tapered allowance nightmare

r2i

Hi Experts

I'm in a NHS pension scheme and at receiving end of 'tapered allowance taxes' , since recent changes to the rules for Annual allowance...

I wonder if it is worthwhile staying in pension when you have only 10-15k allowance left
( total net income 185k including modest NHS income, & income from BTL properties and 1 commercial property ).

The irony is I've to pay taxes towards growth of pension as well and not on net input... No carry forward left..

Dilemma is whether to continue paying additional 20k+ tapered pension taxes or stop paying in NHS pension?

Friendly IFA says 'continue paying inNHS pension till reach LTA' (nowhere near) as still good scheme. SIPP will allow only 10-15k..
Scheme pay (loan) is an option for growth over standard 40k.. with interest till retirement..

Thinking to get rid of BTL properties as still mortgaged...Rent is helping to pay these taxes as well as increasing tapered taxes !! Real irony!..

Any thoughts on how to safeguard retirement if I leave pension scheme or get rid of BTL which I invested in to help me to retire early?

Thanks in advance for your suggestions/ views especially from people who are in similar situation or experts..

-Rob

ps: I'm in search of NHS pension specialist pension advisor and personal recommedations will help me please..

anselld

Doesn't sound like you will struggle overall with safeguarding retirement, but sell the BTLs over a number of years to utilise CGT allowances and (if you want to remain invested in property) re-purchase within a Limited Company.

Brynsam

anselld wrote: »

sell the BTLs over a number of years to utilise CGT allowances and (if you want to remain invested in property) re-purchase within a Limited Company.

...but do read some of the articles readily available to give you some thoughts to ponder on whether, in your situation, it would be advisable to do so via a limited company: http://www.thisismoney.co.uk/money/buytolet/article-4596926/Should-limited-company-buy-let.html

kidmugsy

r2i wrote: »

I'm in a NHS pension scheme and at receiving end of 'tapered allowance taxes', since recent changes to the rules for Annual allowance...

... total net income 185k including modest NHS income, & income from BTL properties and 1 commercial property.

In your shoes then, with IFA help, I'd consider getting rid of enough property income that I could fill up my pensions, and I'd look to invest in things that provide capital gains rather than income, or provide income that is not taxable.

An income of £100k would avoid the 60% tax band, avoid the 45% tax band, avoid the taper, and still leave you very well off. Wouldn't it?

r2i

Thank you all for above useful views especially re BTL options.
What about nhs pension? It may take few years to reduce taper liabilities .. Meanwhile should I continue to pay in pension or to stop?

r2i

kidmugsy wrote: »

In your shoes then, with IFA help, I'd consider getting rid of enough property income that I could fill up my pensions, and I'd look to invest in things that provide capital gains rather than income, or provide income that is not taxable.

An income of £100k would avoid the 60% tax band, avoid the 45% tax band, avoid the taper, and still leave you very well off. Wouldn't it?

Thanks.. I didn't understand the bit regarding ''I'd look to invest in things that provide capital gains rather than income, or provide income that is not taxable''. please can you explain?
Thanks
Rob

kidmugsy

r2i wrote: »

Thanks.. I didn't understand the bit regarding ''I'd look to invest in things that provide capital gains rather than income, or provide income that is not taxable''.

For income that's not taxable you could use ISAs and Premium Bonds. And, once you get your income below £150k, you are allowed £500 p.a. savings interest tax-free. You can also get tax-free dividends from VCTs.

For investments that give their return as (hoped for) capital gains rather than dividends you could look at a range from

(i) the Zero Dividend Preference Shares of investment trusts, to

(ii) shares in the US conglomerate Berkshire Hathaway, or

(iii) precious metal coins - there's no CGT on gold sovereigns, for instance, and obviously no income tax. (To start learning more look at the Royal Mint website.)

Maybe insurance investment bonds are another possibility. This is all the sort of thing an IFA will know far more about than I do.

If you are a glutton for punishment you could even buy index-linked gilts, where the CGs are tax-free and the interest is often tiny. Alas, the total returns will probably prove dismal.

r2i

Thanks kidmugsy
that's really helpful!
You're really knowledgeable..
Rob