Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • louloubelle79
    • By louloubelle79 15th Sep 17, 4:59 PM
    • 244Posts
    • 119Thanks
    louloubelle79
    Lisa or pension
    • #1
    • 15th Sep 17, 4:59 PM
    Lisa or pension 15th Sep 17 at 4:59 PM
    advice pls for husband after left pension with previous employee with county council. Age 38 has own Ltd company, he is only employee. Would a pension or S&S LISA be better for him now? Able to pay £300 pm in.

    Sorry I'm sure this has been asked many times before.
    Hoping to be mortgage free by 2026 age 47
    Current rate 2.79% fixed for 10 years
    Current mortgage end date: 03/10/2043
    MFW Starting Mortgage Jan 17 - £114,703
Page 1
    • dunstonh
    • By dunstonh 15th Sep 17, 5:10 PM
    • 89,518 Posts
    • 55,957 Thanks
    dunstonh
    • #2
    • 15th Sep 17, 5:10 PM
    • #2
    • 15th Sep 17, 5:10 PM
    Age 38 has own Ltd company, he is only employee. Would a pension or S&S LISA be better for him now? Able to pay £300 pm in.
    Pension...
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • AlanP
    • By AlanP 15th Sep 17, 5:26 PM
    • 954 Posts
    • 671 Thanks
    AlanP
    • #3
    • 15th Sep 17, 5:26 PM
    • #3
    • 15th Sep 17, 5:26 PM
    Pension...
    Originally posted by dunstonh
    Paid in via the Ltd company as opposed to personal contribution possible?
    • louloubelle79
    • By louloubelle79 15th Sep 17, 5:35 PM
    • 244 Posts
    • 119 Thanks
    louloubelle79
    • #4
    • 15th Sep 17, 5:35 PM
    • #4
    • 15th Sep 17, 5:35 PM
    Thank so thought that would be the better option just wanted to check with you experts
    Hoping to be mortgage free by 2026 age 47
    Current rate 2.79% fixed for 10 years
    Current mortgage end date: 03/10/2043
    MFW Starting Mortgage Jan 17 - £114,703
    • dunstonh
    • By dunstonh 15th Sep 17, 5:38 PM
    • 89,518 Posts
    • 55,957 Thanks
    dunstonh
    • #5
    • 15th Sep 17, 5:38 PM
    • #5
    • 15th Sep 17, 5:38 PM
    Paid in via the Ltd company as opposed to personal contribution possible?
    Originally posted by AlanP
    Absolutely.

    A LISA is paid out of income that has already left the company and suffered corporation tax and dividend tax.

    A pension with employer contribution has no personal taxation and is a business expense which reduces the CT bill.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • aj9648
    • By aj9648 18th Sep 17, 1:30 PM
    • 1,099 Posts
    • 99 Thanks
    aj9648
    • #6
    • 18th Sep 17, 1:30 PM
    • #6
    • 18th Sep 17, 1:30 PM
    Can you open a LISA within a SIPP? Get the 25% bonus and the tax relief?
    • xylophone
    • By xylophone 18th Sep 17, 1:38 PM
    • 23,400 Posts
    • 13,601 Thanks
    xylophone
    • #7
    • 18th Sep 17, 1:38 PM
    • #7
    • 18th Sep 17, 1:38 PM
    Can you open a LISA within a SIPP? Get the 25% bonus and the tax relief?
    No.
    http://www.taxcafe.co.uk/pensionmagic.html might be worth a read.
    • atush
    • By atush 18th Sep 17, 2:14 PM
    • 16,333 Posts
    • 10,081 Thanks
    atush
    • #8
    • 18th Sep 17, 2:14 PM
    • #8
    • 18th Sep 17, 2:14 PM
    Def pension, paid by the LC.

    But nothing stopping you having an LISA too if you want.
    • dunstonh
    • By dunstonh 18th Sep 17, 2:45 PM
    • 89,518 Posts
    • 55,957 Thanks
    dunstonh
    • #9
    • 18th Sep 17, 2:45 PM
    • #9
    • 18th Sep 17, 2:45 PM
    Can you open a LISA within a SIPP? Get the 25% bonus and the tax relief?
    Originally posted by aj9648
    No. You cannot open a tax wrapper within a tax wrapper.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • jamesd
    As well as the advantages dunstonh has mentioned, you can also often arrange things to take all or most of the money out of a pension tax free, not just 25% tax free. The LISA just can't match that combination of benefits for the company and individual.
    • lisyloo
    • By lisyloo 18th Sep 17, 3:54 PM
    • 21,261 Posts
    • 10,208 Thanks
    lisyloo
    OT - but it's really weird having a tax wrapper called the same as you.
    • bigadaj
    • By bigadaj 18th Sep 17, 7:18 PM
    • 10,671 Posts
    • 6,970 Thanks
    bigadaj
    OT - but it's really weird having a tax wrapper called the same as you.
    Originally posted by lisyloo
    Not uncommon though.

    Ms. Jowell might have thought the same thing in the nineties, and the current man city manager would have been similar.
    • kidmugsy
    • By kidmugsy 18th Sep 17, 9:02 PM
    • 9,830 Posts
    • 6,621 Thanks
    kidmugsy
    the current man city manager would have been similar.
    Originally posted by bigadaj
    Was there really a savings scheme called "Buy a new centre-back for heaven's sake?"
    • cloud_dog
    • By cloud_dog 18th Sep 17, 9:11 PM
    • 3,251 Posts
    • 1,813 Thanks
    cloud_dog
    I thought he was called.... "Really, what value does Sterling bring to the team?"
    Personal Responsibility - Sad but True

    Sometimes.... I am like a dog with a bone
    • bigadaj
    • By bigadaj 18th Sep 17, 10:25 PM
    • 10,671 Posts
    • 6,970 Thanks
    bigadaj
    I can't believe that people can't remember the guardiola, tax advantaged share scheme, it's like it was yesterday.
    • zagfles
    • By zagfles 18th Sep 17, 10:34 PM
    • 12,474 Posts
    • 10,461 Thanks
    zagfles
    The answer isn't as straightforwards as others are implying. It will depend on a lot of factors.

    For instance, if he's a basic rate taxpayer, he takes most of the profits as dividends, and he's likely to have enough other income in retirement to use up his personal allowance, then a LISA could be better.

    Example:

    Every £100 into pension from ltd company - pension has £100, when he withdraws 25% tax free and 75% taxable if no PA spare, £85 out.

    LISA: £100 extra profit for company £81 after corp tax, £74.92 after dividend tax. £74.92 into LISA, add 25% bonus becomes £93.66. No tax on the way out, so £93.66 out. More than the pension.

    Obviously there'll be growth but both will be multiplied by the same growth factor assuming same investments, so irrelvant for comparisons.

    Change the assumptions and the calc changes. Other issues to consider are access and means tested benefit eligibility.
    • louloubelle79
    • By louloubelle79 20th Sep 17, 5:09 PM
    • 244 Posts
    • 119 Thanks
    louloubelle79
    Hi sorry to bring my Q up again. Husbands FA advised him to ask accountant about his pension. Accountant finally got back to us and told him to wait until December as money prob better in savings other than pension...? Really confused. Should we just go with FA advice?
    Hoping to be mortgage free by 2026 age 47
    Current rate 2.79% fixed for 10 years
    Current mortgage end date: 03/10/2043
    MFW Starting Mortgage Jan 17 - £114,703
    • louloubelle79
    • By louloubelle79 20th Sep 17, 5:11 PM
    • 244 Posts
    • 119 Thanks
    louloubelle79
    The answer isn't as straightforwards as others are implying. It will depend on a lot of factors.

    For instance, if he's a basic rate taxpayer, he takes most of the profits as dividends, and he's likely to have enough other income in retirement to use up his personal allowance, then a LISA could be better.

    Example:

    Every £100 into pension from ltd company - pension has £100, when he withdraws 25% tax free and 75% taxable if no PA spare, £85 out.

    LISA: £100 extra profit for company £81 after corp tax, £74.92 after dividend tax. £74.92 into LISA, add 25% bonus becomes £93.66. No tax on the way out, so £93.66 out. More than the pension.

    Obviously there'll be growth but both will be multiplied by the same growth factor assuming same investments, so irrelvant for comparisons.

    Change the assumptions and the calc changes. Other issues to consider are access and means tested benefit eligibility.
    Originally posted by zagfles
    Thank you, maybe LISA then way forward as he basic tax payer.
    Hoping to be mortgage free by 2026 age 47
    Current rate 2.79% fixed for 10 years
    Current mortgage end date: 03/10/2043
    MFW Starting Mortgage Jan 17 - £114,703
    • dunstonh
    • By dunstonh 20th Sep 17, 5:40 PM
    • 89,518 Posts
    • 55,957 Thanks
    dunstonh
    Husbands FA advised him to ask accountant about his pension. Accountant finally got back to us and told him to wait until December as money prob better in savings other than pension...? Really confused. Should we just go with FA advice?
    I sometimes ask the accountant about pension contributions. However, that is only where the company may not have as profitable a year and you want to make sure that the contribution will get the Corporation tax benefit. If the company is profitable by more than the contribution, you dont need the accountant involved.

    If the account is anti pension then it suggests poor knowledge. Unfortunately, you do still come across accountants applying 1990s knowledge to current products.

    If your husband's adviser is an FA and not an IFA, then their compliance may insist they speak to an accountant. FAs have restrictions that sometimes require things that are not for your benefit but to protect the FA's employer or network. They have to cater for the lowest common denominator. Its one of the reasons why its best to avoid FAs.

    maybe LISA then way forward as he basic tax payer.
    LISA will almost certainly be worse than the pension. Company pays 20% Corp Tax and your husband is paying 7.5% tax on dividends LISA only counters the 20% Corp tax. It still leaves him paying 7.5% dividend tax. Whereas pension via the company avoids both 20% CT and 7.5% dividend tax.

    If he employs an adviser then the adviser should be doing the decision-making here. Not you. If you are having to do the work, then the adviser is not up to the job and he should consider replacing him. As it stands, based solely on what you have written,I am not impressed with the FA or the accountant.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • zagfles
    • By zagfles 20th Sep 17, 7:02 PM
    • 12,474 Posts
    • 10,461 Thanks
    zagfles
    LISA will almost certainly be worse than the pension. Company pays 20% Corp Tax and your husband is paying 7.5% tax on dividends LISA only counters the 20% Corp tax. It still leaves him paying 7.5% dividend tax. Whereas pension via the company avoids both 20% CT and 7.5% dividend tax.
    Originally posted by dunstonh
    Err, yes, but the LISA is always tax free on the way out. The pension possibly isn't. See my post above for an example.
    If he employs an adviser then the adviser should be doing the decision-making here. Not you. If you are having to do the work, then the adviser is not up to the job and he should consider replacing him. As it stands, based solely on what you have written,I am not impressed with the FA or the accountant.
    Nor would I be impressed with an adviser who didn't account for pensions being potentially taxable on the way out
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

495Posts Today

4,841Users online

Martin's Twitter