Time to decrease?

squirrelpie

I confess that personally I'm in favour of additional taxation of second home owners (because they're exacerbating the shortage of homes) and I'm in favour of an overall carbon tax (which would make flying less attractive) to help avoid killing the planet.

1980ds

squirrelpie said:

I confess that personally I'm in favour of additional taxation of second home owners (because they're exacerbating the shortage of homes) and I'm in favour of an overall carbon tax (which would make flying less attractive) to help avoid killing the planet.

Don’t forget tax on fat people for taking up the NHS either 

jamesd

squirrelpie said:

I confess that personally I'm in favour of additional taxation of second home owners (because they're exacerbating the shortage of homes) and I'm in favour of an overall carbon tax (which would make flying less attractive) to help avoid killing the planet.

You might look up the oxygen catastrophy or the averted ice age around the time humans started agriculture to learn more about what the planet can handle. It's about our convenience and disruption avoidance not the planet that can just have higher sea levels than in recent history.

Sad for the people living on the fertile North Sea land area but the world didn't end when the North Sea water came along due to rising sea levels and flooded that land. 

It's worth doing quite a lot to avoid the disruption but the planet will get along find and maybe better if there are fewer of us around.

Second home owners aren't inherently more consuming of housing resources than single home owners. Just compare say a person who's retired and living in a four bedroom house with one who has two studio flats. That four bedroom house could be better used for a family or may be capable of being split into several flats. Housing room or floor area taxes might be interesting, though. No inherent need to have a 40 square meter living room that's as big as a flat, so maybe tax it as one. Then that two flat person might pay less for their lower housing resource usage, but still twice as much as a person with one flat.

Since the housing shortage is most concentrated in the demand for single person properties, perhaps taxes designed to encourage splitting splittable homes might be adopted.

btcp

How are you going to live on 25k when you retire while you used to live on 130k? Are you planning to continue working to make up the difference or you think you will need much less? I understand that lots of people don’t have a pension pot close to yours but it’s about a comparison to your lifestyle over time and not to other people. 

As for the property abroad, I wouldn’t do it as I will end up spending my holiday at the same place every year. 

Firefly12345

Thanks for all of the comments. 
I'm gonna be honest, I just disregard the debate on the merits of a second property. Each to their own on that.
@kidmugsy "Don't the new rules about pension taper let you avoid 60% tax every year anyway, without alternating?  I'm mildly surprised."
No because the total I can put in is 40k and and this includes the company contributions. 
@kidmugsy
"One year make just the 5% + 10% contribution.  Then the next year use carry forward to make a contribution so big that you avoid the whole of the effective 60% tax band.  As a follow up you may spring enough cash free to make a contribution to your wife's pension ..."
That is an interesting idea I had not thought of.
@1980ds
Thanks for the comments. I think we are on a similar wavelength.

Almost everyone - why so keen on me adding to wife's pension? Paying into my own is obviously preferable as I get at least double the tax rebate. Therefore I have to assume the advice here is to max my own AND make contribs on behalf of the wife. If I carry own just maxing my own contribs and work to 57 then with zero growth (based on past stock market performance a highly unlikely event) I would retire with just short of a £1million pension + a house worth about £600k + around £100k in cash.  I think this is enough for a worst case scenario?? A (still below average) 5% annualised stock market growth would see a 1.35million pension. 

I guess we are disappearing down the how much is enough / fun now vs savings for later debate that this seems to reduce down for people lucky enough to have the choice.... 

kuratowski

Two reasons to use your wife's pension.  First, you both have personal allowances and basic rate bands.  Makes sense to get money out of the pension (in retirement) at the lowest possible marginal rate.  Second, you are almost certainly going to exceed lifetime allowance - which negates much of the benefit of tax relief.  But your wife has another lifetime allowance.

1980ds

btcp said:

How are you going to live on 25k when you retire while you used to live on 130k? Are you planning to continue working to make up the difference or you think you will need much less? I understand that lots of people don’t have a pension pot close to yours but it’s about a comparison to your lifestyle over time and not to other people. 

As for the property abroad, I wouldn’t do it as I will end up spending my holiday at the same place every year. 

Do you expect him to reach a £3-4m pension pot to maintain £130k in retirement?
earning 130k now means they are able to put c40k away in a pension, big chunk is going to 40% tax, mortgage payments today as well as 2 kids.
fast forward 15years - no mortgage, kids hopefully set up and not a cost anymore, no need for pension payments. Why would he need to pull in 130k still?

btcp

1980ds said:

Do you expect him to reach a £3-4m pension pot to maintain £130k in retirement?
earning 130k now means they are able to put c40k away in a pension, big chunk is going to 40% tax, mortgage payments today as well as 2 kids.
fast forward 15years - no mortgage, kids hopefully set up and not a cost anymore, no need for pension payments. Why would he need to pull in 130k still?

I don't "expect" the OP to do anything, I was just curious. Some people continue working but part time or doing the less stressful job to make up a difference. 130K minus 40K pension contribution and 12K mortgage is 78k (not 25k in pension that they target). If you are saying that kids cost around 50k a year then ok, I don't have kids so hard for me to say. 

LadyGnome

btcp 
You also need to factor in the loss of the tax free allowance as well - that has an impact on your take home pay. 

I am a high earner and so tax, NI and loss of TFA hit hard. (I am not looking for sympathy I am very lucky to be in this position). Regaining the TFA will be a big help. I spend at least £5-10k a year on work expenses (commuting, clothes, coffees, collections team lunches etc). 

Children are expensive (I am paying school fees but even without that) eg parental contribution for uni will be £6k+ alone. If you have younger children childcare can be eye watering. 

Once you strip out the work, mortgage, children and pension costs and factor in the TFA it really does reduce the amount you need by a lot.  

Firefly12345

btcp said:

1980ds said:

Do you expect him to reach a £3-4m pension pot to maintain £130k in retirement?
earning 130k now means they are able to put c40k away in a pension, big chunk is going to 40% tax, mortgage payments today as well as 2 kids.
fast forward 15years - no mortgage, kids hopefully set up and not a cost anymore, no need for pension payments. Why would he need to pull in 130k still?

I don't "expect" the OP to do anything, I was just curious. Some people continue working but part time or doing the less stressful job to make up a difference. 130K minus 40K pension contribution and 12K mortgage is 78k (not 25k in pension that they target). If you are saying that kids cost around 50k a year then ok, I don't have kids so hard for me to say. 

@btcp Sadly I have to pay tax!  
@1980ds you are spot on. The oft used rules around aiming for 65% of income in retirement just don't stack up for high earners [excluding the asset rich, properly wealthy people who generate more than they spend from their assets]