Pension? Confused

Alan01252

Hi all,

This is my first year self employed and I will just break into the higher rate tax bracket.

I'm interested in putting the money I make over the higher rate threshold into a pension pot to keep myself below the earnings threshold but I'm confused.

My four main questions are:

• Firstly, do I need to put my money away before April this year?
• How do the government matched contributions work in practice?
• If I want to buy a house will putting this into a pension affect the amount I could potentially borrow?
• Is there something else I should/could do instead?

I'm 29 so it's probably about time I start planning for future retirement, there's a good chance I won't always be able to make this much money...

Any help/advice would be greatly appreciated.

Thanks

Alan

nomunnofun

May I ask how much you believe that you will make in profit this year/

Linton

Alan01252 wrote: »

Hi all,

This is my first year self employed and I will just break into the higher rate tax bracket.

I'm interested in putting the money I make over the higher rate threshold into a pension pot to keep myself below the earnings threshold but I'm confused.

My three main questions are:

• Firstly, do I need to put my money away before April this year?
• How do the government matched contributions work in practice?
• If I want to buy a house will putting this into a pension affect the amount I could potentially borrow?
• Is there something else I should/could do instead?

I'm 29 so it's probably about time I start planning for future retirement, there's a good chance I won't always be able to make this much money...

Any help/advice would be greatly appreciated.

Thanks

Alan

1) You need to put the money away before April

2) If you are paying for the pension out of your own taxed income the government will pay the insurance company 25% of whatever you pay in. ie they will refund the 20% standard rate tax you have paid. You would then need to claim the higher rate tax portion via your tax return or simply by contacting HMRC and giving them the details. This would be paid directly to you outside your pension, possibly via a change to your tax code

3) No, except for the reduction in the deposit you could lay your hands on.

4) The other option is to put the money into some other investment scheme such as an S&S ISA. I guess someone self employed could have a greater chance of bankruptcy than the average. Pension money is protected, ISA money isnt. There are of course many other factors that could affect your decision.

Alan01252

nomunnofun wrote: »

May I ask how much you believe that you will make in profit this year/

Around £50k

somethingcorporate

Linton wrote: »

4) The other option is to put the money into some other investment scheme such as an S&S ISA. I guess someone self employed could have a greater chance of bankruptcy than the average. Pension money is protected, ISA money isnt. There are of course many other factors that could affect your decision.

Conversely, you could use your S&S ISA based savings to satisfy any liabilities, you cannot do this with money in a pension.

xylophone

http://www.pensionsadvisoryservice.org.uk/self-employed-and-pensions
https://www.moneyadviceservice.org.uk/en/articles/pensions-for-the-self-employed
http://www.hmrc.gov.uk/incometax/relief-pension.htm
http://www.cavendishonline.co.uk/pensions/

http://www.hl.co.uk/pensions/interactive-calculators/pension-calculator

You could consult an Independent Financial Adviser http://www.unbiased.co.uk/pensions