+ Reply to Thread
Page 3 of 6 FirstFirst 1 2 3 4 5 ... LastLast
Posts 21 to 30 of 51
  1. #21

    Godlike

    expat has more data than eek


    Join Date
    Jul 2005
    Location
    Brutopia
    Posts
    8,320
    Thanks (Given)
    0
    Thanks (Received)
    34
    Likes (Given)
    0
    Likes (Received)
    183

    Default

    Quote Originally Posted by SueEllen View Post
    At 55 when you can take out 25% tax free and take out a larger amount if you are willing to pay the tax on it.

    Everything is age and risk related.

    The sensible thing is to have investments in more than one thing.

    I know people who have ended up losing everything except their pension as it can't be touched.
    I agree (almost) completely. In my case I am already over 55 so I can put Company money into my SIPP 100% tax-free and then take out 25% tax-free. The rest I can invest as I like and draw down at the allowed rate.

    It's not hard to run the arithmetic to work out payback horizons. If you are inside IR35 (or want to act as if you are) then it is likely to be about 7 years, depending on age and therefore max drawdown rate. I.e. After 7 years the pension option overtakes the salary option.

    IMHO both inflation rate and rate of investment return are irrelevant to the comparison since they will both apply equally to the salary+saving and the SIPP options.

    However I would caution that the existing untouchability of pensions savings is not logically compatible with Osborne's free access to pension funds, and I expect that protection to disappear.


    Edit: I am assuming max drawdown rate as per the old regulations because I understand that exceeding that rate, as per Osborne new regs, causes limitations on further input to the pension. I may be wrong about that, I just haven't examined it.
    Last edited by expat; 15th April 2015 at 04:10.

  2. #22

    My post count is Majestic

    d000hg - scorchio!

    d000hg's Avatar
    Join Date
    Dec 2007
    Location
    My house
    Posts
    31,377
    Thanks (Given)
    103
    Thanks (Received)
    374
    Likes (Given)
    161
    Likes (Received)
    1295

    Default

    Quote Originally Posted by TheFaQQer View Post
    You'd need to get that £15k out of the company somehow first, which could well attract income tax. Having a company pension means you don't have to do that, plus it's an expense so you don't pay corporation tax on it.
    Fair point. It depends how much your company ears and how much you personally spend, if that 15k having to come out within your personal taxable income is a problem.

    However you will end up paying tax on it so how much benefit do you actually get? Tax on pensions isn't something I know well enough to do the figures. Say for example you put £10k into a pension every year for 30 years, Vs taking £10k out in a dividend that attracts higher rate tax, for an ISA (tax the £10k and put the remainder in the ISA). Assume they go in the exact same stocks/funds/whatever, giving 5% annual growth. What happens?
    Quote Originally Posted by MaryPoppins View Post
    I'd still not breastfeed a nazi
    Quote Originally Posted by vetran View Post
    Urine is quite nourishing

  3. #23

    Contractor Among Contractors

    ZARDOZ is a permanent contractor

    ZARDOZ's Avatar
    Join Date
    Jul 2005
    Posts
    1,070
    Thanks (Given)
    0
    Thanks (Received)
    35
    Likes (Given)
    8
    Likes (Received)
    155

    Default

    What seemed useful to me was the ability to bung money in on the run up to 55 minimising the risk of restrictive changes. Yet from what I have read rules are expected to stop that.
    I have also read 55 is to move with changes in the pension age.
    Also ....how many pension funds will allow the rules to be fully exploited?

    Too much uncertainty for me as yet

  4. #24

    crap ex-mod

    MarillionFan - scorchio!

    MarillionFan's Avatar
    Join Date
    Jul 2005
    Location
    .
    Posts
    34,778
    Thanks (Given)
    44
    Thanks (Received)
    501
    Likes (Given)
    257
    Likes (Received)
    2107

    Default

    Quote Originally Posted by d000hg View Post
    Fair point. It depends how much your company ears and how much you personally spend, if that 15k having to come out within your personal taxable income is a problem.

    However you will end up paying tax on it so how much benefit do you actually get? Tax on pensions isn't something I know well enough to do the figures. Say for example you put £10k into a pension every year for 30 years, Vs taking £10k out in a dividend that attracts higher rate tax, for an ISA (tax the £10k and put the remainder in the ISA). Assume they go in the exact same stocks/funds/whatever, giving 5% annual growth. What happens?
    But that's not a fair comparison. You get tax relief on pension contributions.

    So your 10k into your pension was only actually a personal contribution of 6k + 2k + 2k (if you were a 40% tax payer).
    Your 10k into your ISA was actually 10K after tax. You're already 40% up.
    What happens in General, stays in General.
    You know what they say about assumptions!

  5. #25

    TykeLike

    SimonMac is a fount of knowledge

    SimonMac's Avatar
    Join Date
    Aug 2010
    Location
    God's Own Republic Of Yorkshire
    Posts
    21,946
    Thanks (Given)
    224
    Thanks (Received)
    1052
    Likes (Given)
    798
    Likes (Received)
    2876

    Default

    Quote Originally Posted by MarillionFan View Post
    And there was SimonMac questioning my pension top up a couple of weeks ago.
    I was questioning your sums, not your motives!
    “Live a good life. If there are gods and they are just, then they will not care how devout you have been, but will welcome you based on the virtues you have lived by. If there are gods, but unjust, then you should not want to worship them. If there are no gods, then you will be gone, but will have lived a noble life that will live on in the memories of your loved ones.”

    ― Marcus Aurelius

  6. #26

    My post count is Majestic

    d000hg - scorchio!

    d000hg's Avatar
    Join Date
    Dec 2007
    Location
    My house
    Posts
    31,377
    Thanks (Given)
    103
    Thanks (Received)
    374
    Likes (Given)
    161
    Likes (Received)
    1295

    Default

    I think I covered that in my question.

    a)your company puts 10k in to a pension each year
    b)your company pays out 10k (after you already reached your personal allowance) and you put what is left after personal tax into an ISA.

    Clearly less goes into the ISA each year but then in 30 years it is tax-free to take it out... so what is a proper calculation, taking into account company tax liability, personal tax, tax relief, etc, etc.
    Quote Originally Posted by MaryPoppins View Post
    I'd still not breastfeed a nazi
    Quote Originally Posted by vetran View Post
    Urine is quite nourishing

  7. #27

    crap ex-mod

    MarillionFan - scorchio!

    MarillionFan's Avatar
    Join Date
    Jul 2005
    Location
    .
    Posts
    34,778
    Thanks (Given)
    44
    Thanks (Received)
    501
    Likes (Given)
    257
    Likes (Received)
    2107

    Default

    Quote Originally Posted by SimonMac View Post
    I was questioning your sums, not your motives!
    Well my sums turned out to be correct. Now waiting for 35k tax rebate.
    What happens in General, stays in General.
    You know what they say about assumptions!

  8. #28

    TykeLike

    SimonMac is a fount of knowledge

    SimonMac's Avatar
    Join Date
    Aug 2010
    Location
    God's Own Republic Of Yorkshire
    Posts
    21,946
    Thanks (Given)
    224
    Thanks (Received)
    1052
    Likes (Given)
    798
    Likes (Received)
    2876

    Default

    Quote Originally Posted by MarillionFan View Post
    Well my sums turned out to be correct. Now waiting for 35k tax rebate.
    Which cost you £35K and increased mortgage payments!
    “Live a good life. If there are gods and they are just, then they will not care how devout you have been, but will welcome you based on the virtues you have lived by. If there are gods, but unjust, then you should not want to worship them. If there are no gods, then you will be gone, but will have lived a noble life that will live on in the memories of your loved ones.”

    ― Marcus Aurelius

  9. #29

    TykeLike

    SimonMac is a fount of knowledge

    SimonMac's Avatar
    Join Date
    Aug 2010
    Location
    God's Own Republic Of Yorkshire
    Posts
    21,946
    Thanks (Given)
    224
    Thanks (Received)
    1052
    Likes (Given)
    798
    Likes (Received)
    2876

    Default

    Quote Originally Posted by d000hg View Post
    I think I covered that in my question.

    a)your company puts 10k in to a pension each year
    b)your company pays out 10k (after you already reached your personal allowance) and you put what is left after personal tax into an ISA.

    Clearly less goes into the ISA each year but then in 30 years it is tax-free to take it out... so what is a proper calculation, taking into account company tax liability, personal tax, tax relief, etc, etc.
    Its tax free under today's rules, there is nothing to say the Govt in X years time doing a Cyprus and grabbing peoples deposits that they hold as savings.

    No one knows what the future will bring, thats why the first thing anyone should do with extra cash is pay down existing debt then have a balance of Pension, Property and ISA
    “Live a good life. If there are gods and they are just, then they will not care how devout you have been, but will welcome you based on the virtues you have lived by. If there are gods, but unjust, then you should not want to worship them. If there are no gods, then you will be gone, but will have lived a noble life that will live on in the memories of your loved ones.”

    ― Marcus Aurelius

  10. #30

    crap ex-mod

    MarillionFan - scorchio!

    MarillionFan's Avatar
    Join Date
    Jul 2005
    Location
    .
    Posts
    34,778
    Thanks (Given)
    44
    Thanks (Received)
    501
    Likes (Given)
    257
    Likes (Received)
    2107

    Default

    Quote Originally Posted by SimonMac View Post
    Which cost you £35K and increased mortgage payments!
    You're a little thick aren't you. That's why you'll always be a low level jobbing contractor.
    What happens in General, stays in General.
    You know what they say about assumptions!

+ Reply to Thread
Page 3 of 6 FirstFirst 1 2 3 4 5 ... LastLast

Tags for this Thread

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts

Content Relevant URLs by vBSEO 3.6.0 ©2011, Crawlability, Inc.