Pension Pot and emergency moving out of marital home

Fast_Muchly

Hi 
     The situation .

      Taken already last year my 25% tax free but left the rest invested with Vanguard .

      I have been married for over 25 years but the last 10 years has been marred with wife becoming an alcoholic , she has stopped for 4 years , gone to work with a drug abuse company to help others ( which im extremely proud of her doing ) .But she in the last 2 years has started again while at work .

I have finally had enough , but i have no free money , i have a 120k pension pot still and we own our house outright no mortgage joint ownership its worth around 200k .

My question is this , if i use roughly around 80k to have to live in a mobile home park and buy it out right i will end up paying tax i know ( about 16k )  . But if i move out and then can force the house sale although i know it will be long and drawn out as she will go totally off the rails can i put the 100k back in my pension as an investment in one hit without being penalised or would i have to take an annuity to get a pension which is something i dont want to do .

Or is there something else i can do against the money tied up in the house to enable me to move if i have to go that way .As im coming to the stage in life i want to open the front door and have peace and know for a fact what im facing nd not someone who is telling me lies and constantly letting me and herself down .I know its a disease but i can tell my health is suffering now and i need a life of peace even though i still love her and our home we have built together . 


Thanks 

Devongardener

In most divorce financial settlements pension pots are considered as joint assets so I don’t think whether taking a large proportion of yours just before a divorce would be seen as unreasonable, and the park home would also be a joint asset at the time of the divorce anyway, and divided accordingly.   

Dazed_and_C0nfused

Taken already last year my 25% tax free but left the rest invested with Vanguard .

My question is this , if i use roughly around 80k to have to live in a mobile home park and buy it out right i will end up paying tax i know ( about 16k)

As you have already taken the TFLS the whole £80k will be taxable in the tax year you take the money out.

So even if you had no other taxable income (and weren't a Scottish resident) the tax is going to be closer to £20k.

And if you already earn above the Personal Allowance it's going to be a lot more, it could end up being double your £16k, or even more if it takes your total taxable income above £100k.

Malthusian

You will not pay £16k tax on a withdrawal of £80k. The basic rate tax band is only £37,700. Even if you had no other taxable income whatsoever, the minimum possible tax on an £80,000 withdrawal would be £19k.

If for the sake of illustration you had the median UK income of £27,000, the tax on a withdrawal of £80,000 would be £29k.

You will very likely pay "emergency tax" which means the pension provider will overpay tax to HMRC via your tax code and you will have to claim it back from HMRC. In the short term this is going to affect your escape fund.

You will then burn another chunk of money on the difference between what you pay for the park home and what you can sell it for.

If I was your wife's solicitor I would argue that you should swallow both these costs yourself out of your share of the marital assets, as they are your own doing, and she should not be left with less to live on out of your vindictive attempt to reduce the size of the marital assets. I'm not saying that's what you're doing, and I am not a solicitor and have no idea whether she would succeed, but it is certainly what I would think if I was her.

You will only be able to put it back in the pension and get the tax back if you have earned income (i.e. from work, pension income doesn't count) of £80,000 gross. And if you earn £80,000pa then surely borrowing the money would be a cheaper option.

Or is there something else i can do against the money tied up in the house to enable me to move if i have to go that way.

Get an AirBNB until you can find an affordable place to rent for the longer term. Withdrawing from the pension fund to pay the rent would presumably only cost you tax that you would anticipate paying anyway. Or you could take out a loan. 

And see a divorce solicitor as soon as possible. While they don't give financial advice, I would hope they would be able to at least give some practical guidance given how many of their previous clients will have been in this situation.

Marcon

Fast_Muchly said:

Hi 
     The situation .

      Taken already last year my 25% tax free but left the rest invested with Vanguard .

      I have been married for over 25 years but the last 10 years has been marred with wife becoming an alcoholic , she has stopped for 4 years , gone to work with a drug abuse company to help others ( which im extremely proud of her doing ) .But she in the last 2 years has started again while at work .

I have finally had enough , but i have no free money , i have a 120k pension pot still and we own our house outright no mortgage joint ownership its worth around 200k .

My question is this , if i use roughly around 80k to have to live in a mobile home park and buy it out right i will end up paying tax i know ( about 16k )  . But if i move out and then can force the house sale although i know it will be long and drawn out as she will go totally off the rails can i put the 100k back in my pension as an investment in one hit without being penalised or would i have to take an annuity to get a pension which is something i dont want to do .

Or is there something else i can do against the money tied up in the house to enable me to move if i have to go that way .As im coming to the stage in life i want to open the front door and have peace and know for a fact what im facing nd not someone who is telling me lies and constantly letting me and herself down .I know its a disease but i can tell my health is suffering now and i need a life of peace even though i still love her and our home we have built together . 


Thanks 

You sound as if you've reached the snapping point so common to those who try to live with alcoholics.

Move into rented accommodation and see if your prediction that she'll go completely off the rails comes true. There is a tiny, tiny nugget of hope - as with all addicts, very tiny, I know - that might actually encourage her to face her demons.

Malthusian said:

And see a divorce solicitor as soon as possible. While they don't give financial advice, I would hope they would be able to at least give some practical guidance given how many of their previous clients will have been in this situation.

...and unfortunately this is likely to be your first call before doing anything.

Albermarle

OP - I can see the temptation to try and sort your joint finances out in this ad hoc fashion, but it is not advisable.

The 'best' way is to get divorced,  and as part of that to agree a final settlement of financial matters ( who gets what in simple terms) . The advantage of doing this is that the final settlement is a legal document, and draws a line under everything for the future.

If you leave things open, then almost inevitably in the future, the subject of money will raise its head again between you. Probably numerous times. 

Fast_Muchly

Malthusian said:

You will not pay £16k tax on a withdrawal of £80k. The basic rate tax band is only £37,700. Even if you had no other taxable income whatsoever, the minimum possible tax on an £80,000 withdrawal would be £19k.

If for the sake of illustration you had the median UK income of £27,000, the tax on a withdrawal of £80,000 would be £29k.

You will very likely pay "emergency tax" which means the pension provider will overpay tax to HMRC via your tax code and you will have to claim it back from HMRC. In the short term this is going to affect your escape fund.

You will then burn another chunk of money on the difference between what you pay for the park home and what you can sell it for.

If I was your wife's solicitor I would argue that you should swallow both these costs yourself out of your share of the marital assets, as they are your own doing, and she should not be left with less to live on out of your vindictive attempt to reduce the size of the marital assets. I'm not saying that's what you're doing, and I am not a solicitor and have no idea whether she would succeed, but it is certainly what I would think if I was her.

You will only be able to put it back in the pension and get the tax back if you have earned income (i.e. from work, pension income doesn't count) of £80,000 gross. And if you earn £80,000pa then surely borrowing the money would be a cheaper option.

Or is there something else i can do against the money tied up in the house to enable me to move if i have to go that way.

Get an AirBNB until you can find an affordable place to rent for the longer term. Withdrawing from the pension fund to pay the rent would presumably only cost you tax that you would anticipate paying anyway. Or you could take out a loan. 

And see a divorce solicitor as soon as possible. While they don't give financial advice, I would hope they would be able to at least give some practical guidance given how many of their previous clients will have been in this situation.

I would like to thank everyone on here for their replies , they are much appreciated.  Just want to clear one thing up . There isn't a cat in hells chance I'm being vindictive , that's actually quite laughable to think about when you have suffered during her relapses I could write a book honestly , pages and pages . I just want a way out so I can bolt for it if needed . But there isn't a quick solution I see it now , I suppose I'm tired as I should know 80k will taxed very highly yet my muddled head forgot that . 

The only way is to rent which is extremely hard nigh on impossible as I will also have bills for a house I'm not living in as well . All I can see is I have to stick with it and build an escape fund little by little should I have to use it to be able to rent , to then force a house sale that will prob go on for months as she will not be in any fit state once I go . 

Thanks for the replies , even if they are not what I was wanting to read its helped put a clear picture on things . But may I say if people think I'm doing this to be clever with money I can assure you .....you haven't lived with an alcoholic . I do see though she may try take that angle or her solicitor will . 

GunJack

To the OP - a friend of ours was told out of the blue their partner wanted a divorce, but it was while they were both still co-habiting. When they consulted a solicitor the advice was to NOT move out of the family home until much further into the process of separating. Hard I know, but get to a solicitor before you do anything else and get proper advice on your situation, it may save you a lot of grief & money in the long run. Good luck. 

barnstar2077

GunJack said:

To the OP - a friend of ours was told out of the blue their partner wanted a divorce, but it was while they were both still co-habiting. When they consulted a solicitor the advice was to NOT move out of the family home until much further into the process of separating. Hard I know, but get to a solicitor before you do anything else and get proper advice on your situation, it may save you a lot of grief & money in the long run. Good luck. 

I agree with this 100%, talk to a solicitor before you do anything!

LHW99

You need to take care of yourself first. As said above, find a good / sympathetic solicitor who can guide you on the financial side, then maybe a group such as Al-Anon (https://al-anonuk.org.uk/) which helps and supports families of alcoholics could be worth contacting?

Albermarle

Fast_Muchly said:

Malthusian said:

You will not pay £16k tax on a withdrawal of £80k. The basic rate tax band is only £37,700. Even if you had no other taxable income whatsoever, the minimum possible tax on an £80,000 withdrawal would be £19k.

If for the sake of illustration you had the median UK income of £27,000, the tax on a withdrawal of £80,000 would be £29k.

You will very likely pay "emergency tax" which means the pension provider will overpay tax to HMRC via your tax code and you will have to claim it back from HMRC. In the short term this is going to affect your escape fund.

You will then burn another chunk of money on the difference between what you pay for the park home and what you can sell it for.

If I was your wife's solicitor I would argue that you should swallow both these costs yourself out of your share of the marital assets, as they are your own doing, and she should not be left with less to live on out of your vindictive attempt to reduce the size of the marital assets. I'm not saying that's what you're doing, and I am not a solicitor and have no idea whether she would succeed, but it is certainly what I would think if I was her.

You will only be able to put it back in the pension and get the tax back if you have earned income (i.e. from work, pension income doesn't count) of £80,000 gross. And if you earn £80,000pa then surely borrowing the money would be a cheaper option.

Or is there something else i can do against the money tied up in the house to enable me to move if i have to go that way.

Get an AirBNB until you can find an affordable place to rent for the longer term. Withdrawing from the pension fund to pay the rent would presumably only cost you tax that you would anticipate paying anyway. Or you could take out a loan. 

And see a divorce solicitor as soon as possible. While they don't give financial advice, I would hope they would be able to at least give some practical guidance given how many of their previous clients will have been in this situation.

I would like to thank everyone on here for their replies , they are much appreciated.  Just want to clear one thing up . There isn't a cat in hells chance I'm being vindictive , that's actually quite laughable to think about when you have suffered during her relapses I could write a book honestly , pages and pages . I just want a way out so I can bolt for it if needed . But there isn't a quick solution I see it now , I suppose I'm tired as I should know 80k will taxed very highly yet my muddled head forgot that . 

The only way is to rent which is extremely hard nigh on impossible as I will also have bills for a house I'm not living in as well . All I can see is I have to stick with it and build an escape fund little by little should I have to use it to be able to rent , to then force a house sale that will prob go on for months as she will not be in any fit state once I go . 

Thanks for the replies , even if they are not what I was wanting to read its helped put a clear picture on things . But may I say if people think I'm doing this to be clever with money I can assure you .....you haven't lived with an alcoholic . I do see though she may try take that angle or her solicitor will . 

I do not think anyone has suggested that you are trying to pull a fast one. Only pointing out that any actions you take may well be used against you, by a solicitor employed by your partner, regardless of what your motives are.
It can get nasty so best to be prepared.