Drawdown - one chance to take the TFLS?

jamesd

While you didn't directly miss anything, notice my mention of interest? Have a read of Tax on savings interest to learn about the 6k of tax free interest you can also get on top of your personal allowance. Things like P2P and bond interest are included.

Five thousand of that is the starting rate for interest and this is reduced for other income, including from pensions. So you can't combine it with the pension and VCT approach. The personal savings allowance will stay around, though.

AnotherJoe

Plus also when not earning I can put in £2880 every year which will bump up another £720. Also just occurs to me, in my last tax year at work which will be 2 months, I can essentially put my whole salary into the SIPP (minus what my employer already put in via payroll ) and get a [STRIKE]20%[/STRIKE] 25% uplift it into the pension even if I've paid no tax? Which seems screwy but I think thats the way it works?

I must read up about VCTs, I know HL have a section on them so I'll probably just buy within the standard shares account rather than look elsewhere

EDIT: Having a quick look, I see i can get back 30% income tax relief (maxxed out at what i pay in tax) , so it would appear if I like the look of them I ought to be buying one this tax year since next year my income tax will be zero as I'll earn under the PA.

Thrugelmir

AnotherJoe wrote: »

I must read up about VCTs, I know HL have a section on them so I'll probably just buy within the standard shares account rather than look elsewhere

EDIT: Having a quick look, I see i can get back 30% income tax relief

The underlying investment should be your primary interest. Don't be distracted by the tax relief. There's no such thing as a free lunch.

jamesd

Right on all points except that 20% tax relief means that 25% is added to what you pay in. I'm assuming that you have enough annual allowance available. Base is 40k and you can also carry forward unused allowance from the last three years.

AnotherJoe

Thrugelmir wrote: »

The underlying investment should be your primary interest. Don't be distracted by the tax relief. There's no such thing as a free lunch.

Good point, I've been reading one of the prospectuses, it is high risk stuff even if quite a few of these companies have a decent track record.

jamesd

They vary a lot in risk level, partly depending on how mature the businesses they invest in are. At the higher end are unsecured equity in new businesses. Towards the lower end you'll find relatively late stage and asset backing like property. The one I tend to mention here is at the lower end, Albion.