Pension instead of BTL to save on tax....

[DimPrawn]

Over 55s at risk of shock 70pc tax bill on pension cash - Telegraph

Think again.

[centurian]

When I start to unlock my pension funds, it's only going to go in one direction - out.... so this isn't going to affect me.

However, I can see the scenario they are referring to - and I can appreciate how it could be easy to fall into this without realising it.

The underlying problem is - what constitutes recycling of funds - as there isn't any firm definition of it, much like the mess that is the rest of the tax system.

[MarillionFan]

When I start to unlock my pension funds, it's only going to go in one direction - out.... so this isn't going to affect me.

However, I can see the scenario they are referring to - and I can appreciate how it could be easy to fall into this without realising it.

The underlying problem is - what constitutes recycling of funds - as there isn't any firm definition of it, much like the mess that is the rest of the tax system.

I believe recycling of funds refers to taking out your tax free amount and then paying it back into the pension to get the 20% tax relief. So basically you get 20% free.

[Underbase]

When I start to unlock my pension funds, it's only going to go in one direction - out.... so this isn't going to affect me.

However, I can see the scenario they are referring to - and I can appreciate how it could be easy to fall into this without realising it.

The underlying problem is - what constitutes recycling of funds - as there isn't any firm definition of it, much like the mess that is the rest of the tax system.

I thought the article was pretty clear on this?

To fall foul of the rules savers would need to have taken a tax-free lump sum of £7,500 or more (smaller sums are exempt). As you are allowed to withdraw a quarter of your savings tax-free, this equates to a pension worth £30,000, which is about the value of the average British person’s fund.
If savers then use money that they were previously using to make debt repayments to increase their pension payments by more than 30pc, they face being charged the 70pc fine.

Seems pretty straight forward if you take more than £7500 out and then you increase your payments by more than 30% you are recycling. Just don't increase your payments if you have taken some out is the easy answer.

[AtW]

All that pension stuff is a big con - rules get changed very frequently, how can anybody possibly invest now using CURRENT rules as guidance for investment when in 10 years rules will certainly change and they will certainly be for the worse?

That's why BTL makes more sense - liquid asset that can be sold with capital gains pocketed tax free.

[SueEllen]

All that pension stuff is a big con - rules get changed very frequently, how can anybody possibly invest now using CURRENT rules as guidance for investment when in 10 years rules will certainly change and they will certainly be for the worse?

A pension is just a savings vehicle and like with all saving vehicles the government changes the rules.

BTL is an investment vehicle and like with all investment vehicles the government changes the rules.

That's why BTL makes more sense - liquid asset that can be sold with capital gains pocketed tax free.

That's if you can actually sell the property.

Lots of people I know have ended up as accidental landlords. Some have decided it was a good way to invest so brought more properties while others eventually off loaded their property/ies after a few years of trying. Most sold to another landord...

[ChimpMaster]

..............

That's why BTL makes more sense - liquid asset that can be sold with capital gains pocketed tax free.

..................
That's if you can actually sell the property.

Lots of people I know have ended up as accidental landlords. Some have decided it was a good way to invest so brought more properties while others eventually off loaded their property/ies after a few years of trying. Most sold to another landord...

I think (hope) ATW meant that in jest. After all, property is hardly liquid and CGT is applicable on all profits above the tax-free CG threshold.

[AtW]

A pension is just a savings vehicle and like with all saving vehicles the government changes the rules.

No.

Govt can't blindly rob savers deposits in banks, as in capital - they can do it with low interest, savings can be moved very quickly where as pensions are totally locked in - you are at the mercy of Govt _and_ parasites from private industry who control said pensions. Frankly you might not even survive until your retirement age, money might be required very urgently and what you going to do with your nicely locked pension for another 10-15 years, can you legally sell it to somebody else with reasonable discount? I thought not.

That's if you can actually sell the property. Lots of people I know have ended up as accidental landlords. Some have decided it was a good way to invest so brought more properties while others eventually off loaded their property/ies after a few years of trying. Most sold to another landord...

So it's sellable then?

20 years of house price inflation would give better results than Govts pension with supposed tax benefits, which they'd most certainly take away under guise of "fairness".

[SueEllen]

No.

Govt can't blindly rob savers deposits in banks, as in capital - they can do it with low interest, savings can be moved very quickly where as pensions are totally locked in - you are at the mercy of Govt _and_ parasites from private industry who control said pensions. Frankly you might not even survive until your retirement age, money might be required very urgently and what you going to do with your nicely locked pension for another 10-15 years, can you legally sell it to somebody else with reasonable discount? I thought not.

You mean like the Greek government did?

So it's sellable then?

20 years of house price inflation would give better results than Govts pension with supposed tax benefits, which they'd most certainly take away under guise of "fairness".

As long as someone wants to buy it.

[AtW]

You mean like the Greek government did?

You mean Cyprus here, but yes Greek too - nobody stops you from keeping cash in Switzerland, where such things won't happen, as long as you paid taxes it's all good.

And it wasn't Cyprus Govt that did the haircut - it's the bank going bankrupt who had to do it. If you are worried about it then buy UK gilts - so far no defaults in recent 100 years, compared to Greece's like 4 defaults.

On the other hand in this country retrospective changes with people's pensions happen very frequently. NEGATIVE changes.

As long as someone wants to buy it.

So we have hot property market and nobody would like to buy it?