FIREside Chats

Suffolk_lass

@HTB_newbie - A few follow up comments.

I don't want to be a harbinger of doom but the number of years for a full pension has changed 3 or even four times in my working life and I fully expect the Comprehensive Spending Review to look at it again.

Rather than writing off CB for your DH, registering and receiving the credits would do no harm, and is free, offering a little insurance. You mentioned he has a small DB pension. If he opted out of SERPS (State Earnings Related Pension Scheme) in that employment (most did, as we paid a lower rate of NI Contribution, and crucially, so did our employers, so they encouraged us to do so) those years may only have earned years at the basic rate, not the new pension rate.

And not sure if you are aware that the State pension forecast is predicated on each tax year being fully contributed to up to the April before you reach SPA, not accrued years to date.

If you are sacrificing salary to take your personal taxation rate down from higher to standard rate, I believe standard rate tax payers can share their tax with their spouse, but this is not available to higher rate tax payers.

From a personal taxation perspective, if you both own your holiday let, you should be sharing the income from that (and paying tax on it. We put our other property in DH and DS's names so my tax position is not impacted by it (it is part of DH's retirement income) - as tenants in common, rather than joint tenants.

One-step-at-a-time

Hi all,

Happy to have found this thread and am enjoying reading through - I'm a late starter (having just finished paying off a mountain of consumer debt) and am hoping to get myself in a strong enough position to think about retiring by 60, which gives me 10.5 years. It'll be a challenge to get there, but one that I'm up for!

LadyWithAPlan

@hugheskevi thanks for the feedback.  I can see that using OP mortgage  payments as a great expenditure discipline over and above the rest. I like you used all the excess  free money /income as well to OP - definitely will be doing that as well.
Even just moving my unspent grocery spending pot last month to my deposit savings  had me more focused rather than usual on not spending.

@edinburgher my broker said he would need to look for me at a split repayment and IO mortgage   - rather than just an IO. I can pay the repayment - I just want to grab the SIPP tax relief whilst I can.

I have a friend on an IO mortgage though for the last 18 or so  years ... he has not overpaid principal at all and not saved for the end bit ..he is having a fabulous no dependents  lifestyle  but  the property value has in no way gone up enough - and he is not ever planning to move ... this is why I was always nervous of an IO mortgage  - I do think though  now I have proved to myself at least  I am responsible  and disciplined enough to save into my SIPP/ISAs and do odd OPs as well.

stoplurking

Suffolk Lass - re HTB Newbie’s holiday let -could  all profit  be taxed on OH if it meets HMRC definition of ‘Furnished Holiday Let’. It doesn’t need to be split 50/50 even if held jointly? See PIM1030 on the .gov website, under the heading “Jointly owned property : husband & wife or civil partners” ( that heading needs to be changed to Spouses & Civil partners but they are quite slow in updating).  

Thanks for all the hints and tips on this thread.  SL

Suffolk_lass

stoplurking said:

Suffolk Lass - re HTB Newbie’s holiday let -could  all profit  be taxed on OH if it meets HMRC definition of ‘Furnished Holiday Let’. It doesn’t need to be split 50/50 even if held jointly? See PIM1030 on the .gov website, under the heading “Jointly owned property : husband & wife or civil partners” ( that heading needs to be changed to Spouses & Civil partners but they are quite slow in updating).  

Thanks for all the hints and tips on this thread.  SL

@stoplurking I think it depends on the set up. I was able to discuss our plans with a tex professional before we proceeded and I was left with the understanding that if I owned any part of that house, I would need to account for it on my tax return. If (say) I owned 25%, DH owned 50% and DS owned 25%, DH and I would be jointly and equally responsible for 75% unless we specifically told HMRC that we wanted the income to reflect the share we own and in that circumstance DH could be responsible for 50% of the income, I would be responsible for 25% and DS would be OK because it is his primary residence.

I am not a tax expert but I did receive binding advice at the time. I may be out of date, or it may have changed but that notice also says the following (consistent with what I was told):

Jointly owned property: no partnership...

However, where the joint owners are husband and wife, or civil partners, profits and losses are treated as arising to them in equal shares unless:

• both entitlement to the income and the property are in unequal shares, and

• both spouses, or civil partners, must inform HMRC that their share of profits and losses is to match the share each holds in the property.

  
  

stoplurking

Hi Suffolk Lass - that is the starting point for property owned jointly between spouses/CPs. However, as furnished holiday lets are deemed to be a trade the couple can split the profit how they wish. They have to meet HMRC requirements in terms of days let/available to let etc in order to get this treatment.   Where FHL treatment doesn’t apply  they can follow the procedure you quoted above.  

SL 

gallygirl

Sorry to see this thread has died a bit of a death the last few months!

Come on folks, what are you all doing to move towards FIRE?

bluenose1

gallygirl said:

Sorry to see this thread has died a bit of a death the last few months!

Come on folks, what are you all doing to move towards FIRE?

Well I am 55 and continue to put the maximum allowed into my works pension, definitely worth considering especially if your employer offers salary sacrifice. When I was a newbie to pensions I didn’t realise how much my tax and NI would reduce as I increased my contributions, therefore have lived off savings to take advantage of this.  
Hoping to retire in next 12 months, and just taking it one month at a time. I am lucky now to be in a position where I can afford to retire with a moderate income, so every extra month worked is a bonus and will make like financially slightly more comfortable. 
This site is really good for working out how much increasing pension contributions will cost per month from your salary.  https://www.thesalarycalculator.co.uk/salary.php
I know by 67 when my state pension kicks in I will have a really good income, but would like to retire while I still feel healthy enough to fully enjoy it. 

Ironically I only realised the advantages of putting extra in my pension about 3 years ago, when an accountant at a talk I went to said if I had any extra income I would put it in a pension. Can remember thinking to myself I wonder why he said that?!!!

powerspowers

gallygirl said:

Sorry to see this thread has died a bit of a death the last few months!

Come on folks, what are you all doing to move towards FIRE?

Not much to report! I haven’t increased my AVCs yet but will! I’ve applied for a new job as part of a work restructure which I’m pretty confident I’ll get and I’m going to chuck the whole pay increase at the AVCs. Im not entirely sure it’s the most profitable option but I need something easy that doesn’t take up much brain space. 

How are you doing gg? 

powerspowers

Gallygirl you have inspired me to do a small task- I’ve managed to register and check my AVC account- everything present and correct and has increased in value already which is a plus 😀 
unfortunately can’t increase my contributions online but I am motivated again now, will update when I sort it. Excited to be able to check my pot regularly, it might get addictive 

start date - feb 2019
contributions £1600 
plan value £2000.88 as of 20/11/21
22 years to go 😱

(this is in addition to dcb pension and aim is to plug the gap before sp is paid)