I just want to go sailing

Methersgate

I am coming up to 66, still working, health OK, good enough salary, children 16 and 23 but two divorces have left me without capital apart from my pension. I have a full state pension available plus about the same again from private pensions and I am putting £1,000 a month into AVCs. I've messed about in boats all my life and I want to go in for the standard yachtsman's fantasy of sailing off into the Blue by myself,. I suspect that my job will evaporate within the next two years.

I have three questions:

1. I am a higher rate taxpayer and I have just noticed that my employers have been crediting me with the tax not due (if that makes sense?) on my AVCs at the basic rate. How do I set about reclaiming the balance?

2. I intend to be non- UK resident, once I have retired, but to live on my boat. How will that affect my pensions?

3, In order to start putting my plan into action, I would like to start sorting out the boat in my spare time whist still working.. Could I borrow against the 25% lump sum and repay when I do retire? Or would I do better to retire now?

dunstonh

1. I am a higher rate taxpayer and I have just noticed that my employers have been crediting me with the tax not due (if that makes sense?) on my AVCs at the basic rate. How do I set about reclaiming the balance?

Let HMRC know. It is a box on the tax return but if you are not getting a tax return then just give them the information (total gross and net contributions made by you in each tax year).

2. I intend to be non- UK resident, once I have retired, but to live on my boat. How will that affect my pensions?

Depends on which country you become resident in.

Could I borrow against the 25% lump sum and repay when I do retire?

Its not yours to borrow against. There are some hairbrained schemes (usually unregulated or dodgy) that allow it but there really is no point. You are 66. You already have access to the 25%.

Alter_ego

Methersgate wrote: »

I intend to be non- UK resident, once I have retired, but to live on my boat. How will that affect my pensions?

I have done it. Believe me remaining UK resident is the way to go if you intend to insure and register the boat. Also do you intend to maintain a UK bank account?
Ignore this if you have dual nationality or similar.

jamesd

Your tax residence can make a huge difference. For example, Portugal has an option to have a 0% income tax rate on foreign pension income, which includes all money from the 75% part of a pot, however rapidly it's taken. Punitive tax charges in the UK if you become UK tax resident within a few years, it's all taxed at UK rates in the year of return if that's too soon.

Other countries can have a similar situation, the requirements are:
1. the tax treaty between the two countries must say that the rate of the country of tax residence applies to that specific type of pension, often state and private differ
2. the other country must have an income tax. The rate can be 0, 5, 10, whatever, but income tax must exist. This eliminates say middle eastern countries with no income tax.

You can take the 25% from defined benefit including personal pensions at any time from age 55 onwards and leave the rest in flexi-access drawdown for later.

AVCs strictly mean payments into a workplace pension with defined benefit component. Is that what you mean, or is it just a workplace defined contribution scheme? Actual AVCs might be restricted to being taken at the same time as the defined benefit portion, they in some schemes can be used for 25% of the combined DB and AVC values, meaning you pay the money in, get tax relief, then get it out tax free.

Your situation is also one where a transfer out of DB might make sense, notably if you need lots of capital for a boat purchase.

Also worth thinking about VAT on a boat purchase and how that can potentially be avoided or reclaimed.

Brynsam

You're a higher rate taxpayer, so why not spend some of your income on getting proper advice - the sort you pay for, based on a full understanding of your situation/aspirations, rather than a few lines of background?

Then off you sail - hope you have a great time!