Reply to: Pension or what?

[pacharan]

Pac, just spend the money on cheap ho's and drug fuelled endeavours. You probably only have a few more years to live so go for it big time.

Well, I hope I have more than a few left but I know what u mean.

[ChimpMaster]

Pac, just spend the money on cheap ho's and drug fuelled endeavours. You probably only have a few more years to live so go for it big time.

[Nixon Williams]

When is this due to happen? What if you already have a company pension through your ltd - will you be made to make personal contributions too?

The larger employers (including most umbrella's) will start from October 2012. Other employers will be phased in over the next 3/4 years or so.

The compuslion will not apply to employees aged under 21 and/or a salary of no more than £7,475 (this will be increased each year).

If a pension scheme is already in place then there will be no need to contribute to this new one, but the contributions will have to be at least at the level of this new scheme.

The contribution rates start at 2% (at least 1% from the employer), rising to a total of 8%, with at least 3% from the employer.

Personal contributions will not be required, this is just planned for businesses and their employees.

Alan

[escapeUK]

This also means HMRC'll be wanting payments on account next year. Something I could do without.

This is exactly where I am, I had thought some time not earning would enable me to extract some of the retained earnings. But its not looking like Im going to be having that, got clients lining up.

I dont believe in pensions and I dont believe in giving money to HMRC to waste, so the money is stuck.

[pacharan]

You could consider property investments through a limited company, this way the earnings are protected from personal taxation until they are withdrawn.

Rental income in a company will usually be taxed at the small companies rate (currently 20%). This seems to be attractive when set against a potential 50% rate for an individual. If rents are significant this may be an option to consider although there are additional compliance problems to deal with, not least
Companies Act requirements.

From a tax viewpoint it must be remembered that income
has to be extracted from a company by an individual generally either as salary or dividend and that this may trigger a tax liability. It is also important to remember that when a property is sold by a company any gain is generally only reduced by an inflation allowance.

Other reliefs are generally not available. The gain (after Corpoartion Tax) then has to be extracted from the company at a further additional cost.

Alan

Thanks Alan.

I am a NW punter BTW

[pacharan]

They will become compulsory for most people but if a limited company contractor is paying the tax efficient salary of £7072 (£7488 in 2012/13) then they will not have to contribute to the compulsory pension scheme.

Umbrella contractors will be required to contribute, as well as the 'employer' ie the umbrella company - the funds of which no doubt will need to come from the contractor's income.

When is this due to happen? What if you already have a company pension through your ltd - will you be made to make personal contributions too?

[Nixon Williams]

Indeed not.

They are to become compulsory in the near future.

They will become compulsory for most people but if a limited company contractor is paying the tax efficient salary of £7072 (£7488 in 2012/13) then they will not have to contribute to the compulsory pension scheme.

Umbrella contractors will be required to contribute, as well as the 'employer' ie the umbrella company - the funds of which no doubt will need to come from the contractor's income.

[DimPrawn]

Indeed not.

They are to become compulsory in the near future.

Which tells you they are best avoided.

And the best way to avoid them? Emigrate.

[pacharan]

Its true try and spread it around a bit, BTL Pensions, ISA for pensions do it yourself through Hargreaves lansdown at least then the ball is your court as to what your investing in

An outfit called Wealth Matters handles my pension (recommended by the PCG). I don't really have much input.

[pacharan]

Pensions are not to be totally avoided, good to have one as part of a spread portfolio.

Is this money in your LTD or in your pocket and has been taxed? If it is in your company you save the tax on it which isn't to be sniffed at.

In the Limited.

I also have a few grand in pocket which I shall stick in a cash ISA and keep it there for the 6 or 7 years it'll take until this current contract is off the taxman's radar.

[DimPrawn]

You could consider property investments through a limited company, this way the earnings are protected from personal taxation until they are withdrawn.

Rental income in a company will usually be taxed at the small companies rate (currently 20%). This seems to be attractive when set against a potential 50% rate for an individual. If rents are significant this may be an option to consider although there are additional compliance problems to deal with, not least
Companies Act requirements.

From a tax viewpoint it must be remembered that income
has to be extracted from a company by an individual generally either as salary or dividend and that this may trigger a tax liability. It is also important to remember that when a property is sold by a company any gain is generally only reduced by an inflation allowance.

Other reliefs are generally not available. The gain (after Corpoartion Tax) then has to be extracted from the company at a further additional cost.

Alan

Sounds like a good choice if you are buying property outright (no mortgage) and doing it for the rental yield rather than leveraged capital gain.

If you've only got £20K you aren't going to get very far in BTL without a mortgage, and then the interest will swallow most of the rent anyway.

[Support Monkey]

Pensions are not to be totally avoided, good to have one as part of a spread portfolio.
Is this money in your LTD or in your pocket and has been taxed? If it is in your company you save the tax on it which isn't to be sniffed at.

Its true try and spread it around a bit, BTL Pensions, ISA for pensions do it yourself through Hargreaves lansdown at least then the ball is your court as to what your investing in

[Nixon Williams]

I have a small sum that I was going to invest in my pension before year end.

Only 15-20k but the recent negative press that pensions have been receiving has made me wonder if this is the way to go.

Problem is, if I put towards a BTL, I automatically pay 40% on it as I'm right on the higher band.

This also means HMRC'll be wanting payments on account next year. Something I could do without.

You could consider property investments through a limited company, this way the earnings are protected from personal taxation until they are withdrawn.

Rental income in a company will usually be taxed at the small companies rate (currently 20%). This seems to be attractive when set against a potential 50% rate for an individual. If rents are significant this may be an option to consider although there are additional compliance problems to deal with, not least
Companies Act requirements.

From a tax viewpoint it must be remembered that income
has to be extracted from a company by an individual generally either as salary or dividend and that this may trigger a tax liability. It is also important to remember that when a property is sold by a company any gain is generally only reduced by an inflation allowance.

Other reliefs are generally not available. The gain (after Corpoartion Tax) then has to be extracted from the company at a further additional cost.

Alan

[DimPrawn]

If it's going to be a pension, at least do a SIPP so you have some control on the costs/fees and how the money is "invested".

[northernladuk]

Pensions are not to be totally avoided, good to have one as part of a spread portfolio.

Is this money in your LTD or in your pocket and has been taxed? If it is in your company you save the tax on it which isn't to be sniffed at.