Taking 25% tfls to reinvest in isa

Paul_Herring

And what crash are you referring to?

The one that happens every 7 years or so? 

Just a guess

gm0

shortseller09 said:

gm0 said

LTA can be a reason to crystallise early and hard so the growth doesn't get charged.

Would you mind clarifying, unless the crystallised pot is drawn down, it is still LTA liable is it not?

No problem.

So many threads on this.  What you crystallise is liable for and tested up to the standard LTA (or a protection certificate LTA if you have one for a large previously frozen pension).  Calculated each time you take some as a % used of the total until all 100% gone.

Taking PCLS cash lump crystallises your pension to 4x that amount the 1/4 comes out and the residual 3/4 becomes crystallised funds marked for drawdown "crystallised" but still in the pension and invested until drawn which can be years later. 
If there is an excess of funds over 100% LTA then it is hit when crystallised.  You then get tested for anything uncrystallised and for the cash value of crystallised at 75.  The list of BCE events is longer but this is the thing a lot of people miss for ages when first introduced to LTA jargon.  Forgetting the growth in the first 20 years of a 40 year retirement. 

From 55-75 *all* the growth (inflationary, real, illusory (sterling abasement), can build the LTA charge in two ways - cash value for second test, and uncrystallised benefits over LTA.  But it doesn't have to.   Sure - you have added to your IHT estate by the amount taken out.  But you have insulated yourself from the future growth of that money for LTA purposes as it is no longer in a wrapper (pension) where LTA exists. You sweep up to 25% off the table.  What happens to it after that is up to you.  Once it is in an ISA it can be again in the same underlying assets and growth is not then subject to penalties. In an investment account unwrapped it is subject to CGT upon disposals but again not subject to LTA penalties.
If you consume it as early pension income and gift to charity or heirs then the tax on "growth" of the drawn portion is not relevant.

This is why people consider what I said or others hope to time crystallisation events "into dips" to squeeze more into a given percentage.  And there are those who are sitting on uncrystallised growth with a bet on regulation changing again before 20 years are up.

Albermarle

And what crash are you referring to?

The one that happens every 7 years or so? 

Just a guess

Or the one many are still expecting later this year in the wake of Covid 19 , but  the markets seem to think differently so far !

cfw1994

dunstonh said:

Am reluctant to reinvest untill after impending crash that seems likely. I know timing the markets is not recommended, maybe drip feeding 10k per month would be better. 

It may be better but historically phasing results in lower returns in the majority of periods.

And what crash are you referring to?

I’m a fan of drip feeding investments in (“pound cost averaging”)...but accept that about 2/3rds of the time, I will be wrong with this approach!  This year does feel exceptional....and I’m at it again....
On the topic of the “impending crash”....well, we’ve had a dip, now mostly recovered....it *feels* like we are due another dip (recession anyone?).......
...... & yet....& yet.....the world we live in changes very very fast compared with even 10 years ago.  I’m not convinced there is a further “impending crash” ahead this year.  Where did I leave that crystal ball?

Albermarle

I’m a fan of drip feeding investments in (“pound cost averaging”)...but accept that about 2/3rds of the time, I will be wrong with this approach!

It is not wrong , it is just your preferred method, as the lump sum approach makes you feel nervous .

AnotherJoe

merlin321 said:

Thanks for replies, yes never considered that isa privileges could be withdrawn also. But suppose it may be worth doing to keep under the £85000 limit in case aj bell go bust. (very unlikely I know).
Another issue, have transferred from Aviva in cash, Minus the small property fund, thats stuck at the moment.
Am reluctant to reinvest untill after impending crash that seems likely. I know timing the markets is not recommended, maybe drip feeding 10k per month would be better. 

The £85k limit isn't for protection in case AJ Bell go bust. You should be fine in that case, your investments are segregated from their finances.

It would come into play if there was some sort of scam going on and they never actually bought any investments for you but merely told you they had. A bit like Madoff.

jamesd

AnotherJoe said:

The £85k limit isn't for protection in case AJ Bell go bust. You should be fine in that case, your investments are segregated from their finances. 

Actually beyond 85k the protection isn't total. If there isn't other money the investors are going to have to pay the costs of their administration because someone has to. Another firm taking all of the customers quickly is one of the least bad outcomes.

AnotherJoe

jamesd said:

AnotherJoe said:

The £85k limit isn't for protection in case AJ Bell go bust. You should be fine in that case, your investments are segregated from their finances. 

Actually beyond 85k the protection isn't total. If there isn't other money the investors are going to have to pay the costs of their administration because someone has to. Another firm taking all of the customers quickly is one of the least bad outcomes.

Good point, and welcome back James not seen you around for a while