Financial plan: What would you do?

LifeAfterForty

gwynlas said:

Please also think about critical illness cover as life events might mean you need to retire early.

Thanks for your suggestion. I have looked into it before. When I read through all the information, the list of exceptions was so long and so complicated that I decided against it. It just seemed that they were going to do everything they possibly could to avoid paying out. At least I have no dependants to take into consideration.

dharm999

Are the pension contributions taken from your gross or net salary?  If net, are you claiming the extra tax relief?

LifeAfterForty

dharm999 said:

Are the pension contributions taken from your gross or net salary?  If net, are you claiming the extra tax relief?

Thanks - The additional pension is salary deduction, before tax. So the 'relief' should be automatic as far as I understand it.

Linton

LifeAfterForty said:

Linton said:

Yes, if there's a choice ISAs are best used for investments rather than cash.  Apart from the tax saved, putting investments into an S&S ISA means you dont have the hassle of dealing with CGT.

Thanks for your answer. I thought the 20k annual ISA allowance was tax free. Do I have to pay CGT if I accumulate a boat load of cash ISAs? Sorry for being a total noob!

All ISAs are tax free.  The comparison is with holding funds outside an ISA/SIPP where CGT can be an ongoing issue.

AlanP_2

LifeAfterForty said:

dharm999 said:

Are the pension contributions taken from your gross or net salary?  If net, are you claiming the extra tax relief?

Thanks - The additional pension is salary deduction, before tax. So the 'relief' should be automatic as far as I understand it.

It will be for the NHS DB scheme so nothing extra to do in that regard.

MX5huggy

Think about additional pension contributions outside the offer from the NHS for additional pension (absolutely no doubt stay in the NHS pension main scheme). This would give you the option of making lump sum payments, so as we approach the end of the tax year now you will be able to see on your Jan and then Feb payslips how likely you are and by how much you are likely to get paid this tax year and then before April 5th make a lump sum payment in to your pension to avoid higher rate tax. In this pension you could invest in all the previously mentioned funds etc. you could then take this pension separately form your NHS. 

LifeAfterForty

MX5huggy said:

Think about additional pension contributions outside the offer from the NHS for additional pension (absolutely no doubt stay in the NHS pension main scheme). This would give you the option of making lump sum payments, so as we approach the end of the tax year now you will be able to see on your Jan and then Feb payslips how likely you are and by how much you are likely to get paid this tax year and then before April 5th make a lump sum payment in to your pension to avoid higher rate tax. In this pension you could invest in all the previously mentioned funds etc. you could then take this pension separately form your NHS. 

Thanks. Presumably I would then have to do a tax self-assessment and claim back the difference?

I've never done a tax return before. All I know is that my tax code changes each year to recoup back-taxes from the previous year. I have little faith that it's being done correctly, but I lack the maths skill and understanding to check it.

AlanP_2

No need to do self assessment 

https://forums.moneysavingexpert.com/discussion/6585592/new-online-way-to-claim-pension-tax-relief-via-government-gateway/p2#latest

MX5huggy

No you don’t have to do SA to claim back the tax relief on higher rate pension contributions. https://www.gov.uk/guidance/claim-tax-relief-on-your-private-pension-payments

If you’re having to do SA for another reason then you have to use the SA to claim the tax relief. 

Note don’t be scared of doing SA if you ever have to it’s really quite easy.

LifeAfterForty

@AlanP_2 & @MX5huggy Thank you for the info and suggestions. 

I've been looking at this https://www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/v/vanguard-target-retirement-2040-accumulation   and it appears that I can pay in as a SIPP or an S&S ISA. I'm thinking the SIPP idea makes more sense for this kind of fund.