715,000 Millionaires in UK - are you one of them?

Pincher

I could borrow against the equity of the BTL, and liberate about £400k, to blow on what I want, but the interest on the extra £400k wouldn't be tax deductible.

There is an interesting tax dodge, in that the capital gains is reset to nil on Probate. Assuming that I will die at age 73, and I can still get a mortgage before 70, I would get a five year fixed mortgage when I am 68, 100% if possible, but 80% will do.

So, let's say the property is £800k when I'm 68, so I get a £600k mortgage, which has to pay off the previous £200k mortgage, and I end up with £400k in my bank account. When I die at 73, the property is worth £1million, and the total capital gain is £800k, which is reset to ZERO due to Probate. The equity is worth about £400k (£1million - £600k mortgage), which means only £400k - £325k = £75k is taxed at 40% IHT, versus CGT of 28% on £800k = £224k.

I need to work really hard to spend the £400k between the ages of 68 and 73, of course, otherwise every penny will be taxed at 40% IHT.

Actually, I need to have transferred the house I live in to an heir 7 years before I die, as well. Hmm, pay commercial rent using the £400k I liberated, to the heir whom I gave the house to? What did he do to deserve this?

pafpcg

chucknorris wrote: »

That doesn't sound like something I can invest a lot of money in though. Is this what you buy if you are some years short of the minimum for a full state pension?

You're right - Class3A contributions will offer only a small top-up "annuity" - the maximum payout is £25 per week (£1300pa) with the cost of buying that payout dependant on age at date of purchase (the maximum, a woman at 63, is only £23,350). But the offer applies only if you have already reached or will reach state pension retirement age BEFORE April 2016, so men born after 6-Apr-1954 or women after 6-Apr-1953 aren't eligible. The offer opens in October but there's no formal documentation available yet. See www.gov.uk/government/publications/additional-state-pension-top-up

You can buy this extra "Class3A" pension whatever your NI contributions record. To fill-in missing years of contributions, I think you pay "Class3" contributions, but whether that's worthwhile is a much more complicated issue depending on your individual contributions record (best discussed on the Pensions section of this forum).

Apologies for taking this forum thread off-topic.

zagubov

There might be millionaires but in general UK housing is below European standards and security in retirement is a colossal worry for many. Healthcare is good but you have to wait longer than elsewhere in the EU, and educational attainment is so poor, many pay to deliver it privately.

But there's an extra zero at the end of our house prices so that's all OK then.

Not at all like being a lira millionaire like they used to have in Italy.

Archi_Bald

zagubov wrote: »

Not at all like being a lira millionaire like they used to have in Italy.

Now all we need is Jeremeeeeeeeeeeeeeee, people's QE and a bit of nationalisation of several industries, forced expropriation if necessary, and a steep income tax rise to teach those rich b£££rds a lesson, in order to speed up the lira-zisation of the pound sterling. Happy days.