Pensions and ISAS - Reminder

[MarillionFan]

Your numbers are all wrong, you are not getting £63k back, you are getting £35k, the £28K you may get back (and potentially more when you retire), also if you are using £77k of the mortgage that means to add £112k where is the other £35k coming from? Or have you counted the £35k you will be getting back twice?

At best you are only at the same place you started cash in hand wise, but with a mortgage and a bigger pension pot.

Just back to a nice big fat check from HMRC. As expected, all of my numbers were spot on.

Pity this is the last year you'll get tax relief at the higher rate. ******* Tories.

[unixman]

I can't wait to schlepp all that cash into a 1% ISA.

When the banksters get a whiff of Gideon's forthcoming interest tax break, they will simply drop their rates accordingly. The tax break is really just another subsidy to the banks.

[MarillionFan]

Your numbers are all wrong, you are not getting £63k back, you are getting £35k, the £28K you may get back (and potentially more when you retire), also if you are using £77k of the mortgage that means to add £112k where is the other £35k coming from? Or have you counted the £35k you will be getting back twice?

At best you are only at the same place you started cash in hand wise, but with a mortgage and a bigger pension pot.

Numbers are correct.


When you make a payment, 20% is added by the pension company(government)


So to pay in £140k, you actually pay in £112k. £28k is added when you pay in.


Then because I pay 45% tax as a permie. I can claim back the other 25%, which is £35k (actually it's slight less based on my earning). I get that back as a rebate.


Calculator is here. Pension tax relief calculator | Hargreaves Lansdown


I did it last year but with £30k, paid in £24k got £6k back as I was on a 40% bracket.


I have the other £35k in the bank, I've got to pay it out first before getting it back via self assessment.

[d000hg]

Just wondering whether it's worth going overdrawn for a week to get up to the ISA limit for the year.

Probably is.

With the limit being so high (£15k) now it doesn't seem that big a deal to me.

This week is a Bank Holiday so you've only got up until the 2nd (not the 5th this year) to make sure you've topped up your pensions and taken out your ISAS. Don't get caught out.

MF in helpful mode.

Thanks

But, can't you make pension contributions retrospectively? Or is that only company pensions?

[SimonMac]

Not really. If you think about it, I've got some BTL property I own outright. I've taken a remortgage on the house I built for 87k @ 2% and then effectively going to use 77k of that to get back 63k in tax I've paid as a permie but pop it in a pension(carried forward), something I could have never have done at that rate as a contractor. As a contractor I didn't use up my allowances in 11/12, 12/13 & partly in 13/14.


Then next year I'm swapping the whole lot to a SIPP so I can buy some commercial property and set up some shops again & go back part time contracting.


I thought it was a genius move.

Your numbers are all wrong, you are not getting £63k back, you are getting £35k, the £28K you may get back (and potentially more when you retire), also if you are using £77k of the mortgage that means to add £112k where is the other £35k coming from? Or have you counted the £35k you will be getting back twice?

At best you are only at the same place you started cash in hand wise, but with a mortgage and a bigger pension pot.

[MarillionFan]

Depends what the mortgage rate is I guess, borrowing to put into a pension can be risky

Not really. If you think about it, I've got some BTL property I own outright. I've taken a remortgage on the house I built for 87k @ 2% and then effectively going to use 77k of that to get back 63k in tax I've paid as a permie but pop it in a pension(carried forward), something I could have never have done at that rate as a contractor. As a contractor I didn't use up my allowances in 11/12, 12/13 & partly in 13/14.


Then next year I'm swapping the whole lot to a SIPP so I can buy some commercial property and set up some shops again & go back part time contracting.


I thought it was a genius move. My pension pot just went up from 100k to 240k in one move.

[SimonMac]

Actually just found that Standard Life will be open on Friday. Still waiting for the funds to come in from a remortgage which should land tomorrow, then I'm making a payment of £112K to standardlife, government will put £28k to top it to £140k and I get back a tax rebate of £35k in May from my self assessment.


£63k for nothing. Sweet.

Depends what the mortgage rate is I guess, borrowing to put into a pension can be risky, and I assume as you are putting in so much you haven't added anything for the past three years?

What's your strategy as it seems random to me, don't pay anything in for a while than add a large lump sum of money you don't actually have to begin with?!

[MarillionFan]

Just wondering whether it's worth going overdrawn for a week to get up to the ISA limit for the year.

Probably is.

I think it is.

[MarillionFan]

Although if you were being really helpful you would say that you need to move it into anything other than a cash ISA, as with the new rules there is no longer a disadvantage keeping cash in a normal account

Actually just found that Standard Life will be open on Friday. Still waiting for the funds to come in from a remortgage which should land tomorrow, then I'm making a payment of £112K to standardlife, government will put £28k to top it to £140k and I get back a tax rebate of £35k in May from my self assessment.


£63k for nothing. Sweet.

[VectraMan]

Just wondering whether it's worth going overdrawn for a week to get up to the ISA limit for the year.

Probably is.

[SimonMac]

This week is a Bank Holiday so you've only got up until the 2nd (not the 5th this year) to make sure you've topped up your pensions and taken out your ISAS. Don't get caught out.

MF in helpful mode.

Although if you were being really helpful you would say that you need to move it into anything other than a cash ISA, as with the new rules there is no longer a disadvantage keeping cash in a normal account

[SimonMac]

This week is a Bank Holiday so you've only got up until the 2nd (not the 5th this year) to make sure you've topped up your pensions and taken out your ISAS. Don't get caught out.

MF in helpful mode.

One step ahead of you! I am waiting for Tuesday as I have maxed out this years ISA and having it sat in my regular savings account is too tempting

[Gumbo Robot]

This week is a Bank Holiday so you've only got up until the 2nd (not the 5th this year) to make sure you've topped up your pensions and taken out your ISAS. Don't get caught out.

MF in helpful mode.

Never mind that - today is my year end so do I transfer a big wedge into my co. pension or keep the money & take the hit?

[MarillionFan]

This week is a Bank Holiday so you've only got up until the 2nd (not the 5th this year) to make sure you've topped up your pensions and taken out your ISAS. Don't get caught out.

MF in helpful mode.