Avc'sI

geelamch

Just a quick question to the board,just got this years pay rise ,approx £30 a week,I pay 40% on about £6000 of salary.does it make sense to just pays this as an Avc'sI to brass fund,it's tax free and can be taken as lump sum if desired at retirement.
Already pay in £50 a week on Avc'sI and pension is final salary.i know things are bad for people but I can live quite easily without this rise. As I've stated before I like any type of savings etc to be tied up so to speak,(prevents madcap ideas lol).
Thanks

AlwaysLearnin

If you can happily live with amounts over the higher rate tax threshold, and can afford to go without it longer term, then the 40% 'gain' from those contributions is a big bonus.

If you look at it (simplistically) that you would get £60 net salary for every £100 over the 40% rate, you'd need a 66.66% return on that £60 just to get up to the £100. Add to that the fact that the £100 is (hopefully) benefiting from compounding from day 1, and that you might be able to save a bit of NI if you can contribute to your AVC via salary sacrifice; it presents a pretty good arguement...!

geelamch

Ok thanks for the info .much appreciated.