Overpay mortgage vs SAS ISA Vs pension

ug02070

Hi all,

This is my first post on a long time so please be gentle 😁

I am a higher rate tax payer and am hoping for some advice to make my money work for me rather than the other way around.

I currently have a mortgage of 188k, 2.19% on a 30 year term. I pay 5% of my salary into the company pension as they double my contribution. As a lot of people are I feel I'm taxes hard with not only the tax rate but also the repayment of child benefit.

I'm assuming it's best to invest more money and reduce my salary by paying into SAS ISA or by paying even more into the pension although the company contribution is maxed. Alternatively do I use the cash that has been taxes to overpay ony mortgage? To me it's an impossible calculation and very complex but I would welcome any advice.

Many thanks

thickasabrick

You might be better posting this on the "The ISAs & Tax-free Savings Board" as this seems more about investment aims.

To quote The Monevator "Tax efficiency is important but whatever happens don’t let the tax tail wag your investment dog."

I think you're mixing up how an ISA and a SIPP/Pension tax wrapper work, as pensions give you the relief upfront and ISAs give you the tax break later.
This article from The Monevator explains it better than I can.
https://monevator.com/pensions-versus-isas/

For me 5% (+ 5% from employer) into your pension seems quite low, especially given the upfront tax relief for a higher rate tax payer.
https://www.moneysavingexpert.com/savings/discount-pensions/#need-3

I'm only a couple of years away from 55 so the advantages of investing through my pension far outweigh the disadvantages. I understand not everyone can live on 70% of their salary but the amount I save in tax upfront makes it worthwhile for me.

20% salary sacrifice and 5 % employer contribution for my company pension. I also have a target of 10% into my SIPP, this is flexible as I still want to enjoy life now. Although I have hit 6% so far so might just make it the full 10% before the 5th of April

ug02070 wrote: »

Hi all,

This is my first post on a long time so please be gentle 😁

I am a higher rate tax payer and am hoping for some advice to make my money work for me rather than the other way around.

I currently have a mortgage of 188k, 2.19% on a 30 year term. I pay 5% of my salary into the company pension as they double my contribution. As a lot of people are I feel I'm taxes hard with not only the tax rate but also the repayment of child benefit.

I'm assuming it's best to invest more money and reduce my salary by paying into SAS ISA or by paying even more into the pension although the company contribution is maxed. Alternatively do I use the cash that has been taxes to overpay ony mortgage? To me it's an impossible calculation and very complex but I would welcome any advice.

Many thanks