, quite academic, one of these cerebral types with lots of knowledge about obscure nonsense and limited life skills. He has a "proper" job 3 days a week and earns about £20K. In addition to this, he has various "sidelines". He's a prolific seller on ebay and other similar sites. Buys books, clothing and classical music vinyl at car boots and charity shops and sells for a profit. He does a bit of gardening and odd jobs for elderly neighbours, for which charges ridiculously low money, because basically, tax evasion aside, he's a decent bloke. Plus a few other similar low key money making activities. All this stuff brings him in about £1000 / month. This addition income of circa £12K a year had never been declared as taxable income. (I know, don't shoot the messenger).
This has been going on for about a decade, and he's a little nervous about it. Not nervous enough to put it right though! Thing is, he has a house he bought for buttons 30 years ago with no mortgage, and lives quite easily off his legitimate income. The extra is just saved, or spent on travel. I suggested he pay his sideline activity into a pension. Not only would he then not be liable for tax on it, one assumed if he paid in a grand, the pension co would actually add 25%, as they would assume the grand was paid out of £1250 of taxed income on which he paid 20%! Or have I got that wrong? He likes the idea of getting tax relief on untaxed income.. But he'd prefer not to get it so thus legitimising the extra earnings. But I assume it'll be added anyway.
He's quite happy to wrap the money up for 12 years or so until he retires (his SP age is 67 I think). But there's no way he's sitting down with an IFA or similar. They will ask how he can pay £12K a year in pension on a £20K income and he's not getting into it with anyone "official". He doesn't really trust banks/HMRC/pensions, but realises they are a necessary evil.
So, my question. Is there an online pension plan he can start up, with minimal interaction with humans, where he can pay in whatever he wants each money by a bank transfer? One month its might be £1200, the next month £500. Or is it a complete non starter?
superlightr said:
So you want to help him continue to tax evade and though you would ask here on how best help him achieve that aim...
As said, he'd prefer not to get any tax relief on the money paid into the pension, so the money paid in wouldn't be taxable anyway. Thus wouldn't that legitimise his position? TwigtheWonderkid said:
As said, he'd prefer not to get any tax relief on the money paid into the pension, so the money paid in wouldn't be taxable anyway. Thus wouldn't that legitimise his position?
No, because it's grossed up to take account of the tax already paid. Which he hasn't.Rufus Stone said:
TwigtheWonderkid said:
As said, he'd prefer not to get any tax relief on the money paid into the pension, so the money paid in wouldn't be taxable anyway. Thus wouldn't that legitimise his position?
No, because it's grossed up to take account of the tax already paid. Which he hasn't.He could put up to 100% of his 'official' salary into a pension.
Lots of contractors used to do this.
I've known people who've had a windfall like a lottery win or an inheritance do this.
You'd have to check the rules haven't changed.
He can put money into an ISA where it will grow tax free but won't get tax relief going in.
He could of course declare some self employment
I thought it was hard to not be enrolled into a snakeholder pension now though?
Lots of contractors used to do this.
I've known people who've had a windfall like a lottery win or an inheritance do this.
You'd have to check the rules haven't changed.
He can put money into an ISA where it will grow tax free but won't get tax relief going in.
He could of course declare some self employment
I thought it was hard to not be enrolled into a snakeholder pension now though?
Gassing Station | Finance | Top of Page | What's New | My Stuff