Please help :-)

Katieo1

Hi all
I'm after some advice
I have roughly 130 k invested in various s/s isas etc with fidelity and 20k in premium bonds
I have no morgtage and a decent income but and this is a big but
I have no pension what so ever as I'm self employed I've never really thought about it
I'm wondering if I would be better pulling the capital I have in isas etc and putting it all in pensions or is this a bad idea ?
I'm a 20% tax payer and early 40s
All at sea with pensions :-(
Thanks all

Your_Hero

Katieo1 wrote: »

Hi all
I'm after some advice
I have roughly 130 k invested in various s/s isas etc with fidelity and 20k in premium bonds
I have no morgtage and a decent income but and this is a big but
I have no pension what so ever as I'm self employed I've never really thought about it
I'm wondering if I would be better pulling the capital I have in isas etc and putting it all in pensions or is this a bad idea ?
I'm a 20% tax payer and early 40s
All at sea with pensions :-(
Thanks all

Start a new pension and pay into it regularly. You have many years to go until you retire. Probably best to leave the ISAs as they are at the moment. You wouldn't be able to move it all into a pension anyway (there are annual limits).

It would be more compelling to do that though if you are a higher-rate tax payer.

xylophone

http://www.cavendishonline.co.uk/pensions/stakeholder-and-personal-pensions/

https://www.gov.uk/tax-on-your-private-pension/overview

https://www.moneyadviceservice.org.uk/en/articles/worried-about-the-cost-of-starting-a-pension

xylophone

Re state pension https://www.gov.uk/new-state-pension/overview

jamesd

Pensions are generally not vulnerable to being taken to pay debts in bankruptcy. ISAs are just normal savings and will be used to pay debts. ISAs are savings and considered in benefits means tests, pensions aren't. If you become dependent on means tested benefits, perhaps because of injury or illness, you could lose all of this money. So at the moment your money is vulnerable to life's bad events.

If you think that you will be a higher rate tax payer later you might want to wait until then. Maybe. But even today you may be able to just pay much of your income into a pension and save on National Insurance or Corporation Tax in addition to the income tax benefit. You'll pay the income tax on pension income above your personal allowance in retirement but the other two are pure gain for you. You also never have to pay income tax on the 25% pension tax free lump sum so there's some pure gain there as well.

To reduce risk and gain from the pension tax relief I suggest that you have a word with your accountant about the most efficient way to start taking your gains from your business as pension contributions. Use the ISA money to subsidise living while you do this. That way you get the CT/NI benefit of making the contributions from the work, something you wouldn't get if you just paid the ISA money into a pension directly.

The normal annual contribution limit for pensions is £40,000 a year or your earned income. Your accountant can help you to plan to get the money into the pension within these limits.

One thing many people don't know is that if you haven't taken money out of a pension and are diagnosed as likely to live for less than a year you can get the whole pension pot as a tax free lump sum.

Another consideration is when you want to retire. If that is before you reach 55 you'll need some money outside the pension because that's currently the earliest age at which money can be taken out of a pension. You probably aren't planning to retire enough before 55 for it to be a big concern at the moment, though.

atush

I agree that while being a 20% taxpayer isnt the best boost to a pension, moving some of you 150K into pensions would be a great idea. You'd immediately boost your contribs by 25% (ie every 80 into pension becomes 100) but you'd also shelter it from raids should you be sued (which is a risk if you are SE).

There are limits, but you c an put in up to 40K (incl the tax relief) so 32K per year or your income, whichever is higher.

the 20K in premium bonds could be your emergency cash, and you could put some of your 130K if S&S isas into the pension. You could even invest int he same things should you want to.

JohnB47

Katieo1 wrote: »

Hi all
I'm after some advice
I have roughly 130 k invested in various s/s isas etc with fidelity and 20k in premium bonds
I have no morgtage and a decent income but and this is a big but
I have no pension what so ever as I'm self employed I've never really thought about it
I'm wondering if I would be better pulling the capital I have in isas etc and putting it all in pensions or is this a bad idea ?
I'm a 20% tax payer and early 40s
All at sea with pensions :-(
Thanks all

Have you registered yourself with HMRC as self employed and are you making class 3 (I think it's class 3) NI contibutions? That's a cheap way to build up your State Pension.

Katieo1

Thanks for all your replies :-)
I'm self employed but it's a ltd company so covered that way and as for the ni I basically earn minimum and get dividends etc so state pension is covered
I'm just concerned that I'm not using the tax relief at all on a pension and just give my fa 20 k ish per annum to go into s&s
So not sure if I should instead be putting this into pensions instead :-(

xylophone

Your company can fund a pension on your behalf.

See an IFA to discuss your options?

https://www.unbiased.co.uk/find-an-adviser?gclid=CKjizL_9z8ECFY_ItAod2E4Ang

greenglide

I'm self employed but it's a ltd company so covered that way and as for the ni I basically earn minimum and get dividends etc so state pension is covered

So you aren't self employed, you are employed by your company (and a director?). It does make a difference.

Katieo1

Apologies for the misunderstanding
Yes I'm a director of my company i allways think of myself as self employed :-(
Would it help also as my wife is also a director in name only and does not "work" elsewhere
Would this make a pension for both of us beneficial
Sorry for all the questions but really not clued up on this kind of thing