Financial planning strategies

[MrC]

Until the current year, I was paying salary of ~8K (previously ~10K) and paying 100% of this in personal pension contributions. I've then been making a lump sum company contribution at year end (in October) based on a fag-packet projection of how much I can afford to contribute whilst having enough in the bank at the end of March to max the basic rate band allowance with dividends and hopefully leave something in the warchest; this has varied between 5K and 15K.

Thanks for the insight. Sounds like a tax efficient strategy. Quite skewed towards maximising pension contributions now so you'll have made it the best of it if higher rate pension contribution get the chop.

[MrC]

No one can give you an answer as no one is in exactly the same situation as you with exactly the same risk appetite.

You have to do your own research and then work out what you want to invest in.

In regards to the government doing random things - unfortunately no-one apart from Chancellor can control what the government gets up to.

Not the exact same situation granted but the rules surrounding tax are the same for everyone (unless you happen to be Google, Amazon et Al).

Controlling the chancellor would be nice but I'm really just trying to anticipate likely changes and mitigate risk accordingly.

[Fred Bloggs]

Not sure if you followed my op. Looking at Hargreaves bumpf isn't going to inform an answer. This is not a question of what should i invest in.

My answer was aimed 100% at a post you made above. I quoted it and responded with my opinion.

[Ebenezer]

OK, I'll bite.

What I've been attempting to do is "hedge bets" on what will turn out to have been the right thing to do, given uncertainty about future government tinkering.

Until the current year, I was paying salary of ~8K (previously ~10K) and paying 100% of this in personal pension contributions. I've then been making a lump sum company contribution at year end (in October) based on a fag-packet projection of how much I can afford to contribute whilst having enough in the bank at the end of March to max the basic rate band allowance with dividends and hopefully leave something in the warchest; this has varied between 5K and 15K.

In other words, I've been paying between ~13K and ~25K per year into the pension, which I think is "reasonable" for someone who is earning - meaning invoicing - somewhere between 80K and 150K per year depending on level of idleness.

I've since stopped the personal contributions, as I'm not sure this is still the right thing in light of the dividend tax changes, in addition to which I''ve spent a few quid fixing up the house this year, meaning that a pension contribution "holiday" was no bad thing. I did make a small company contribution at year end. "Fixing up the house" is of course also an investment in a certain sense, and possibly a fairly tax-efficient one at that.

I am also making ISA contributions out of what is left after house-fixing, wine, women, and song, but these are naturally somewhat smaller due to Brexit-induced inflation of wine prices.

The S&S ISA exists to support the idle fantasy that I will actually be able to chuck this all in at a reasonably young age and live off the investment income from that until the pension income starts.

BTL not my style at all, it's too much like hard work and I understand that Hector - who is a man with a lot of time on his hands - has also been taking a keen interest in this area of late.

[SueEllen]

Not sure if you followed my op. Looking at Hargreaves bumpf isn't going to inform an answer. This is not a question of what should i invest in.

No one can give you an answer as no one is in exactly the same situation as you with exactly the same risk appetite.

You have to do your own research and then work out what you want to invest in.

In regards to the government doing random things - unfortunately no-one apart from Chancellor can control what the government gets up to.

[MrC]

To be honest, I do not think you are going to find what you are looking for here. Sure, there's advice like starting a SIPP, paying as much as you into it as a company contribution, up to GBP 40k etc... Then starting an ISA, and so on. But you need to look elsewhere beyond that. And actually, there has never been so much information so readily available. Just ask Google where you can find. If you are starting from a base of close to zero knowledge, I recommend you start by downloading and reading all the free guides from Hargreaves Lansdown. Then, perhaps we can help a little more.

Not sure if you followed my op. Looking at Hargreaves bumpf isn't going to inform an answer. This is not a question of what should i invest in.

[NotAllThere]

£43,000 isn't a trivial income. Decent enough if you're not saddled with commitments. If on the other hand you've got 2 wives, 3 children 2 mortgages, 6 dogs, 3 cars and a gambling habit.... Perhaps not.

Until you can pay yourself in retirement what you pay yourself now then all you're doing is living beyond your means

Not really. My expenses at retirement will not be anywhere near what they were when my kids lived at home and off my income.

[Fred Bloggs]

Thanks though without trudging through all 78 pages worth I'm none the wiser as on the face of it that thread is about what to invest in. My dilemma is about where to source investment funds from and tax efficiency. I can invest in the same shares, funds etc in an ISA or a SIPP.

Is there a particular part of that thread that's relevant?

To be honest, I do not think you are going to find what you are looking for here. Sure, there's advice like starting a SIPP, paying as much as you into it as a company contribution, up to GBP 40k etc... Then starting an ISA, and so on. But you need to look elsewhere beyond that. And actually, there has never been so much information so readily available. Just ask Google where you can find. If you are starting from a base of close to zero knowledge, I recommend you start by downloading and reading all the free guides from Hargreaves Lansdown. Then, perhaps we can help a little more.

[MrC]

Take a look at the stock and shares thread, that’s the way many are investing around here.

Share Investment, Discussion & Tips

Thanks though without trudging through all 78 pages worth I'm none the wiser as on the face of it that thread is about what to invest in. My dilemma is about where to source investment funds from and tax efficiency. I can invest in the same shares, funds etc in an ISA or a SIPP.

Is there a particular part of that thread that's relevant?

[cojak]

Financial planning strategies

Take a look at the stock and shares thread, that’s the way many are investing around here.

http://forums.contractoruk.com/showthread.php?t=80304

[MrC]

£43,000 isn't a trivial income. Decent enough if you're not saddled with commitments. If on the other hand you've got 2 wives, 3 children 2 mortgages, 6 dogs, 3 cars and a gambling habit.... Perhaps not.

Until you can pay yourself in retirement what you pay yourself now then all you're doing is living beyond your means

[stek]

So live like a pauper until you're too old to enjoy spending?

As David Brent recently said "I'll cash in another of my pensions, some of them are worth nearly as much as I put in...."

Get an pension? Get a Maserati!!

[MrC]

Bump. Anyone?

[MrC]

So my current strategy has been to take modest salary, divs up to HR limit, little or no pension contribution to try and amass as big a warchest as possible. Plan then is to leave contracting several years down the line with bumper a ER payout and go and do some other totally different work.

Expecting that this other work may see me salaried paying higher rate I'd then look to take salarly sacfrifice on anything above the HR threshold to fund my pension. Thus catching up on missed pension contribution in a tax efficient way.

I'm concerned of 3 areas of law that may change and scuppper my plans.

• Pension higher rate "relief" removal
• ER on disposal meddling
• Private sector blanket inside IR35. aka "the death of contracting"

The threatened removal of higher rate relief saw me putting a lump sum into pension days before the last budget so I'm considering doing this again although it makes a mess of my overall strategy.

I know I could just pay into pension now and later when permie but I'd rather do ISAs, BTL etc as part of retirement income investments which need funds in the near term.

Interested to know your thoughts on the best approach/risk mitigation - or indeed what others are doing if in a similar situation?