Pension Planning. How does this look ??

enthusiasticsaver

OP must be paying HR tax if on £45k so I don't think his wife can claim marriage allowance now as he has to earn between £11k and £43k.

When he has retired she can though.

AnotherJoe

I'm surprised you are looking to retire with all that debt and no savings. You say your debt is OK because you can get higher rates elsewhere but then where are your savings ? Where have you saved £55k at better than 3%? Many here would like to know !

I wouldn't be looking to retire until the £55k debt was replaced with some decent savings (or is that whatvthe AVCs amount to,what's the tax position on taking those?) and more progress had been made on the mortgage, 3% interest rate is relatively high have you looked at transferring to a lower rate ?

Dazed_and_confused

enthusiasticsaver
OP must be paying HR tax if on £45k so I don't think his wife can claim marriage allowance now as he has to earn between £11k and £43k.

When he has retired she can though.

The higher rate threshold in 2018:19 is £46,350 so depending on other taxable income such as savings interest or company benefits they should be ok.

And don't forget salary is irrelevant for tax purposes, it's taxable pay which counts. It looks like op is in a company pension scheme so that £45,000 salary could easily be a taxable salary of less than £40,000 depending on the pension contribution rate.

michaels

One thing the OP should bare in mind is that once retired they may not be eligible for new cheaper rate mortgage deals and end up on a mor expensive SVR.

Similarly rolling the CC debt onto new intro offers may become harder if less earned income reduces credit availability.

Ending up on a 4%+ mortgage rate and having to pay credit cards off at 18.9%+ would be extremely expensive....

AlanP_2

LULULU1 wrote: »

Can you access your AVCs independently of the main FS/DB pensions?
Yes I can access my AVC separately of my FS pension


Some schemes you can, some you can't.

Can either of the AVCs be taken tax free as the 25% PCLS at the same time as the main FS/DB pension?
Yes the AVCs can be take a completely tax free.

OK, but can you do both at the same time?

It's not clear to me how you could access AVC independently of main FS benefits and take it tax free as it would be based on a calculation involving FS pension + value of AVC.

With the AVCs we have alongside our DB pensions they can be taken Tax Free (within overall limits) at time of commencing main scheme benefits OR transferred out to a PP/ SIPP at an earlier date where only 25% of pot could be taken tax free.

enthusiasticsaver

Dazed_and_confused wrote: »

enthusiasticsaver
OP must be paying HR tax if on £45k so I don't think his wife can claim marriage allowance now as he has to earn between £11k and £43k.

When he has retired she can though.

The higher rate threshold in 2018:19 is £46,350 so depending on other taxable income such as savings interest or company benefits they should be ok.

And don't forget salary is irrelevant for tax purposes, it's taxable pay which counts. It looks like op is in a company pension scheme so that £45,000 salary could easily be a taxable salary of less than £40,000 depending on the pension contribution rate.

I applied for the marriage allowance last week and the HMRC application form says your husband or wife has to be earning between £11501 and £45000 in England £43000 in Scotland. No mention of pension contributions.

kidmugsy

enthusiasticsaver wrote: »

OP must be paying HR tax if on £45k so I don't think his wife can claim marriage allowance now as he has to earn between £11k and £43k.

Isn't the £43k figure for Scotland only? £45k elsewhere. Slightly bigger in 18/19.

Dazed_and_confused

There are extensive threads regarding Marriage Allowance on the Cutting Tax board and the figures you quote are simply not true/relevant.

To apply you have not got to be a higher rate payer, having income less than the current Personal Allowance isn't a legal requirement. For most people it would make no sense to apply if you have income more than the Personal Allowance but as there are currently three 0% tax band in existence you could easily have taxable income of £20,000 apply for Marriage Allowance and still have no tax to pay.

And pension contributions play a significant part for some in determining if they are a higher rate payer which is what the legislation specifies for Marriage Allowance. Income is irrelevant. If you have a "salary" of £45,000 and pay 10% into a company pension scheme before tax then your taxable salary, which is what your tax liability is based on, is actually only £40,500. If you didn't pay into a company pension but paid the same (gross) contribution of £4,500 into a personal pension/SIPP this increases the amount of basic rate tax you can pay.

Dazed_and_confused

kidmugsy

Isn't the £43k figure for Scotland only? £45k elsewhere. Slightly bigger in 18/19.

Yes but neither has any relevance as far as Marriage Allowance is concerned. Probably over simplifying it but really you just need to not be a higher rate payer

LULULU1

So I started a post in 2018 and wanted to update it and see how people might be thinking of our plans now...

I now 58 and have a full time job paying 45k per year gross. I am hoping to retire from this role next year in March 2022 and work part time with an income of approx 10k per year gross. I will just tip into the higher tax bracket this year by 2k as I still pay a lot into my AVC, Approx £1k per month 
I have a final salary pension which will pays me £15k gross a year which I now taken to help us pay down our debts.

My wife is 54, she is earning gross 12k per year. She has a final pension of £5k per year due when she is 55.
Both of us are due to receive full state pension.

We have a mortgage of 114k at 1.64% interest rate fixed for 5 years and due to finish in 19 years time. This is still high as currently we favour investments over mortgage overpayments but can flip this if things change when rate expires in 2024. 

We a few small debts less than 5k in total which we will pay off before retirement.
We have 105k in our AVCs which we can access when we reach 55. (me 45k, wife 60k)
We have 100k in my wife’s SIPP.


Any other thoughts or ideas would be greatly appreciated.