SIPP and ISA

dunstonh

Good_bad_and_ugly wrote: »

I'm inclined to agree. Unilaterally saying it will change is at best, speculative. It was only a few years ago of course, that the pension lifetime allowance increased to £1,800,000. I would advise caution if you intend to base a devision on a premise that could easily change - truth is, no one knows! That caveat must be added to Dunstonh's impressions.

The personal allowance has only failed to be increased 5 times in 36 years. Inflation is the key driver. So, unless you feel inflation has gone forever, it would be daft to assume the personal allowance is never going to increase again.

Of course, it is no surprise to see you take that view as if I said the grass was green, you would disagree.

Good_bad_and_ugly

Dunstonh,

I'm not going to get into a 'debate' only to be accused of ruin a thread. As you concede, the risk is small but it exists nonetheless. The risk is, currently, 15%. For some, that's worth taking into account, especially as we're in a period of sustained low inflation. I didn't say you were wrong, I simply qualified it with a note of caution.

littld

It's my personal view that the basic income tax rate will rise significantly when NICs and Income Tax are merged. I expect it would need to be near 30%. That's the logic behind my keeping basic rate income in an ISA and not a SIPP.

zagfles

littld wrote: »

It's my personal view that the basic income tax rate will rise significantly when NICs and Income Tax are merged. I expect it would need to be near 30%. That's the logic behind my keeping basic rate income in an ISA and not a SIPP.

No-one is proposing merging income tax and NI. What has been proposed is merging the operation of them, which is sensible. For instance operate NI via PAYE and annualise it rather than by pay period.

It's inconceivable that income tax and NI are going to merged and applied to pensions. Any govt which did that would be committing political suicide. If they did merge them, there'd almost certainly be a separate, lower rate of tax applied to pensions.

After all, most people have paid NI on the money they earned to put into the pension (except for salary sacrifice, which is a minority), charging them NI twice on the same money would be ridiculously unfair, and pensioners are good voters

EdGasket

zagfles wrote: »

Just watch out for the limits (£40k annual allowance, and max 100% of earned income), and the rules about withdrawing more than the 25% TFLS could reduce your annual allowance.

You can invest up to three years worth of previous unused allowances in a pension though

Spreadsheetman

EdGasket wrote: »

You can invest up to three years worth of previous unused allowances in a pension though

Only if you already have a qualifying pension (as per the HMRC guidelines) that was running during those previous periods.

Good_bad_and_ugly

And if you have sufficient relevant earnings in the current year to support the contribution.