What best to do....

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  • OldBlade
    OldBlade Posts: 25 Forumite
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    That's worth a punt! thanks for that.
  • OldBlade
    OldBlade Posts: 25 Forumite
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    With regard to allowances. I've already transferred the permitted part of her allowance to myself. Her annuity is around 8000 so with income of say 3500 from her new pension giving her an income of 11500. Her reduced allowance is 10610, so she would pay 20% on on the difference, ie 178.
    Even so, a gain of 542.
  • AlanP_2
    AlanP_2 Posts: 3,252 Forumite
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    OldBlade wrote: »
    With regard to allowances. I've already transferred the permitted part of her allowance to myself. Her annuity is around 8000 so with income of say 3500 from her new pension giving her an income of 11500. Her reduced allowance is 10610, so she would pay 20% on on the difference, ie 178.
    Even so, a gain of 542.

    I don't think she would pay any tax as 25% of the withdrawal from the new pension would be the tax free lump sum so using your £3500 example £875 is tax free leaving £2625 as taxable income.

    2625 + 8000 = 10625 which will be under her tax allowance.
  • kidmugsy
    kidmugsy Posts: 12,709 Forumite
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    OldBlade wrote: »
    With regard to allowances. I've already transferred the permitted part of her allowance to myself. Her annuity is around 8000 so with income of say 3500 from her new pension giving her an income of 11500. Her reduced allowance is 10610, so she would pay 20% on on the difference, ie 178.
    Even so, a gain of 542.

    For what it's worth, the Hargreaves Lansdown SIPP is probably about ideal for this game. Just be sure to check their charges so that you know how much money to leave behind in the SIPP in tax year 18/19. And, of course, be sure to leave the money in the SIPP as cash - for heaven's sake don't decide to invest it. Also, leave the money in the SIPP long enough that the £720 from HMRC actually reaches the account - you need only check online. About 6 or 8 weeks should do the trick. You should also allow for the notice HL need before they pay money out - perhaps 4 weeks?

    Lastly, beware of having tax deducted that you then have to reclaim. One solution, apparently, would be to draw a small sum in the first month of drawdown so that HL get sent a tax code for your wife that would leave her a non-taxpayer when she draws the rest that she plans to drawdown. Mind you, apparently you can get the overpaid tax back pretty quickly at the cost of a single phone call. This has been mentioned on lots of threads - you could try a forum search.

    P.S. As AlanP argues, her tax bill should be next-to-nothing. So, she draws all her TFLS and nearly all of the rest. Then, starting on or after 06/04/19, she does it all again (unless this month's Budget changes the rules of the game).
    Free the dunston one next time too.
  • kidmugsy
    kidmugsy Posts: 12,709 Forumite
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    OldBlade wrote: »
    My wife ... has 80K in cash (savings and ISAs)

    I'm looking for suggestions for what we might do with this 160K in terms of the most productive investment.

    If those are Cash ISAs, and if you are interested in getting best interest rates, there's a case for her withdrawing the money from the ISAs and using the best non-tax-sheltered accounts she can find. That's because she won't have to pay any tax on her interest anyway, and there are higher interest rates available outside ISAs than inside. She should probably look at regular savers (up to 5% AER), current accounts (also up to 5% AER), fixed term deposit accounts, and notice accounts.

    If, on the other hand, you two prefer that she invest in Stocks'n'Shares it would make for an easy life to keep the assets inside ISAs. As for you, since you are still earning you could presumably take money from savings and contribute it to a pension wherein you'd presumably invest it in S&S: the money is currently worth 6.25% more to you in a SIPP (say) than in an ISA - if we ignore costs. There's the added advantage that if you should die before age 75 then she could draw your SIPP money free of income tax.
    Free the dunston one next time too.
  • OldBlade
    OldBlade Posts: 25 Forumite
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    She has 10K invested with a Fidelity S&S ISA which has performed abysmally, as have my Virgin and Fidelity SIPPS.

    I have a pension I am contributing to with Aviva and am contemplating transfering my other two SIPPS into that and trying to find some more productive funds.

    Does anyone have any suggestions for Aviva funds that might show some return?

    Thanks for everyone's suggestions to date though, most useful and informative.
  • Dazed_and_confused
    Dazed_and_confused Posts: 6,458 Forumite
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    edited 13 October 2018 at 10:50AM
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    As kidmugsy had mentioned your wife may want to look at making her savings interest taxable income to gain a better rate than cash ISA's currently offer.

    From what you've posted it seems she doesn't have sufficient income to be able to use the Personal Savings Allowance but she has the starter savings rate which means up to £5,000 savings interest can be taxed at 0%.

    In her situation she will have, in the current year a maximum of £16,660 income before she has any tax to pay (assuming any wages/pension income is £10,660 or less).

    £10,660 Personal Allowance
    £5,000 starter savings rate (0%)
    £1,000 Personal Savings Allowance rate (0%)

    She may want to wait for the budget in a couple of weeks before looking at changing the ISA's just on the off chance the savings rate changes from 0% (has been 0% for a few years now).
  • sheslookinhot
    sheslookinhot Posts: 1,976 Forumite
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    Would it not be better to take the SP now and invest the whole amount into your SIPP ?
    Mortgage free
    Vocational freedom has arrived
  • Albermarle
    Albermarle Posts: 22,134 Forumite
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    She has 10K invested with a Fidelity S&S ISA which has performed abysmally, as have my Virgin and Fidelity SIPPS.

    I have a pension I am contributing to with Aviva and am contemplating transfering my other two SIPPS into that and trying to find some more productive funds.

    You have to be clear that the performance of any SIPP/personal pension is not related directly to the pension provider, but the underlying funds your money is invested in . It might be all you need to do is to change the funds in your existing pensions ( usually there is some choice , although the amount of choice can vary quite a lot ) rather than open a new one.
    Having said that, one area where the pension providers can be different is in their charging structure . Normally there is a charge for the pension and one for the funds , although sometimes there is just one overall charge . Older pensions tend to have higher charges than new ones and more complicated actively managed funds are more expensive then just simple tracker funds.
  • xylophone
    xylophone Posts: 44,412 Forumite
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    When does your wife reach State Pension Age?

    Have you looked into voluntary contributions if eligible?

    See second link in post 6 above.
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