Contractor turning 40, no pension sorted

Makkusu

jamesd wrote: »

This basic rate tax payer - me after a high level of pension salary sacrifice - cut £4,500 off their income tax bill by buying VCTs in 2016-17. That's an extra £4,500 in my pocket, not HMRCs, courtesy of buying £15,000 of VCTs. If the income tax bill is £2,000 that takes a £6666 buy to eliminate it, though it's normal to buy only in multiples of £1,000 so maybe just buy £6,000 worth.

Because of past buys and that I'll be getting about £3,000 a year of tax exempt dividends. That'll pay my mortgage and council tax.

Basic rate tax payers aren't any less deserving of tax breaks than anyone else.

A business owner can do things like employer pension contributions and paying profit as dividends as well but the money which is going to be spent after coming out of the business does eventually get taxed when it's high enough.

My point being £2k reduced tax bill is not worth the risk of a VCT considering the age and pension fund at present. Build a better portfolio then diversify to VCT's if you want.

There are some stinking VCT's on the market, pensions perform fine and you still get tax relief, if a spare £6k is lying about after taking care of the pension the throw it into an alternative investment. I think it's a very silly strategy to depend solely on VCT's given his position, they simply are nowhere near secure enough.

gsf600y

I see the points behind both views. I guess it's about appetite for risk.

I suppose right now I want to get some security, mainly.

gsf600y

:Ajust comparing HL and II sipp fees

that's investing 1500 a month in funds and 500 and month in shares.....
Is is me, or is HL expensive over 10 years?

steampowered

gsf600y wrote: »

As my wife is also an employee at the moment, is a 2nd pension a good idea for her too? Or is ploughing all the money into 1 pension a better idea?

Are you saying your wife is an employee of a different company? If so, will your wife's employer match her contributions?

If so, that's free money. So she might as well put in enough to get the max contribution.

gsf600y

no, she's employed by my company, but hopefully will return to full time work soon.