Buy a house, or put into a pension?

kyte wrote: »

Under tax credits, if I buy a house, it counts as my personal private residence due to the nature of my work. So I would have my tax credits reduced for any income stream from it, but not for the capital amount (same if it is in savings, I would declare any income from interest).

Under tax credits your capital is ignored, period, no matter what form it's in. Only income (including income generated from capital eg interest, rent) counts.

This is to allow people in my position who are not allowed to live in their own home as a requirement of the job, to house ourselves if the job ends/at retirement

When Universal Credit comes in, it looks like this means I wouldn't qualify, but someone with an equally larger or larger pension pot would qualify. Although I would qualify for transitional protection, so would get UC unless my circumstances changed.

Yes, when I looked into this several years ago they did say transitional protection would apply to those with savings, though exactly how this would work was a bit vague.

I'm not trying to deprive myself of income, either buying a house, or buying into a pension is about providing for my retirement, and trying not to be a drain on the system at that point.

My Ex is receiving a larger share, but his is all in his pension, and he receives JSA etc.

About pensions (I have no idea how this works)....

....Does this apply for private/stakeholder pensions? And what if I'm not bothered by tax relief, does this mean I'd get charged tax on the £150k (or some other charge?), or is it just not possible to pay the £150k in, like that?

No, as above you can put it all into a pension if you want. You'd only get tax relief on 100% of your earnings (or £3600 if more), so you'd need to make sure your pension provider was aware so they don't claim tax relief you're not entitled to.

But see above about deprivation. Usually it's a bad idea to put money into a pension without tax relief, because it's taxable on the way out. So basically you set yourself up to (probably) pay tax on it in the future, which you wouldn't otherwise have paid, not on the capital at least.

So this could be evidence of a motivation to potentially increase your UC, which could leave you in the situation of getting no UC and also not being able your hands on the capital you've put into the pension (not accessible till you're 55 at least).

So not something to do unless you're absolutely certain you know what you're doing!

I dont think pension counts as deprivation. You are paying in capital, some of which is in lieu of taking part of his pension. Besides, you can only pay in as much as you earn per year (plus carry forward). How much do you earn?

And you may not be taxed on the pension when you retire, if the income is under your PA at the time.

And yes, it may have been better to get half his pension transferred to a pension for you, then taking less of the house proceeds. A lot of women do this, and it isnt always to their benefit. but when you are the custodial parent, you'll do anything to keep a roof over their heads.

kyte wrote: »

I earn around £12k.

I'm confused though, there's a calculator that seems to suggest that annual allowances are much higher? http://www.hmrc.gov.uk/tools/annualallowancelimit/index.htm

You are limited by your earnings. If you earn more than £40k you are limited to £40k instead (plus carry forward). If you earn £210k you are limited to £10k.

P.S. It's earnings that limit you, not income.

kyte wrote: »

I earn around £12k.

I'm confused though, there's a calculator that seems to suggest that annual allowances are much higher? http://www.hmrc.gov.uk/tools/annualallowancelimit/index.htm

The annual allowance is a completely separate limit to the tax relief limit mentioned above. This confuses a lot of people.

As I understand it, if you were to exceed the tax relief limit (ie put well over £12k in) then the annual allowance would not apply to the excess on which you don't get tax relief.

But as above I'd be wary of doing this if you're likely to claim UC in the future.

maybe discuss your various options further with your local Citizens advice bureau ?


If I was in your position I think I may max out on S&S ISA's - and start a personal pension