Tax free withdrawals

xylophone

Taking taxable income will invoke MPAA limiting future contributions to £4k/year (gross).

OP does not appear to have any relevant earnings so is restricted to a gross contribution of £3,600 (net £2880) to the SIPP.

zagfles

Living_proof said:

I have a small SIPP with HL currently in cash. My only income is state pension, rent a room scheme, solar and NS&I bonds, so all tax-free. If I take out 25% of my SIPP, can I also take out the difference between personal allowance and taxable income tax free please? Sorry to be so dense!

Yes, if your taxable pension income doesn't take you above the personal allowance then you pay no tax on it.

Nobslouch

jamesd said:

Dunstonh was serious about moving to Portugal. They have an opt-in scheme that sets a zero income tax rate for foreign pension income. You'll need to be tax resident there, and that is likely to require exceeding the ordinary EU visitor visa limits. I forget the exact nu.ber but something like £100k of taxable money can be taken this way without being taxed again - this time at UK rates as a single lump sum - when you become UK tax resident again. Go over that limit and the tax on return applies if you return within several years, perhaps four, I forget.

You can buy VCTs. Those get you 30% of the purchase price as tax relief that you can use to reduce or eliminate your net tax cost.

Thanks J, um what are VCT.  
      RB

zagfles

Nobslouch said:

jamesd said:

Dunstonh was serious about moving to Portugal. They have an opt-in scheme that sets a zero income tax rate for foreign pension income. You'll need to be tax resident there, and that is likely to require exceeding the ordinary EU visitor visa limits. I forget the exact nu.ber but something like £100k of taxable money can be taken this way without being taxed again - this time at UK rates as a single lump sum - when you become UK tax resident again. Go over that limit and the tax on return applies if you return within several years, perhaps four, I forget.

You can buy VCTs. Those get you 30% of the purchase price as tax relief that you can use to reduce or eliminate your net tax cost.

Thanks J, um what are VCT.  
      RB

See https://www.ii.co.uk/advanced-investing/vcts

As it says, "It is important to point out that VCTs are complex products and are only suitable for sophisticated investors". Also seem to have produced less returns than the average UK IT over the last 10 years. So more risk, higher charges, lower returns, less liquidity, but you get tax breaks. Personally I wouldn't touch them with a bargepole. But maybe that's cos I'm not "sophisticated" enough.

Living_proof

xylophone said:

My only income is state pension, rent a room scheme, solar and NS&I bonds, so all tax-free. 

Tax free NS&I bonds? Which are they? Or do you mean Premium Bonds? Or the old Index Linked Savings Certificates?



https://adviser.royallondon.com/technical-central/pensions/benefit-options/emergency-tax-and-lump-sum-withdrawals/

@xylophone my apologies, that was a syntax error and I was aware SP is taxable. Yes, they are the old Index Linked Saving Certs but they mature next month and may not be renewable.

jamesd

Nobslouch said:

Thanks J, um what are VCT.  
      RB

Venture Capital Trusts. A collective investment like other funds that is intended to help the growth of smaller and newer businesses than the average fund. As well as the Initial tax relief the dividends and any growth are tax exempt.

For around five years I've been getting around 10% dividends a year on my biggest VCT holding, based on my after tax relief purchase cost. Around 5% before allowing for the initial relief is common.

Comparison with the whole UK investment trust market is irrelevant because those aren't constrained to invest in only the smaller end of UK companies. When compared to similarly constrained investments the results are similar. UK micro-cap companies have their features but being US tech giants that gave helped to flatter the average investment trust performance isn't one of them.

As long as investing some of your money in such small companies fits you they are a handy tool. Definitely not one for all of your money, though.

ErinGoBrath

Living_proof said:

xylophone said:

My only income is state pension, rent a room scheme, solar and NS&I bonds, so all tax-free. 

Tax free NS&I bonds? Which are they? Or do you mean Premium Bonds? Or the old Index Linked Savings Certificates?



https://adviser.royallondon.com/technical-central/pensions/benefit-options/emergency-tax-and-lump-sum-withdrawals/

@xylophone my apologies, that was a syntax error and I was aware SP is taxable. Yes, they are the old Index Linked Saving Certs but they mature next month and may not be renewable.

They are renewable but will be using CPI instead of RPI now

"You have an NS&I fixed term investment that’s due to mature soon, so it’s nearly time to decide what to do next.

We’ll contact you around 30 days before the maturity date to explain your options. We’ll then need to receive your instructions no later than two working days before your investment matures. If you want to give us your instructions online or by calling us, you’ll need your NS&I number and password to hand."

Living_proof

@ErinGoBrath Bizarrely I read this just this morning, and I will almost certainly leave it in for another five years as although CPI isn't very generous, it's probably as well to have something index-linked. I wonder what the new green savings product will look like?

ErinGoBrath

Living_proof said:

@ErinGoBrath Bizarrely I read this just this morning, and I will almost certainly leave it in for another five years as although CPI isn't very generous, it's probably as well to have something index-linked. I wonder what the new green savings product will look like?

I suspect the only thing green about it will be the investors.

But I am happy to be proved wrong.