Investing £100k tax efficiently

jimjames

valuepack said:

So it's very unlikely that this will be sorted by April, but I will ask the question, thanks.

If you do want to try to use this year's ISA allowance and have £20k available "somewhere" then as long as you open a flexible ISA by 5th April you can remove the £20k again on 6th April and have that extra £20k allowance available to replenish by April 2026. That would be in addition to your 2025-26 ISA allowance but mean you each have £40k you can use for keeping the money tax free.

valuepack said:

It sounds just like a stocks and shares ISA, other than I can't withdraw funds until retirement.

That's exactly the case. The only difference is the tax wrapper, you can have exactly the same investments in a pension and ISA.

Wyndham

valuepack said:

My secret plan is that if I can get going with a nest egg that will look after both of us, she can stop working (she's part time) in 10 years when she turns 60, and I can then stop working at male retirement age, whenever that is at the time.

There is no such thing as 'male retirement age'. State pension age is 66 (rising to 67) for both men and women. I'm not aware of any pension scheme that still make the distinction either - of course, on this forum someone may well come along with an example

Are you looking for her to retire at 60 because you think that is the 'female pension age'? What does she think about it all? Does she want to retire then?

valuepack

@Keep_pedalling

We won't have to worry about IHT, but we have both recently done LPAs and wills.

valuepack

@saajan_12 Thanks for that info.

As I'm learning it has become apparent that paying into a pension and investing in the stock market is all investing lol

I will find out how I go about investing a lump sum into my current pot.

 I guess the time has finally also come where I need to find out how my three pension pots are performing, which ones are worth switching etc.

In the past I simply made sure that my address was up to date with them and I knew the total pot amount, but never investigated further.

saajan_12

valuepack said:

@saajan_12 Thanks for that info.

As I'm learning it has become apparent that paying into a pension and investing in the stock market is all investing lol

I will find out how I go about investing a lump sum into my current pot.

 I guess the time has finally also come where I need to find out how my three pension pots are performing, which ones are worth switching etc.

In the past I simply made sure that my address was up to date with them and I knew the total pot amount, but never investigated further.

Indeed, there's lots you can look into and refine, but at the same time it doesn't have to be all or nothing. Eg you can pick one pension at a time, check what its invested in and transfer if sensible. Or just look at putting the inheritance in one of the pensions, as its likely better than nothing, and then look to optimise what its invested in as step 2. Basically my point is avoid getting overwhelmed about there being too much to consider, you can do a bit at a time and still m ake a difference. 

valuepack

@saajan_12 Thanks for your encouraging post. I've had a look at my current pension via our HR portal but it just shows the current pot and not much detail on where the money is.

I'll need to look into the pension provider to get more detail, and then chip away by working backwards to get a full picture of all the pots.

valuepack

Quick update. I've been checking out my current employers pension which is with Aviva, currently in a growth fund, I can't remember the exact name.

I have the option to choose from a choice of about 100 funds to transfer my pension into. They have names such as Black Rock growth or Aviva global, and show the annual management charge.

So I have the option to switch this around, and I might be able to transfer my pension out of Aviva entirely.

I've also been looking at Sipps, and looking at setting one up via Invest engine. My understanding is that I can invest up to 100% of my annual salary into this (I earn under 60k), minus contributions from my employer pension.

Once this is done, I can then work backwards for up to three years under the pension carry forward rule.

It's also my understanding that I manage where the money goes, so I could leave it in stocks and shares for a good few years to come.

By doing this I'm maximising my tax relief and could pretty much load my entire inheritance into a pension.

Is the general gist of this correct?

ColdIron

valuepack said:

I've also been looking at Sipps, and looking at setting one up via Invest engine. My understanding is that I can invest up to 100% of my annual salary into this (I earn under 60k), minus contributions from my employer pension.

There are two limits:

1. Your relevant earnings. This includes tax relief but not employer contributions
2. The £60,000 Annual Allowance, This includes tax relief and employer contributions

Once this is done, I can then work backwards for up to three years under the pension carry forward rule.

You can only use CF if you have exhausted the Annual Allowance. You say you earn less than £60,000

valuepack

Update

I've been doing my homework and can now access the info for all three of my pension pots.

I also had a call from People's Pension, which was very useful.

I've noted the annual charges and management charges for each pot.

I'm now in the process of looking at how each pot has been performing, but it is early days, I've just looked at year 23-24.

I don't know if I'm doing my sums wrong but I worked out 16.4% for one "balanced" pot, and 15% for a "diversified growth" pot.

This is way better than I was expecting.

I will dig into the data sheet for each fund, but am I right in saying that this performance is a reflection of the high performance of the stocks and shares market?

I will go back into previous years too.

I am new to this so just wondering if I'm missing something blindingly obvious