SIPP, ISA, LISA, Company contributions arghh :)

keepthegreen · 9 June 2018 at 1:18PM

I'm 34, a single company director and looking ( late ) to start retirement planning.

I'm a basic rate tax payer and take a minimal salary and the rest as dividends. I'm considering starting a SIPP as I believe it may be a good plan if the company started contributing to a pension for me rather than paying out dividends to reduce the corporation tax bill. I am in a position where I/my company would be able to start contributing around £500 per month and should be able to increase this to £1000 per month within 2 years but I don't have any fixed sum set aside as an initial contribution.

I have been reading up and have been pulled back and forth between the best routes based on my circumstances. I first considered a LISA but I have more than the max to put away and also I don't believe the company could contribute which I understand would negate the benefits.

I inherited my home so wouldn't use that benefit of a LISA either.

Am I right in thinking a SIPP would be the best vehicle? If so can anybody recommend a provider? I already have a self trade Shares ISA but I have only contributed £500 so far. Would a self trade SIPP be competitive?

Thanks in advance

BLB53 · 9 June 2018 at 1:28PM

Am I right in thinking a SIPP would be the best vehicle? If so can anybody recommend a provider

A SIPP would be a good way to go in your situation. I use AJ Bell Youinvest and can recommend.

Selftrade may also be good but it would be good to look at a few options. Here's an article on DIY Investor which may help

http://diyinvestoruk.blogspot.com/2016/08/selecting-your-diy-pension-platform.html

also Monevator comparison

http://monevator.com/compare-uk-cheapest-online-brokers/

kidmugsy · 9 June 2018 at 2:44PM

For our small SIPPs we find Hargreaves Lansdown fine - excellent service and OK charges. This might be relevant to you.
http://www.hl.co.uk/pensions/sipp/how-much-can-i-invest/employer-contributions

It presumably doesn't matter to you when in the tax year your company makes its contribution. So it could be attractive to wait to see the T&Cs and charges when Vanguard opens it SIPP.

For a LISA I suggest you open one before you are forty, for some small sum. That way you can contribute until you are fifty if that should appeal later.

keepthegreen · 9 June 2018 at 3:11PM

Thank you both that's helpful.

kidmugsy wrote: »

For a LISA I suggest you open one before you are forty, for some small sum. That way you can contribute until you are fifty if that should appeal later.

Great tip, I'll be sure to do that to keep my options open.

So I think I've decided the SIPP will be the best route but I'm still not totally sure whether it would be better to contribute personally or via the company.

To get an idea of the figures, I'm currently taking £8424 salary and approximately £15000 in dividends. I also have a personal property income of £9000 and approx £1000 per year in property expenses.

In these circumstances which method is more cost effective? Contributing from the company which will reduce corporation tax but reduce the amount I can take in dividends or paying personally after I receive the dividend income?

Lots of things to juggle and my head is spinning trying to think everything through.

Thrugelmir · 9 June 2018 at 6:41PM

What's the attraction of a SIPP rather than a more mudane pension wrapper.

keepthegreen · 10 June 2018 at 8:51AM

I’m looking for an execution only plan that will allow me to purchase funds but also individual small caps.

SIPP, ISA, LISA, Company contributions arghh :)

Comments

Categories

Get our FREE Weekly email full of deals & guides - and it’s spam-free