pension or s&s isa

help50

don't have to set a scheme up for a while yet, sometime in 2016 from memory. However, we could do earlier (it is a small company of 15, I am the MD) and we will probably set up a scheme this year and match employee contributions. So if we do that then the pension route gets more attractive. I guess I should have a word with myself.

atush

jesus, do you have an acountant?

why hasn't he pointed out the tax benefits of being an LLC? and then your pension could be paid by the company?

atush

help50 wrote: »

Hi yes have emergency fund. Your last sentence reflects my question I guess - " all 3, pension, cash and ISA". Why pension and s&s ISA and, in what balance? My assumption is that pension gives me tax relief benefits, but is a managed strategy portfolio whereas the ISA lets me shift funds around and vary deposits into each, so more flexible.

Pensions and S&S isas are tax wrappers that mean you can pay less tax on income and capital gains.

Paying less tax than you need to is always a good thing

help50

we are an LLC and yes we do have an accountant. A pension scheme is one of the many things that a startup company has to consider. I understand they are tax wrappers, just not clear in my circumstances why you would do one as opposed to the other. It seems ease of access and treatment of tax in v out. Unless someone else can suggest otherwise!

atush

Well it would be a business expense so would lower your corporation tax as well as company paid Nics.

help50

yes, we're probably getting to that position now that its time to get this in place.
That aside, does my conclusion on the difference between the two strategies (ISA or pension) sound correct, that it is down to type of access you need to the funds, and the tax treatment in v out?
thanks for the views!

kidmugsy

help50 wrote: »

That aside, does my conclusion on the difference between the two strategies (ISA or pension) sound correct, that it is down to type of access you need to the funds, and the tax treatment in v out?

Yes; just so.

The thing I like about ISAs is that they 'freeze" your current income tax rate, in the sense that it's already been charged on the money you put into the ISA. It's appealing if that's currently 20%, because I fear that the basic rate of income tax will be increased over the next few decades. It would be seriously annoying to get 20% tax relief on a pension contribution and then find yourself paying 25% tax on your withdrawals.