- Visitors can check out the Forum FAQ by clicking this link. You have to register before you can post: click the REGISTER link above to proceed. To start viewing messages, select the forum that you want to visit from the selection below. View our Forum Privacy Policy.
- Want to receive the latest contracting news and advice straight to your inbox? Sign up to the ContractorUK newsletter here. Every sign up will also be entered into a draw to WIN £100 Amazon vouchers!
Collapse
You are not logged in or you do not have permission to access this page. This could be due to one of several reasons:
- You are not logged in. If you are already registered, fill in the form below to log in, or follow the "Sign Up" link to register a new account.
- You may not have sufficient privileges to access this page. Are you trying to edit someone else's post, access administrative features or some other privileged system?
- If you are trying to post, the administrator may have disabled your account, or it may be awaiting activation.
Logging in...
Previously on "Better to overpay pension when working through an umbrella?"
Collapse
-
Got to say that for a mortgage reapplication your best bet would be x months at max salary just to make it obvious for birds of of little brain.
-
Originally posted by eek View Post
Not surprising because technically you can only change pension contribution when “a life changing event” occurs when you look at HMRC’s actual rules.
now I know for contractors it’s a simple case of (at worst) switching umbrella were you to need to make such a change but very few people are going to know that
Oh the irony of ir35 and disguised employment and the answer to that being a brolly
Leave a comment:
-
Originally posted by youngguy View PostAnother thought in relation to putting a huge amount into your pension when via a brolly (I appreciate this may not apply to many of the magnates here!)
I've had a few raised eyebrows when needing to show my salary (eg new mortgage, car payments). Because the pension is taken gross, it reduces my 'take home salary' considerably on paper and me explaining I can access up to another £40/£60k a yr by amending my pension contributions on a months notice usually garners confusion from the financial institution I am speaking to.
now I know for contractors it’s a simple case of (at worst) switching umbrella were you to need to make such a change but very few people are going to know that
Leave a comment:
-
Another thought in relation to putting a huge amount into your pension when via a brolly (I appreciate this may not apply to many of the magnates here!)
I've had a few raised eyebrows when needing to show my salary (eg new mortgage, car payments). Because the pension is taken gross, it reduces my 'take home salary' considerably on paper and me explaining I can access up to another £40/£60k a yr by amending my pension contributions on a months notice usually garners confusion from the financial institution I am speaking to.Last edited by youngguy; 4 December 2023, 10:50.
Leave a comment:
-
ok....decision made - I won't exceed my annual allowance more than I already have. Too big a risk of withdrawing into the 40% bracket.
Now the next question is should I pay the tax charge on 20k excess contribution from my pension (if Hargreaves Lansdown support that from a SIPP) or from other dosh?
Leave a comment:
-
Originally posted by Olly View Post
The chance of needing/wanting to draw down pension into the 40% bracket is fairly high which in turn makes overpaying a very bad move.
My gut's telling me don't do it. Stop trying to "play" the system - you'll get burnt as usual.
Originally posted by Olly View Postit's to buy a kick-ass house at some stage.
Leave a comment:
-
I still can't decide/have found more time to crunch further numbers.
My 'war chest' is not a concern - I don't spend much - I've probably got 15 years' worth of runway outside of my pension but I'm not building it up for that purpose - it's to buy a kick-ass house at some stage.
The chance of needing/wanting to draw down pension into the 40% bracket is fairly high which in turn makes overpaying a very bad move.
My gut's telling me don't do it. Stop trying to "play" the system - you'll get burnt as usual.
Leave a comment:
-
Originally posted by WTFH View PostAs a slight warning to those trying to stash everything away - make sure you have a warchest of preferably 6 months in a personal, easy access place. i.e. not locked in a 90 day account or 5 year bond, or whatever, but something that if you suddenly don't have your £20k a month coming in, that you can still pay your mortgage, household bills, etc.
There's no value in locking away for a future if you don't have enough for food on the table now.
And make sure that you've left enough in your company account to pay what's due from it - VAT, Corp Tax, accountant fees.
I realise others will disagree with me and tell you to live to the max, because you'll always have work until you choose not to, but that's not always the reality, and not everyone on the internet tells you the truth about their income/expenses/etc.
On the same page. If anything, I’m guilty of carrying too much and not putting enough away (hence low pensions amounts historically). I agree 100% about a war chest and it should be a no brainer.
Last edited by Keanu2020; 27 November 2023, 15:33.
Leave a comment:
-
Originally posted by WTFH View PostAs a slight warning to those trying to stash everything away - make sure you have a warchest of A MINIMUM OF 6 months in a personal, easy access place. i.e. not locked in a 90 day account or 5 year bond, or whatever, but something that if you suddenly don't have your £20k a month coming in, that you can still pay your mortgage, household bills, etc.
There's no value in locking away for a future if you don't have enough for food on the table now.
And make sure that you've left enough in your company account to pay what's due from it - VAT, Corp Tax, accountant fees.
I realise others will disagree with me and tell you to live to the max, because you'll always have work until you choose not to, but that's not always the reality, and not everyone on the internet tells you the truth about their income/expenses/etc.
Leave a comment:
-
As a slight warning to those trying to stash everything away - make sure you have a warchest of preferably 6 months in a personal, easy access place. i.e. not locked in a 90 day account or 5 year bond, or whatever, but something that if you suddenly don't have your £20k a month coming in, that you can still pay your mortgage, household bills, etc.
There's no value in locking away for a future if you don't have enough for food on the table now.
And make sure that you've left enough in your company account to pay what's due from it - VAT, Corp Tax, accountant fees.
I realise others will disagree with me and tell you to live to the max, because you'll always have work until you choose not to, but that's not always the reality, and not everyone on the internet tells you the truth about their income/expenses/etc.
Leave a comment:
-
Originally posted by Keanu2020 View Post
The political risk is the main thing for me as well. I’m in same place as OP (post was interesting idea) and historically under paid into my pension (I have maxed out last few years though). But I worry about political risk, too much in and pretty sure won’t get state pension (future means testing) or the pot will get raided as future gov's will be desperate. Like other posters i'm looking at investing in other things rather than pile all into pension. Clearly there is a sweet spot though to put some in, just not sure what that number is.
25% tax free is up for grabs. Age you can withdraw is up for grabs. Taxes on withdraw (Income/NI) is up for grabs. Honestly if you're even remotely thinking about overpaying then chances are if means testing comes in you're well over the threshold.
I think for most people anything in higher tax bracket up to the £60k limit is the sweet spot. If you somehow get employer matched above that then it's still worth it. If you're genuinely loaded then it's probably still worth it.
Leave a comment:
-
Originally posted by Protagoras View Post
What might a future government do, that may impact pensions? Big pension pots could be an attractive target for future taxation - most people don't have a big pot so there's not too much problem 'taxing the rich'. Means testing of state pension is another one that gets mentioned from time to time. I'd rather expect a future government to re-apply lifetime allowances.
Leave a comment:
-
Originally posted by JustKeepSwimming View PostThe lifetime allowance was abolished in April?
Personally, no I wouldn't go above the annual allowance. 60k a year is more than ample for my pension pot. I would rather have liquid cash to invest as I please today rather than have it locked up and subject to whim of politicians in the future.
What might a future government do, that may impact pensions? Big pension pots could be an attractive target for future taxation - most people don't have a big pot so there's not too much problem 'taxing the rich'. Means testing of state pension is another one that gets mentioned from time to time. I'd rather expect a future government to re-apply lifetime allowances.
Leave a comment:
-
The lifetime allowance was abolished in April?
Personally, no I wouldn't go above the annual allowance. 60k a year is more than ample for my pension pot. I would rather have liquid cash to invest as I please today rather than have it locked up and subject to whim of politicians in the future.
Leave a comment:
- Home
- News & Features
- First Timers
- IR35 / S660 / BN66
- Employee Benefit Trusts
- Agency Workers Regulations
- MSC Legislation
- Limited Companies
- Dividends
- Umbrella Company
- VAT / Flat Rate VAT
- Job News & Guides
- Money News & Guides
- Guide to Contracts
- Successful Contracting
- Contracting Overseas
- Contractor Calculators
- MVL
- Contractor Expenses
Advertisers
Contractor Services
CUK News
- Streamline Your Retirement with iSIPP: A Solution for Contractor Pensions Sep 1 09:13
- Making the most of pension lump sums: overview for contractors Sep 1 08:36
- Umbrella company tribunal cases are opening up; are your wages subject to unlawful deductions, too? Aug 31 08:38
- Contractors, relabelling 'labour' as 'services' to appear 'fully contracted out' won't dupe IR35 inspectors Aug 31 08:30
- How often does HMRC check tax returns? Aug 30 08:27
- Work-life balance as an IT contractor: 5 top tips from a tech recruiter Aug 30 08:20
- Autumn Statement 2023 tipped to prioritise mental health, in a boost for UK workplaces Aug 29 08:33
- Final reminder for contractors to respond to the umbrella consultation (closing today) Aug 29 08:09
- Top 5 most in demand cyber security contract roles Aug 25 08:38
- Changes to the right to request flexible working are incoming, but how will contractors be affected? Aug 24 08:25
Leave a comment: