The Mortgage Free in Three - Take 4 challenge (MFiT-T4)

Suffolk_lass

FreedomGirl wrote: »

Shanghaijimmy...


Sorry - my bad (typing). I meant to say, three years un-used pension allowance.


However, I think I may have mis-understood the government announcements. It seems there is a maximum allowable limit of £60k per year that you can pay into your pension, but that you can use previous years allowances, so if you had the cash, you could pay in £180k this year. And get tax back, assuming that you had paid tax in that year.


I'm interested in maximising pension contributions and "getting back" the 40% tax I paid (in tax years ending April 2015, 2014 etc.). I had assumed that this carry back/forward meant I could also put in money from this tax year, and get back the 40% from previous years.


But I now think I'm wrong


A confused FG


P.S. For the avoidance of doubt, I most definitely do not have £60k cash kicking around the place. I'm just trying to understand the rules now that I will need to understand once/if I become this MFiT4 (and MFiT5, 6) super earner/saver so I can reach my crazy goal

Hi FreedomGirl,

There was an article in the money section of Saturday's Times that set this all out (the three years thing and the importance to anyone who is a higher rate taxpayer who did not take full advantage of their pension payments). My understanding is that you can go back 3 years, the new set up starts in April, so next year you could go back to two years of the higher tax-free allowance and the year after that you could only go back to the last year before the lower allowance kicked in (April 16) - if that makes sense.

So in summary, while you can go back three years, my understanding from the article is you could spread that over three years. You could check this with HMRC - my husband rang them on a Saturday last January and they were really good and really helpful and the query was about his pension contribution. He got put through to a tier 2 (expert) who answered his queries on the spot (and he got a nice tax refund of 20% of his contribution - that would have been 40% for higher rate taxpayers!). I think they have extra staff available in the lead up to the end of January Self-Assessment submission deadline.

I just checked for the name of the article and there are two:

The £6bn raid on Britain's pensions (Mark Atherton)
Taxing Times: your guide to pension changes (Robin Ash)

I have saved them to my articles and I think I could email them so if you can't access them and you want them, pm me your email and I will try and send them

SL

Lomcevak

I just checked for the name of the article and there are two:

The £6bn raid on Britain's pensions (Mark Atherton)
Taxing Times: your guide to pension changes (Robin Ash)

I have saved them to my articles and I think I could email them so if you can't access them and you want them, pm me your email and I will try and send them

I'd certainly be interested - I can't see behind the Sunday Times paywall to find the articles, but this is an area that i'm vaguely aware of but don't understand ... and think I should.

trix-a-belle

Welcome to all the newbies.
I think i'm pretty much up to date with notifications of challenger numbers & target updates in the first post but will have another check through this evening, 2 weeks to go till kick off!

trix

FreedomGirl

Suffolk Lass,


Thanks ever so much for the tips, I know someone who has a subscription so can get the articles from them.


Daft of me, never occurred me to phone HMRC


FG

shangaijimmy

#8 - having reviewed my spreadsheet and budget I've just sent a form to updated my target by a further £5,000. So target is now to reduce from £126,000 to £85,000 😱

trix-a-belle

Less than a week to go to kick off!!!

- [STRIKE]Pavlov's dog[/STRIKE], taka, [STRIKE]SuperSecretSquirrel[/STRIKE] & Twiggy please can you update your targets.

Trix

SuperSecretSquirrel

Hi trix-a-belle

I'm going for a "increase my savings" target this time round.

At the start of this challenge we will be approximately 15k ahead of mortgage neutral (sum total: cash, s&s, mortgage owed, tax estimate). A realistic target in three years time would be MN+45k (a 30k improvement). A more ambitious but hopefully doable target would be MN+60k (a 45k improvement), so that's what I'm going for.

For the purposes of this challenge "Build up my savings from £15,000ish to £60,000" seems like a good fit.

I'll update my real starting figure on the 24th, but have submitted a placeholder of 15k for now. Thanks!

pavlovs_dog

I won't know my starting balance untl the weekend, shall update then

brizzledfw

The countdown to this challenge has started in my house

SuperSecretSquirrel

Hello again!

Just been on the phone to the mortgage company, official mortgage balance is now -£35,583.91.

Add to this a tax estimate of -£329.68, cash at £44,117.33, and stocks and shares at £6,529.34, and I arrive at us currently being MN+£14,733.08.

I'm declaring my official start balance as £14,733.08, with an aim of hitting 60k or more in three years time.

Good luck everyone!