What to do with spare £1500 per month?

ColdIron

californiagirl wrote: »

So if he contributed, say, £10k PA into a pension, that would move him entirely out of higher rate tax?

If hubby is on £50K before tax and he put £7,000 (£5,000 from 06/04/17) into a pension he would pay no tax on it and only basic rate tax on the remainder of his income

unitedwestand

Putting food in your mouth, clothes on your back and a roof over your head that's yours have been the priorities of mankind since the cavemen.

It's only in recent history folk have become deluded in debt and in-broiled with profiteering financial institutions.

Well done californiagirl, lot to be said for sticking with commonsense these days :-)

Anonymous101

Not to sound like a total pleb, but can you explain this?

There's no such thing as a silly question. :money:
A general rule of thumb around pension savings is that if you half the age at which you start to save into a pension, thats the percentage of your salary you should be saving. So if you're 30 and earn £50k, you should be saving 15% of £50k, £7,500 a year.


So if he contributed, say, £10k PA into a pension, that would move him entirely out of higher rate tax?

Yes. As other have said much less than £10k from next tax year. To answer your question. Any contributions you make into a pension are tax free. That is by contributing to a pension the government will refund any tax you have paid on the income. This happens automatically via a pension provider for basic rate tax payers i.e. you pay in £1000 and they will add the basic rate tax of 20% to this so you'll effectively get £1200 invested. For higher rate tax payers you need to inform HMRC via your tax return or just over the phone and they'll change your tax code to give you the other 20% back.

stoozie1

Coldiron wouldn't it be less than that as it's the grosses up contribution that gets used? Hence 4k when he has 5k to 'lose' in 17/18?

YorkshireBoy

inflationbuster wrote: »

@californiagirl - l would save your money in an ISA
Your ISA can be your emergency fund

They intend to save £15-20K over the next year or so, maybe less.
They will then spend most/all of this on a motor car.
Now the Flex products mentioned above will pay 5% AER gross on all this money (up to £19.5K), whereas the (cash) ISA will pay around 1% AER if they're lucky.
Still think this cash should be saved in an ISA?

Anonymous101

stoozie1 wrote: »

Coldiron wouldn't it be less than that as it's the grosses up contribution that gets used? Hence 4k when he has 5k to 'lose' in 17/18?

He needs to "lose" £5k gross so only £3,600 or there about's nett contributions?

californiagirl

inflationbuster wrote: »

@californiagirl - l would save your money in an ISA and continue leasing.

Wow, I'm so surprised. I would have thought the general consensus would be that leasing is a total waste of money, especially when I think of how it is half of what our monthly mortgage payment was and yet we give it back at the end of the term.

So buying a second hand car is a dumb idea?

Anonymous101

californiagirl wrote: »

Wow, I'm so surprised. I would have thought the general consensus would be that leasing is a total waste of money, especially when I think of how it is half of what our monthly mortgage payment was and yet we give it back at the end of the term.

So buying a second hand car is a dumb idea?

I think the theme is to think about it. Second hand car's still depreciate. Perhaps the loss in value over the term will be more than leasing would have been? Or maybe a second hand car carries risk of breakdown? Servicing costs etc?

I try to keep an open mind and investigate these things.

ColdIron

stoozie1 wrote: »

Coldiron wouldn't it be less than that as it's the grosses up contribution that gets used? Hence 4k when he has 5k to 'lose' in 17/18?

I'm taking about gross contributions from pre tax income, don't forget OP and hubby have limited companies

Anonymous101

ColdIron wrote: »

I'm taking about gross contributions from pre tax income, don't forget OP and hubby have limited companies

Whilst we are on that theme... Why is he a higher rate tax payer in the first place? :money: