Currently over LTA, should I activate DB scheme before or after 6th April 2024?

RogerPensionGuy

NoMore said:

Marcon said:

RogerPensionGuy said:

Any views most welcome as I need to plan sumthink with this 190K-ish just arriving soon.

I just want a set and forget system as I don't want to be so involved as I get older, I am just trying to eek max value outa my cash cows you could say. 

PS. Premium Bonds are all full currently thankfully.

Maybe use some of the £190K to pay for personalised financial advice? There may be various things you've not considered/fully understood (join the rest of us!) and proper advice, based on a full understanding of all relevant facts, could be one of your best investments yet.

This ^. IFA's can get a bad rep on here, but this is exactly the situation where they can shine. in fact you should maybe get advice before you trigger the DB pension because you could still be missing something.

Also maybe accept at some point you will be paying more tax and you are in a very fortunate position to the vast majority of the population. Nothing wrong with you being tax efficient as possible but sometimes it just best to pay the tax and enjoy your life.

Thanks for these two posts.

My experience with IFAs has not been great.

Years ago an IFA was going to sweep out my DB CETV under his umbrella.

He would only issue the paperwork to my DB saying it was a good idea if he captured all the funds and the initial costs were big, when I asked him for just the advice document allowing me to vent DB in to a low cost DC, he said he would only produce a letter saying a CETV out was totally inappropriate. 

So my personal example above has left me very weary unfortunately. 

Another observation I have noticed these last few years, a few friends have DC pots way over 1M and were totally unaware of the LTA and its rules, plus I observe friends pulling out say 2% or 2.5% of income and costs of 1.2% to 2% coming out via charges and funds performance seams below par.

It appears I will just have to ignore the tail wagging the dog of 40% and I agree that I'm in a good position after working 46/7 years.

Maybe if they put a step in if 30% income tax it would keep the dog in my head more quiet. 

I just feeling like whichever way I duck and dive that 40% hammer is always there, I guess this tail and dig feelings will very possibly make me very reluctant to touching me DC pot and at least enjoy tax free groath and just bite the bullet if I ever drain it at 40%

zagfles

What about low coupon gilts? There's no CGT on gilts, you pay tax on the interest but that'll be trivial if you get low coupon ones, there's a few at 0.125%, most of the return will be capital gain. You could use index linked ones if you want to hedge inflation. If you hold to maturity there's no market risk once bought. 

But you seem to have misunderstood CGT anyway. The £3k allowance is the gain, not the sale proceeds, so you don't need to sell £3k each year, you need to sell enough to realise a £3k gain. For instance £60k if it went up 5%. Watch out for bed and breakfast rules, I think if you rebuy the same stock soon after selling it you're not deemed to have realised the gain, look up the rules. 

NoMore

TBF, that sounds like you were wanting the IFA just to do a box checking exercise on a DB transfer because you had already made your mind up. That's not what any (good) IFA would do, they would do all the due process and investigation and give you their considered advice, which may have been against transferring.

leosayer

You can use a flexible ISA to lock in an ISA entitlement in this tax year before the cash actually arrives.

Described here:
https://monevator.com/annual-isa-allowance/#:~:text=Flexible ISAs let you withdraw,Stocks and shares ISA

RogerPensionGuy

zagfles said:

What about low coupon gilts? There's no CGT on gilts, you pay tax on the interest but that'll be trivial if you get low coupon ones, there's a few at 0.125%, most of the return will be capital gain. You could use index linked ones if you want to hedge inflation. If you hold to maturity there's no market risk once bought. 

But you seem to have misunderstood CGT anyway. The £3k allowance is the gain, not the sale proceeds, so you don't need to sell £3k each year, you need to sell enough to realise a £3k gain. For instance £60k if it went up 5%. Watch out for bed and breakfast rules, I think if you rebuy the same stock soon after selling it you're not deemed to have realised the gain, look up the rules. 

Tks for posting, yes I'm very confused, I've been PAYE for a long time and now just need to understand some basics on investments outside pensions and ISAs. 

It's a shame the NS&I don't just pay generally better rates and leave wealth in there. 

Below is a link about the 30 day rules, just more hassle, why cannot they put in place carrying forward rules on GIAs I do wonder, it would save so much hassle. 

☆☆☆

https://www.investopedia.com/terms/b/bed-and-breakfast-deal.asp#:~:text=The 30-day rule for shares prevents investors from selling,share to claim the exemption.