Trying to learn

LateStarter

This may sound terribly stupid, but so far the plan seems to be:

• build up some cash (and try to get some interest on it)
• add quite a bit more to the pension (and try to choose the right mix of funds/trackers to invest in)

I'm perplexed; surely there's a lot more than this.Where do ISAs and SIPPs and everything else fit in? Or are those only for people who have a lot more money?:(

Dazed_and_confused

Cheers, yeah I'm just getting my head around this. Can you tell HMRC how much you plan to put in and they adjust your tax code in advance, or is it done in arrears?

With a company pension there is often no additional tax relief to claim because your employer automatically gives the maximum relief possible by the net pay method i.e. salary £50,000 less 10% pension contribution = £45,000 taxable pay.

You only need to tell HMRC if it is a relief at source scheme where the pension company adds basic rate relief to the fund and you need to claim any additional relief due from HMRC.

HMRC will adjust your tax code if possible but if you tell them after the tax year ends then they will send you a refund (or you claim it through your Self Assessment return).

Note you cannot get tax relief for one tax year through the tax code for a different tax year.

justme111

LateStarter wrote: »

This may sound terribly stupid, but so far the plan seems to be:

• build up some cash (and try to get some interest on it)
• add quite a bit more to the pension (and try to choose the right mix of funds/trackers to invest in)

I'm perplexed; surely there's a lot more than this.Where do ISAs and SIPPs and everything else fit in?:(

I am not sure why you made this conclusion. Posts number 3 and 5 in this thread and others as well talk about sipps and isas.

LateStarter

justme111 wrote: »

I am not sure why you made this conclusion. Posts number 3 and 5 in this thread and others as well talk about sipps and isas.

Maybe this is where I'm being dim? If my cash fund is 10-15k, is there any point in putting it in an ISA - there's no way I'll go past the tax threshold on interest?


And as Albermarle pointed out, I can esentially put pretty much everything else into the company pension, rather than a seperate SIPP.


Honestly, what am I missing?

justme111

I see. I think it has little to do with how much money and a lot to do with circumstances. For example you do not think you would be able to retire early while many other people would use SIPPs to bridge over the gap between the time they stop working and the time they can collect their pension. May be charges or options of the work pension are not so appealing . May be they do not want to deal with HR every time they change jobs to get details of their pensions , choose allocations , find out what are the options - it can be right pain - so they just leave their minimal contributions work pensions be and create something separate. May be they want other provider for added security.
Re Isas- you have now 12 k savings. If you continue contributing it will be more. Many people prefer investment isas to sipps for part of their money - accessibility and tax free income from them being a consideration. For you as you are close to the age you could access them anyway it is not so important but still - if you happen to need to access your money while you still working you would havento pay tax on 75% of the money you get from pension while isa would be tax free.