Diverting £50k of salary into pension fund to claim welfare benefits

gadgetmind

Gracchus_Babeuf wrote: »

It's still a huge drop from his current income.

But a massive gift to his future self.

Even if circumstances and/or regulations change, just a few years of £50k+ into a pension is building a brilliant foundation.

Gracchus_Babeuf

Also I think this loophole will be closed. There is no way that this guy could get away with this fiddle for 27 years. I think what they'll do is limit tax free pension contributions to 50% of salary - the OP is living in cloud cuckoo land.
And what about his other half? I assume she is looking after the kids? Will she not want to work at least part time at some point in the future?

Gracchus_Babeuf

gadgetmind wrote: »

But a massive gift to his future self.

Even if circumstances and/or regulations change, just a few years of £50k+ into a pension is building a brilliant foundation.

It's a clever scam, granted, but the loophole will be closed - you can be sure of that. This allows the wealthy to claim benefits and there is no way any government could allow it.

Interested to know how a 28 year old can earn £65k - he must be a high flying lawyer or accountant I guess.

gadgetmind

drc wrote: »

There was a similar thread a few years back. I think the general consenus apart from being morally dubious was that it couldn't be done easily;

It would be interesting to see how the deprivation of income rules interact with HMRC's own views on salary sacrifice.

gadgetmind

Gracchus_Babeuf wrote: »

Interested to know how a 28 year old can earn £65k - he must be a high flying lawyer or accountant I guess.

I earned more than that in my first year out of uni back in the mid-80s., and year two went even better. Shame about years three and four (long story!) but I did manage to buy my first house at age 24.

And no, it was nothing to do with finance, law, or medicine, though they might have proved less stressful!

drc

jlpike wrote: »

The reason I think it can't be implemented as advertised is it goes against the tory philosopy of capitalism and work hard for personal wealth creation. In 2013 the cut off will be £44k for uppr rate tax. Somone earning £43,999 with 3 kids and a stay at home wife can get a £1 pay rise and be the equivilent of approx £5k (in salary terms) worse off instantly. Where is the incentive to work hard and improve yourself. They will have to wait years to get a £5k payrise and be the same off, therfore why would i take a promotion or work harder or do overtime. How does this help GB Plc and for only £1bn, it is a mad plan.


Surely they must have thought this, they are not that stupid. How can more work not pay.

Totally agree. Work hard and improve your lot (£44k isn't that much if you live in London or the southeast and is before tax and NI) and you lose child benefit.

Don't work hard and you get a 5% benefit "pay" rise courtesy of the taxpayer.

Work doesn't pay in Cameron's UK.

CSL0183

Gracchus_Babeuf wrote: »

Easier said than done. Living on a pittance sounds doable in theory, but you'll be punishing yourself for 27 years in order to reach a pot of gold at age 55. Are you seriously prepared to do this? And how confident are you that you will be earning so much for the next 27 years? What if you were to lose your job?

Please see the figures I posted a few pages back, with a £12k salary plus state related benefits for 3 children my income will be pretty much the same as it is now give or take a couple of hundred £££.

I may not be able to do this for the full 27yrs no, the child benefits will stop when the kids are 18 but even 15 yrs at maximum £50k+ contributions is going to lead to a very good pension pot come 55. 25% tax free cash should be able to buy me a home outright, the state will pay for a roof over my head in the meantime.

I may suffer from a slight drop in standard of living now but the pros far outweigh the cons when you look at the bigger picture. I am effectively saving the majority of my salary every year and taking advantage of our very generous welfare system which enables me to pretty much match the same standard of living I have at the moment.

Of course, I can lose my job should I do this or not but I would rather lose it with a big pension pot;)

I have been enquiring about figures today, my 75% estimation of the WTC/LHA/CTB is pretty much spot on, figures look good, I should be able to pull in a £3k per month income under this plan. Slight drop of where I am now (£3.5k, although £3.3k in 2013 after child benefit disqualification)

10% drop in income but my pension pot is increasing by 550%, (£10k currently, £55k with this plan) This is a no brainer and I shall be pressing ahead with this in the new financial year.

CSL0183

Gracchus_Babeuf wrote: »

Incidentally, what job do you do?

Recruitment consultant in the offshore oil and gas industry. It is a good salary for the NE of Scotland.

besti

Go fot it.

drc

CSL0183 wrote: »

10% drop in income but my pension pot is increasing by 550%, (£10k currently, £55k with this plan) This is a no brainer and I shall be pressing ahead with this in the new financial year.

Let us know how you get on.