Really late retirement plan...

kidmugsy

EdSwippet wrote: »

£750/month is £9,000/year and would have been okay in the past, but unfortunately this is now far in excess of the new £4,000/year limit.

Is it certain that it's going to be cut from £10k? Will we have to wait until the Budget to find out?

Audaxer

EdSwippet wrote: »

At this point it seems appropriate to invoke the spectre of the current political football known as the 'Money Purchase Annual Allowance'.

£750/month is £9,000/year and would have been okay in the past, but unfortunately this is now far in excess of the new £4,000/year limit.

Does that mean they are planning to reduce the maximum annual contributions to a SIPP from £40k to £4k?

Steve_GP220

This is how ignorant of the facts I am. A simple question - I cannot save £750 a month in say a savings account, maybe an ISA and then keep all of that money at the end of 12 years? Even though I've already paid tax on it I will still be hit for more? I understand when money is used to make more money the tax man is interested. I get that. But my straight savings get hammered? If yes, then I understand why people hide their wealth under a mattress. Not that I ever would nor would I ever condone it, of course.

ColdIron

Audaxer wrote: »

Does that mean they are planning to reduce the maximum annual contributions to a SIPP from £40k to £4k?

No, just the maximum annual contribution once you have accessed your pension. It was going to be in Hammond's Finance Bill but then they announced an election so it was deferred. The Government have stated their intention to pass the legislation, along with the reduction of the dividend allowance to £2,000, in the current parliament

greenglide

If you have cashed in a previous pension then you are probably caught by the MPAA which limits pension contributions to £4,000 in a tax year.

greenglide

But my straight savings get hammered? If yes, then I understand why people hide their wealth under a mattress.

You get taxed on the interest received, not the money you already have.

Save £100 at 1% and you receive £1 interest. Tax at 20% of the £1 is £0.20.

Using emotive terms like "hammered" does not help.

EdSwippet

kidmugsy wrote: »

Is it certain that it's going to be cut from £10k? Will we have to wait until the Budget to find out?

As certain as is possible at this point. From Finance Bill:Written statement - HCWS47:

The Finance Bill introduced in March 2017 provided for a number of changes to tax legislation that were withdrawn from the Bill after the calling of the general election. The then-Financial Secretary to the Treasury confirmed at the point they were withdrawn that there was no policy change and that these provisions would be legislated for at the first opportunity in the new Parliament.

The Government confirms that intention. It expects to introduce a Finance Bill as soon as possible after the summer recess containing the withdrawn provisions. Where policies have been announced as applying from the start of the 2017-18 tax year or other point before the introduction of the forthcoming Finance Bill, there is no change of policy and these dates of application will be retained. Those affected by the provisions should continue to assume that they will apply as originally announced.

The Finance Bill to be introduced will legislate for policies that have already been announced. In the case of some provisions that will apply from a time before the Bill is introduced, technical adjustments and additions to the versions contained in the March Bill will be made on introduction to ensure that they function as intended. To maximise certainty about the exact provisions that will apply, the Government is today publishing updated draft provisions.

Its an extremely poor way to implement policy, but unfortunately pretty much par for the course with the recent run of governments.

Steve_GP220

greenglide wrote: »

Using emotive terms like "hammered" does not help.

:beer: Fair enough... but I was brought up on the street dude! Its an emotive world out there!

Audaxer

Steve_GP220 wrote: »

This is how ignorant of the facts I am. A simple question - I cannot save £750 a month in say a savings account, maybe an ISA and then keep all of that money at the end of 12 years? Even though I've already paid tax on it I will still be hit for more? I understand when money is used to make more money the tax man is interested. I get that. But my straight savings get hammered? If yes, then I understand why people hide their wealth under a mattress. Not that I ever would nor would I ever condone it, of course.

The interest on a Cash ISA and dividends and gains you make in a Stocks & Shares ISA are not subject to any form of tax.

Steve_GP220

Audaxer wrote: »

The interest on a Cash ISA and dividends and gains you make in a Stocks & Shares ISA are not subject to any form of tax.

That was why I originally dumped the straight cash ISA idea for the investment ones like stocks and shares. My options remain open. I'll just put the money aside and watch these forums.