Pension

GuidoT

I have a pension fund with circa £100K in it.

I have not contributed into it for a decade or so, I have kind of lost confidence in pensions (take for example the Equitable Life debacle) and those that give advice that have a commercial interest.

Instead I bought a few houses that I let out, I know not very tax efficient, but at least in my control to an extent.

My tax bills are pretty hefty these days and I would like to get some relief on the 40% tax I pay.

Can I contribute say £20K to a fund today and get relief on that for tax year 2011.

I probably need to get some advice, do some internet research, but would like some help from the knowledgeable folk here to steer me initially.

dunstonh

I have not contributed into it for a decade or so, I have kind of lost confidence in pensions (take for example the Equitable Life debacle) and those that give advice that have a commercial interest.

Of course those that give advice have a commercial interest. It would be totally silly for them not to. They are businesses and businesses need to be profitable. However, that doesn't interfere with tax wrapper selections or investment selections.

Equitable Life was one provider out of many that was actually too generous beyond its means. Most people have more to thank equitable life than those that lost out as the rules and financial solvency requirements that came in because of it have helped saved repeats and ensured insurers did better during the credit crunch than they would have if Eq life did not happen.

Instead I bought a few houses that I let out, I know not very tax efficient, but at least in my control to an extent.

You bought an asset type that fluctuates in value and provides a fluctuating income. It has a certain tax process. It incurs costs. How does that differ from other investments?

Can I contribute say £20K to a fund today and get relief on that for tax year 2011.

No. You have to contribute in the tax year in question.

Loughton_Monkey

On your main question, no, you cannot 'backdate' pension tax relief. The contribution must be made in that tax year.

To suggest that you have lost confidence in 'pensions' is rather a sweeping statement. A pension is primarily an empty (tax efficient) wrapper into which you make 'investments' of many kinds. I think you are expressing concern over the investments rather than the pension itself?

A casual glance at Trustnet informs me that I could have achieved a return around 95% over the last 5 years (despite stock market crashes) by simply choosing the right funds. Admitedly, by choosing the wrong funds, I could have been 50% or more down.

Exactly the same range of outcomes would have occurred to ISA investors, and to 'ordinary' Stock Market investors.

Don't blame the pension. All that does is gives you a 66% boost on top [for higher rate taxpayers like yourself] in return for some reasonable restrictions on when and how you draw the proceeds.

There is absolutely nothing wrong with running a business either full time, or 'on the side'. You can run a butchers shop, a plumbing business, or indeed a BTL business. Up to you. Just like the butcher, you can salt all your profits away into a pension, or use them to boost the business. But you cannot put that business 'in the pension' and claim some sort of tax break.

atush

As said, you are too late by a few weeks to contribute for the last tax year (would have had to do it before april 5th) but nothing stopping you reduceing this years tax bill by contributing now. So do it.

and if you really love property as an investment, you can invest in commerical property via a SIPP. But with several properties and a home of your own I think you are overweight in that asset class.

xylophone

http://www.hmrc.gov.uk/incometax/relief-pension.htm