Pension need to knows Official MSE Guide Discussion

Options
1181920212224»

Comments

  • Dazed_and_C0nfused
    Options
    Probably yes but how much does he expect to earn (from a job or self employment) in each of the current and next tax years?
  • blokeypoomac
    Options

    Hi.  I am lucky enough to not only work and get paid, but I receive a pension for my 24 years military service.  My pay and pension take me over the £50,000 point where I start paying 40% tax.  I am wondering if I increased my personal pension contributions from my pay at source to reduce my income to below that 50k threshold, would I then not pay tax at 40%?

     

    Pay this year £57,700 ish.

    Pension this year £10,300 ish

    Total  =  £68,000 ish.

     

    So I pay 40% tax on £18,000.

     

    If I increased my personal contribution to my pension to take out this £18k (so about £1500 / month), would I then not pay the 40% tax??  I guess it’s not quite that simple 😒.  Any advice is welcome.  Cheers


  • Dazed_and_C0nfused
    Options

    Hi.  I am lucky enough to not only work and get paid, but I receive a pension for my 24 years military service.  My pay and pension take me over the £50,000 point where I start paying 40% tax.  I am wondering if I increased my personal pension contributions from my pay at source to reduce my income to below that 50k threshold, would I then not pay tax at 40%?

     

    Pay this year £57,700 ish.

    Pension this year £10,300 ish

    Total  =  £68,000 ish.

     

    So I pay 40% tax on £18,000.

     

    If I increased my personal contribution to my pension to take out this £18k (so about £1500 / month), would I then not pay the 40% tax??  I guess it’s not quite that simple 😒.  Any advice is welcome.  Cheers


    If you contribute via he net pay method then it really is that simple.

    Your taxable pay from your employment would become £39,700 + pension = £10,300 = £50,000
    NB.  The standard higher rate threshold has increased from 6 April 2021 to £50,270.

    You would avoid paying 40% tax on nearly all of that £18,000 so the real cost to you each month would be closer to £900 then £1,500.
  • S_dal001
    Options
    Has anyone used LV financial services and had issues with them? My pension was transferred to them on 28th April, my pension with them hasn’t been set up and twice they are meant to have paid me my lump sum and twice the date has been and gone. Apparently they are very busy and struggling to process new pensions so my money sits unaccounted for. I just wondered if this is standard for them or if I should be concerned as to whether they are a suitable pension provider.
  • dunstonh
    dunstonh Posts: 116,628 Forumite
    Name Dropper First Anniversary First Post Combo Breaker
    Options
    S_dal001 said:
    Has anyone used LV financial services and had issues with them? My pension was transferred to them on 28th April, my pension with them hasn’t been set up and twice they are meant to have paid me my lump sum and twice the date has been and gone. Apparently they are very busy and struggling to process new pensions so my money sits unaccounted for. I just wondered if this is standard for them or if I should be concerned as to whether they are a suitable pension provider.
    LV is the old Liverpool Victoria Friendly Society.    There is no issue with their financials.  However, they are suffering capacity issues and integration issues.  
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • hastp
    hastp Posts: 1 Newbie
    First Post First Anniversary
    Options
    Hey all. Sorry if this has been asked before.

    I'm a 57 year old, still working. I have two pensions, one I/my employer pays in to (SIPP), one elsewhere where I combined various pensions from previous employments. I contribute to the work pension only. Each pot has circa £200k in each. I need to find £30k to pay for an emergency replacement roof on my house (don't ask!) so wondering whether my tax-free lump sum option is a viable one.

    My question is this, If I take £30k out of my non-work pension, is my ability to pay into my work pension impacted and only tax-free for the first £10k I invest? My understanding is I would be restricted to the £10k tax free cap.

    In other words, my feeling is my two pots equal one larger swiss roll, rather than two smaller ones! :smile:  
  • Dazed_and_C0nfused
    Dazed_and_C0nfused Posts: 13,675 Forumite
    First Anniversary First Post Name Dropper
    Options
    hastp said:
    Hey all. Sorry if this has been asked before.

    I'm a 57 year old, still working. I have two pensions, one I/my employer pays in to (SIPP), one elsewhere where I combined various pensions from previous employments. I contribute to the work pension only. Each pot has circa £200k in each. I need to find £30k to pay for an emergency replacement roof on my house (don't ask!) so wondering whether my tax-free lump sum option is a viable one.

    My question is this, If I take £30k out of my non-work pension, is my ability to pay into my work pension impacted and only tax-free for the first £10k I invest? My understanding is I would be restricted to the £10k tax free cap.

    In other words, my feeling is my two pots equal one larger swiss roll, rather than two smaller ones! :smile:  
    MPAA is only triggered if you take taxable money out of the pension (buying an annuity being an exception).

    So if you take £30k TFLS and leave £90k crystallised within the pension you won't trigger it.

    But if you take £30k consisting of £7.5k TFLS and £22.5k taxable pension then you would have triggered MPAA.
Meet your Ambassadors

Categories

  • All Categories
  • 343.7K Banking & Borrowing
  • 250.2K Reduce Debt & Boost Income
  • 450K Spending & Discounts
  • 235.9K Work, Benefits & Business
  • 608.9K Mortgages, Homes & Bills
  • 173.3K Life & Family
  • 248.4K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.9K Discuss & Feedback
  • 15.1K Coronavirus Support Boards