Just lost out on early severance package - What Now

jerrysimon

I have set up payment to clear the IF when they end 12-18 months time. I guess I could pay less and then just move it to another interest free card at the end lol

I paid off my mortgage with inheritance from my father. I just liked the idea of having no mortgage payment I guess.

Jerry

robin61

jerrysimon wrote: »

My wife is 55 in october. I checked her payslip and she has earned £8196 this year and contributed £480 to her pension.

Based on this how much can I put in a SIPP before 1/4/16 and get tax relief, £1424 ?

I guess if I do the same next year I can then put in another £2800 ?

I have looked on Hargreaves & Landsdown and can open one on line ?

Regars

Jerry

She can put up to 100% of her earnings in this financial year. I make that a net contribution of £6556.80 (£8196.00 gross). Remember to subtract what she has already paid in of course.
The £2880 is the amount anybody including nil earner can put in and that then becomes £3660 gross. So if she gives up work now she would be able to put that amount in next year.

There is a calculator here.
http://www.hl.co.uk/pensions/interactive-calculators/tax-relief-calculator

jerrysimon

Thanks. Maybe I am being dim

She got £8196 before any deductions (no tax) for pension, union membership etc. so should I put in £2880 or more before end of tax year i.e 1/4/16 ?

Should I do one as well ?

I would fund this from equity from the mortage as I assume the 3.9% I would pay in interest on mortgage would be out performed by the tax 20% relief ?

Or use my interest free credit card



Regards

Jerry

jerrysimon

Ah I think I got it as a non earner after September she will be able to draw out up to 11K without paying tax when she is 55 in October ?

If I had one and retire later and was getting a pension of more than 11K I could not draw out more than 25% tax free.

I see how I could put enought into both of them in the next 12-24 months from my salary to draw out 11K each and fund a year or so, leaving my pension a little longer so it was then reduced less.

Jerry

OldBeanz

£11,000 is three quarters of what you can draw as you can take the 25% tax free on top of that = £14,666.

jerrysimon

Thanks yes that makes sense.

Would it make sense for me to start one as well before the tax year end i.e. would I get a simlar benefit on £2880 ?

Jerry

OldBeanz

You can pay all you earn up to a maximum of £40k less your pension contributions then 8/10ths of that to allow the government to make up the difference.
The GO pension changes of a couple of years ago enabled people in your position to pack money into pensions especially for those like your wife where you can afford to help her.

jerrysimon

Ok so for us both we should put in as much as we can afford though next year as a non earner my wife will only be able to put in £2880. I guess I should put in as much as we can afford up to her max based on her earnings this year.

This way I guess by having two if we then wanted to draw out of them whilst we wait a year or two for my pension we can both draw out £14,666 each without paying tax and the government will have added 25% to any contribution ?

Regards

Jerry

jerrysimon

Given I just want to take advantage of the government addition and it will only be a max of two years should I just do a cash one i.e. I really want no risk ?

I am thinking of putting in 5K i.e. max it out for my wife and maybe 10k for myself ?

Jerry

robin61

If you want no risk at all there are a few companies where you can take out a cash SIPP. However you will get next to no interest. I know Hargreaves Lansdown do one.