pickles
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Post by pickles on Sept 6, 2017 20:26:09 GMT
This is not a P2P specific question - mods feel free to move the thread - but as there is a lot of expertise round here...
I've been a contractor for a long time, I've just switched to the dark side as the employer made a very decent offer unlikely to be seen again at my age. But the downside is a level of tax that horrifies! My previous plan has been to pay myself only within the standard rate band, leaving the rest in my own ltd company until such times as I don't earn fees. The majority is in P2P nowadays. But I digress.
The employer has a limit on what I'm allowed to push into the pension plan at around 10%. I guess the sensible thing to do is put a large amount into a personal pension (I have a couple from years ago). Or should I open a SIPP? What are the differences, pros/cons? I guess a SIPP gives the opportunity of buying things like FC fund. Also can buy trackers which are cheaper than managed fund in a PP - is this right?
Also what should I do with the cash in my companies? I'm concerned the tax will double as soon as I don't have contract fees going in. Should I move as much as possible into pensions now?
Are there any other options? My total assets are fairly modest at the moment, previous retirement planning went out of the window with the divorce, but I hope not to be a pauper when I hang up the keyboard.
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alanp
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Post by alanp on Sept 6, 2017 20:58:52 GMT
I'm not an expert by any means but: There is a wealth of pension and investment expertise and advice on forums.moneysavingexpert.com/forumdisplay.php?f=19&order=descYour specific situation will affect and need to be considered to provide context and suggestions, for example age / planned retirement date / tax rate etc. but in general paying into a pension is a great tax saver particularly if you are a HR taxpayer now and will be a BR taxpayer when drawing it out but you are limited by the age you can access it at (55 currently). As for new SIPP or old PP - Ask over at MSE and include details on the existing PPs. Charging & structure of new pensions is likely to be very different but some older schemes had "added value items" like guaranteed annuity rates etc. so worth sticking with. Tracker fees are generally lower than active / managed funds but it's the overall return that matters. Lots of debate around this on MSE with some outright Tracker advocates and some who aren't as convinced. For example an IFA posts on there, and he recently compared a portfolio he setup to a well known & popular diversified tracker range (Vanguard Life Strategy). Raw fees on tracker were lower but his portfolio (which mixed trackers with active funds) had ~40% higher returns over the period being discussed. Moral of the story - Price isn't the only thing. |
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Nomad
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Post by Nomad on Sept 7, 2017 0:21:44 GMT
This is not a P2P specific question - mods feel free to move the thread - but as there is a lot of expertise round here... I've been a contractor for a long time, I've just switched to the dark side as the employer made a very decent offer unlikely to be seen again at my age. But the downside is a level of tax that horrifies! My previous plan has been to pay myself only within the standard rate band, leaving the rest in my own ltd company until such times as I don't earn fees. The majority is in P2P nowadays. But I digress. The employer has a limit on what I'm allowed to push into the pension plan at around 10%. I guess the sensible thing to do is put a large amount into a personal pension (I have a couple from years ago). Or should I open a SIPP? What are the differences, pros/cons? I guess a SIPP gives the opportunity of buying things like FC fund. Also can buy trackers which are cheaper than managed fund in a PP - is this right? Also what should I do with the cash in my companies? I'm concerned the tax will double as soon as I don't have contract fees going in. Should I move as much as possible into pensions now? Are there any other options? My total assets are fairly modest at the moment, previous retirement planning went out of the window with the divorce, but I hope not to be a pauper when I hang up the keyboard. I found this very useful - www.wealthprotectionreport.co.uk/
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Mike
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Post by Mike on Sept 7, 2017 7:15:27 GMT
Sounding like I'm in an armchair, give it away to charity. It's a nice way to stop paying HR
Or set up your own charity if you have the time and vision. It's easier than you'd think.
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pickles
Member of DD Central
Posts: 94
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Post by pickles on Sept 7, 2017 20:17:21 GMT
Thanks for the comments and the links.
Yes I do give to charity, and give my time too, but I'm still going to need food and shelter myself when I stop earning!
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stevio
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Post by stevio on Sept 16, 2017 5:51:28 GMT
This is not a P2P specific question - mods feel free to move the thread - but as there is a lot of expertise round here... I've been a contractor for a long time, I've just switched to the dark side as the employer made a very decent offer unlikely to be seen again at my age. But the downside is a level of tax that horrifies! My previous plan has been to pay myself only within the standard rate band, leaving the rest in my own ltd company until such times as I don't earn fees. The majority is in P2P nowadays. But I digress. The employer has a limit on what I'm allowed to push into the pension plan at around 10%. I guess the sensible thing to do is put a large amount into a personal pension (I have a couple from years ago). Or should I open a SIPP? What are the differences, pros/cons? I guess a SIPP gives the opportunity of buying things like FC fund. Also can buy trackers which are cheaper than managed fund in a PP - is this right? Also what should I do with the cash in my companies? I'm concerned the tax will double as soon as I don't have contract fees going in. Should I move as much as possible into pensions now? Are there any other options? My total assets are fairly modest at the moment, previous retirement planning went out of the window with the divorce, but I hope not to be a pauper when I hang up the keyboard. I found this very useful - www.wealthprotectionreport.co.uk/You have to pay to download anything
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Nomad
Member of DD Central
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Post by Nomad on Sept 16, 2017 13:44:27 GMT
You have to pay to download anything True, but to quote their website - Obtaining specific UK and international tax planning advice from a good tax adviser can prove to be both difficult and expensive. Charge out rates begin at £150/hour and increase rapidly if you go to a recognised expert. In addition you'll find that many high street accountants lack the specialist skills required to advise on offshore tax planning.Our service gives members access to fast online tax planning guidance advice, (covering both UK and offshore tax planning) from top tax experts at a substantially reduced cost.Key benefits of membership include:Access to over 1,000 tax planning articles and reports,Our free online tax Q&A service (we've answered over 6,000 previous questions) - members can obtain tax planning advice completely free of charge.Access to our 50 free downloadable tax books (worth over £1,000 if purchased separately). Members can access all of our booksAccess to our free online tax planning tools/calculatorsYou can even email our Editor directly at **** with any difficult member benefits tax planning queries.N.B. I post this purely as a satisfied user.
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