No pension

mindyourlanguage

I have started a new thread as the one I was joining in on got too confussing, wasn't sure weather it was referred to me or the other chap.


I'm 30 and have had a pension for 5 years with my previous employer.

I have just bought a business and borrowed £25k from my house, my new mortgage on the house is now £85k over 14 years with payment of £650.

I will be putting my home on rent which will bring me a income of £500, I am living at the business property as their is living accomadation too.

I will be paying of the extra loan first (£25K) then start to pay lump sums on the mortgage and plan on paying it off in 7 years from the business.

The business will generate around £30K after all expenses including tax are paid and my wife will be working else where she earns £15K after tax.

My wife has a good pension from the NHS so that leaves me, I was thinking of using the income from the rental as a pension and topping up a tessa every year.

Does this sound about right?

Thanks

DavidLaGuardia

Well Tessas are now extinct, so that will leave you with an ISA. £7,000 in stocks and shares or divided into mini ISAs which include a cash element of up to £3,000. If it is for your retirment though, the cash would be a bit of a waste since proper investments such as equity might be better. If you want safer investments then paying off the mortage is more efficient than cash investments (although it is useful to keep a small pot for things!)
Since April 6th You can put the hiigher of £3,600 or 100% of your earned income (that does not include rental income!) into a pension. I would personally make this a priority over ISAs because of the tax relief. (This one is often argued over on these boards but I can still find more credible arguments for a pension than against it).
Also, find out if you can get you or your wife to name the other property as your residence to escape future capital gains. I say this as someone living in a house provided by their work (such as a vicar or a gamekeeper) can do this, and your living accoomodation within your business might count in this respect. There may or may be something to prevent you doing this, but I would advise you talk to your accountant about this point, assuming you have a bona fide accountant rather than a book keeper; if not then find one cwho can talk to you on this point