Self-employed child tax credits & stakeholder pension

helenahandbasket_2

I wonder if any of you guys can help me. I have a riddle.

I have been receiving child tax credits (having my childcare paid for 5K a year) as my partner and I are self-employed and we have been showing taxable income under 19k between us.

This year however, even though I don't have our exact figures, our taxable income is about 5-6k higher. A lot of this money has gone into our housee deposit pot. Unfortunately, CTC are going to probably ask for 5k back, and not help us out any more in future years.

I can't get any thresholds (amounts of taxable income where we start paying childcare ourselves)from my accountant, IFA or CTC so I can't work out what to do next.

I have looked into sticking some money into a pension before the tax year is out. My accountant won't fully commit to numbers as a) we dont have our exact books totals and b)I think he has been told not to let us know this information so we don't exploit it.

Question is, do CTC take pension contributions in self-employed people as expenses??

Is it worth sticking money in a Stakeholder? We haven't got a mortgage as we are renting.

Thanks in advance

Am I being unethical? I just think we are going to get stung and would rather put 2k in our pension than pay 5k back to the government.

dunstonh

Question is, do CTC take pension contributions in self-employed people as expenses??

Pension contributions do reduce your income and can increase working/childrens tax credits.

Is it worth sticking money in a Stakeholder?

if it meets your requirements, yes.

Am I being unethical?

Some benefits can be increased by utilising certain investment products. Some of these cannot be recommended by advisers or accountants. However, some can (Govt double standards). Utilising working/childrens tax credits is not considered one that you cannot recommend. However, different firms may have different interpretations on this.

helenahandbasket_2

Thankyou

My partner will be putting some money in this week to either Friends Provident or Scottish Widows Stakeholders pensions.

I am also setting up a teachers pension for myself on some part-time work. I am very relieved to be tackling the pensions problem, it has worried me for years.

Now to get through the housing maze next (which involves staying away from buying for another couple years).

Oh...and surviving this hurricane!

dunstonh

I would avoid FP stakeholder if I was you and SW personal pension is better than their stakeholder.

helenahandbasket_2

Thanks so much for taking the time to help me! As far as I can tell, from the SW website, the only difference between a SH pension and PP pension is that there are many more funds to choose from in PP. Also, we need the flexibility of the SH and PP has, in it's description 'currently' able to stop, start, and reduce payments. Maybe we can change over to a PP in a few years when we have got used to P payments! Also, do you have any good ideas of funds, seeing as property and western stock markets are looking dodgy, and commodities are going balistic. Or is there no point thinking short term? Thanks in advance

dunstonh

The SW PPP is just as flexible. It is basically the stakeholder product with more funds. SW themselves say they only offer the stakeholder to comply with rule RU64. Come 2012 they expect the stakeholder to be withdrawn.

Dont buy the pension direct. That is more expensive.

pensions are long term. The markets are already down around 15%. There could be more but in the long run there is little point trying to guess the market when you are investing for such a long time.