Income tax avoidance

Aretnap

You can't apply the Residential Nil Rate Band to money which isn't connected to the ownership of a residence. The clue is in the name.

No it doesn't make sense - except in so far as it fits with the core principle of British tax law. Which is that the noblest way of acquiring wealth imaginable is to have bought a big house at the right moment in history, ideally in the south east of England, and money "earned" by that means must never be taxed to the same extent as, say, money earned by working for a living, or by investing in actually productive assets.

QrizB

... the noblest way of acquiring wealth imaginable is to have bought a big house at the right moment in history, ideally in the south east of England, and money "earned" by that means must never be taxed to the same extent as, say, money earned by working for a living, or by investing in actually productive assets.

Ooh ...

😆

Albermarle

the noblest way of acquiring wealth imaginable is to have bought a big house at the right moment in history, ideally in the south east of England, and money "earned" by that means must never be taxed to the same extent as, say, money earned by working for a living, or by investing in actually productive assets.

Maybe the second noblest way is pumping up your pension with 40% tax relief and then complaining when the Govt wants more of it back  

ClashCityRocker1

I know this will be anathema to nearly everybody here, but if you have maximised all your ways to avoid tax on a large estate, rather than give everything taxable to charity why not, 

er,

...just pay the tax?

Not a political point, let's not get into that, but once you've leveraged all the breaks parliament have allowed -(almost a sacred duty I suppose)  after that let's help run the country (or pay debt interest, or whatever else the Treasury does with it!)

Silvertabby

OP isn't the first on these boards who have said that their ambition is to pay as little tax as possible in retirement.

Our combined tax payments are £600 per month, but we'd much rather be in this position than have to subsist on little more than just the State pension.

michaels

Given inflation is eroding the value of the OPs tax free allowances they will eventually either have to reduce their lifestyle or pay at least 20% tax. Plus on death, even with the up to £1m inheritance tax allowance, their dependents if earning will pay at least 20% tax on money still in the pensions.

Given this I would say it makes more sense to use up the 20% tax bands and gift or move to ISA any that is excess to expenditure needs at least until below the up to £1m IT threshold.

hugheskevi

Silvertabby said:

OP isn't the first on these boards who have said that their ambition is to pay as little tax as possible in retirement.

Our combined tax payments are £600 per month, but we'd much rather be in this position than have to subsist on little more than just the State pension.

Although I take every possible means to reduce my personal tax burden (fulfilling my sacred duty!), and also that of my wife, I don't mind paying income tax on pension - it is extremely low after all the tax breaks and taking care to allocate funds to optimally take advantage of Personal Allowance and basic rate tax bands.

On our combined taxable pension income of £86,668 (the current accrued amount, albeit not payable for years yet) we would pay £12,306 income tax, or an average rate of 14% based on 2025/26 rates and thresholds. There is no employer or employer NI to pay, there will previously have been 25% tax free sums taken from some of our pensions, and a lot of the pension built up benefitted from no employer or employee NI. Quite frankly, the rewards from pensions are preposterously generous.

If a single person was earning that amount, then ignoring pension contributions they would pay £38,090 in income tax and employer/employee National Insurance, an average rate of 44%. They would also be far more likely to have to pay a mortgage, rent, and Student Loan repayments, car loans, etc, from that income.

Andyjflet

Argonauts said:

I would like some assistance from the board experts there are many on here
I will be seeking advice as well

I’m currently in a conundrum about not wanting to pay income tax or inheritance tax in the future

Currently got
HL Sipp 99k in cash drawing down each month enough to be £12000 this tax year
L&G pot worth 400k untouched as yet 
Other pot 570k untouched as yet

House £240k

Banks £450 k bond ladders and isas 
Half in isas so no tax to pay

State pension 
Full one in 4 yrs , wife full one In 5 yrs 

Income tax 
I’m taking 12k from H&L this year leaves £6500 for interest from banks
No tax to pay
Wife gets Lgps pension and H&L Sipp payment just under 10k in total
Leaves 8500 for interest from banks 

No tax to pay for either of us
Any cash I need for bills  yearly ones tv licence , car insurance are taken from cash I have in Marcus account 

Taking more from Sipp before state pension 
If I take more then interest from banks would be taxed and extra money from Sipp at 20%

Same for wife 

Pensions
Plan on taking 25% TFC
Give to kids , we not need it got £260k left to take
Help kids move or pay off their mortgages 
It’s a gift so live 7 yrs should be ok ?

Currently giving gifts 3k allowed a year
Have given more and kept records of gifts!!

Gifts from income ?
Can I treat from banks / Sipp/Isas count to income ?
Keeping records of any gifts
Marriage 5k gift to one child soon as well

Inheritance tax 
Married we are 
When last parent dies 1 million and under tax free (at the momment)
2 X 325k and 2X 175k gives kids a million tax free

We are going to be over we know
Spending plenty on holidays change car in new year old one 3 yrs old 

Is it better getting cash out of Sipp first and paying 20% than kids paying 40% later on

Was always planning this tax yr to take TFC and give to kids
Thinking do this prior to budget , just in case any changes happen. 


Last problem kids taking cash they say you spend it on yourselves
We’ve enough 
Yes care home could happen in next decade who knows seen prices for my parents shocking !!

What to do ?

Not really fancy annuity

Why have you posted the same stuff again you did less than twelve months ago I wonder? 

Argonauts

Cheers Andy for your answer


i was wondering if I’d missed something 

itsthelittlethings

When you say you’ve had six holidays, is that since retirement or this year?