Effective Tax rate withdrawals

Yorkie1

Yeah the SIPP contributions are two fold, they bring me under the £60k threshold so we get all of that, plus the additional amount from there to £50,270 gets the 40% relief.

Plus, of course, it also gets you the £1K 0% personal savings allowance. Given your overall picture, it's not much, but every little helps as I believe I've read somewhere!

FIREDreamer

https://forums.moneysavingexpert.com/discussion/comment/82007902#Comment_82007902

I think your effective taxable income needs to be £49,270 to get the £1,000 0% personal savings allowance.

If your income is £50,000 (net of pension contributions) plus £800 gross interest this makes you a higher rate taxpayer (total taxable income exceeds £50,270) so £300 of that interest is taxable at 40% as only £500 is taxed at 0%.

Can anyone confirm if my interpretation above is correct?

Yorkie1

https://forums.moneysavingexpert.com/discussion/comment/82008883#Comment_82008883

Yes that would be right, as the savings interest needs to be added to other taxable income in order to identify the tax rate band.

I was just flagging that getting below the HR tax threshold had the added benefit of the increased PSA.

michaels

Employers NI is 15%

Obviously sal sac is ending in March 29 so might be worth modelling based on that.

Our kids blew their child trust funds on turning 18, so glad we never topped them up, at least one was moderately sensible but the temptation to spend it was just too great.

DT2001

I think a comprehensive cash flow analysis would be very helpful as there are plenty of options/factors involved.

My initial thought, purely on the basis of your comment that the most important thing was early retirement, was as you suggested to utilise a mortgage repayable from TFLS. If you worked on the assumption that your combined SIPPs totalled £1.08m (for easy maths) when you turned 57 you could withdraw £270k (6 years of income requirement @ £45k p.a.). Obviously ignores inflation, tax and your rental income. If you took an offset mortgage you would minimise interest paid by utilising your cash first. So maybe the location of your funds in the SIPPs isn’t as bad as you thought? Retiring at/before 50 would be achievable but creating a what if scenario would be good - do you reduce your risk and if so how, what if the market corrects and takes 5/10 years to recover which could cover the start of retirement.

We have 4 children, youngest about to start Uni (5 year course) and the costs for the first 3 post 18 were unpredicted. First took an apprenticeship but stayed at home (at no cost to him as he is saving for a property), second studied abroad and no student loans available however costs were lower, third studied in UK and needed top up to maintenance loan.
The stock market performance over the last 10 years has allowed us to help our children build up investments to prepare/get on the property ladder. It is a great feeling to give them a helping hand. They have all had funds in their own names from under 18 and we regularly spoke to them about finances. We were happy to hand over the GIAs that their grandparents had contributed to at 18 and thankfully that faith in them has been correct.

You are in a fantastic position and working through various scenarios I am sure will benefit you psychologically. Good luck

SpeedSouth

https://forums.moneysavingexpert.com/discussion/comment/82004194#Comment_82004194

Update on this one. I've spoken to a couple of people. One family aquactince who was an FA it turns out, and another IFA.

Granted it was only a 1 hour discovery session with the IFA, bit longer with the freind. The "advice" in that hour was vastly different.

FA - We'll take control, de risk away from 100% equities. Lots of talk about managing investments and picking stocks
IFA - Would invest the ISAs in 100% equites trackers, but not really do much more than I'm already doing it seems, which he mostly admitted. This was not a % based, but rather a small monthly fixed fee

Not entirely sure what I was expecting, but at least some sort of similar thinking.

GunJack

The thing with a FA is that they have a limited to their company range of investments, and they are effectively trying to sell you those investments, the IFA is not.

Family friend or not, I'd steer clear of the FAs advice and products...

SpeedSouth

Yeah, did think that might account for some of it. Maybe I'll find another IFA for comparison. Don't know any by word of mouth unfortunately.

A lot of the ones on Unbaised even though they claim to be IFA's appear to be part or various management firms. I know it's not the same as it used to be with lead generation, but have unticked the available for contact checkbox