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Everything posted by VeryMeanReversion

  1. Just a reminder for you PAYE'rs that using salary sacrifice, you avoid employee (and employer in my case) NI contributions so this can be added to your fund. When you pull the money out, no NI to pay. It finally realised that 10 years ago and it changed my whole financial plan. I'm basically trying and turn into a pensioner asap. (Late 40's now). The current Tax/NI system simply encourages me to excessively save now then stop work or go part-time asap and take it easy. If pensioners also paid NI, I don't think it would change my plan much. I'm aiming for low income early to get out of the system rather than a high income at 67.
  2. HMRC have suggested some film titles for the BTL'rs hoping to do a runner avoiding CGT. - No Fistful of Dollars - Finding Repo - A Beautiful Bind
  3. Wishful thinking (for both you and me) or is there any evidence that this has now been proposed? I'll reserve my little happy dance until I hear back from you. My neighbour relies on EE's to run his farm. They live on-site but pay no council tax yet get to claim credits/benefits. My Mrs was asking how they all seemed to be able to run nice cars (12 parked there at the moment). I had to explain how it all worked.
  4. Well done DB. Your posts are so simple but contain so much. Personally, I'm making maximum use of a SIPP to avoid 65% effective marginal rates. It's less than eight more years for me before I can draw the 25% out to clear the mortgage then go part time. No point working Mondays and Friday to pay for someone else to take it easy whilst I don't get the benefit. Finally, I can become a T-W-A-T ! (Tuesdays, Wednesdays and Thursdays)
  5. All the items I listed are basically income tax, just with multiple names to obfuscate. All I need to know is "Income goes up by £1, how much do I keep". Note that the trades (typically) avoid the additional 9% graduate tax as well. That £50K graduate earner gets to keep ~25p of the next pound they earn. The trade guys that built my extension seemed to like paying 0% via cash payments.
  6. Using salary sacrifice, my employer adds the NI they save into my pension. So I do actually get to keep that money.
  7. If you £50K income and two children: Income tax = 40% Employee NI = 2% Employer NI = 12% Child Benefit Withdrawal @ 17%. Effective marginal tax rate is already well over 60%
  8. My favourite phrase. I worked mine out as 65%, a big disincentive to work.
  9. Thanks for your posts DB. Every one of them is a motivation for me to work less and reduce my taxable income by stuffing it into pension where I might see some reward for my efforts one day.
  10. Moneyweek Merryn has some comments on the subject http://moneyweek.com/merryns-blog/why-a-pension-beats-a-buy-to-let-flat-hands-down/ "and the great tax benefits of property investment are slowly disappearing (the new buy-to-let income tax policy is beginning to bite and there is talk of tax on capital gains on buy-to-let being charged as income)."
  11. My first thought as well. Pensions : Marginal rate income tax relief and employee/employer NI avoidance, low running costs. Incremental contribution/withdrawals. BTL: Tax penalties (stamp + interest changes), high running costs (agents, maintenance etc.). Lumpy transactions subject to CGT. The advantage of BTL has been the leverage involved but that only works in a rising market. Shares may dive 50% but BTL can completely wipe out the original investment and take your primary residence with it.
  12. One of my relatives with two BTL's worked in the risk management section of Nationwide.
  13. I remember (3x main + 1 x second) income being the multiples 20 years ago. That was for two mortgages I had in the mid 90's. So if main was 25K and second was 15K then.....(ignoring inflation) 20 years ago => limit was 85K If 5x joint now => limit is 200K So... House prices = Credit Availability.
  14. He could sell them all in a year then do a runner to a country with a non-extradition treaty. Or at least one that doesn't extradite for tax dodging.
  15. I was talking about this issue with a BTL'r back in the early 2000's. I said that with IO mortgages, as interest rates went to zero, house prices should go to infinity. You are being paid to hold an income producing asset, far more than the maintenance cost. The problem is when the interests go up again. I don't think BTL'rs ever consider the risk they are taking.
  16. That will keep my laughing all the way to lunchtime. What is your "correct" allocation of resources?
  17. The son of a friend believes this and is off to the US with no plans to return. However, http://www.studentloanrepayment.co.uk says you are supposed to pay it back and provides the forms to "help". This article below (2012) says 2% of UK students do a runner but 45% of EU students. Brexit should help stop EU students getting free degrees at our expense. http://www.telegraph.co.uk/education/universityeducation/9030043/Thousands-of-EU-students-fail-to-repay-loans.html "The SLC has powers to deduct money directly from the wages of graduates who find jobs in Britain, but for graduates who live and work overseas it is forced to rely on their co-operation in giving up-to-date information about their earnings and making their own arrangements to pay." What a stupid system. I would expect they would find it difficult to enforce if you are abroad. After 5 years of trying to find you, it may be unofficial policy not to continue but present you with the bill if you come back and re-enter the NI system. A state pension can be worth £200-250K so its a trade-off. I went to the US in my 20's, wouldn't have bothered coming back to a £60K debt.
  18. Another good post (keep 'em coming). What you describe is exactly what a member of my family did. They didn't want to cut back spending but still wanted a nice retirement, shiny German lease car and their 3 BTLs was their plan A/B/C. The problem came when they retired and wanted to sell one and couldn't cover the capital gains tax.
  19. I'm shovelling in every penny I can whilst the 40% relief still exists. If it stops, I don't know what is best. I could move some contributions into Mrs VMR's pension and she would be able to pull it out at 0%. Otherwise, I just can't face working at 65% effective marginal tax rate so would drop down to a 3 day week instead (~34% EMTR which I can live with) and enjoy my time off. I would just stop further pension contributions, keep the same net income but have to work more years instead.
  20. I put away 36% of gross per year and have 6x net salary saved up so far, all done in a DB scheme. I'm aiming for around 12x current net salary so that would give me 24 years of 50% net salary to live off or 36 years at 33%. I'm not expecting the real return to exceed zero in my time horizon. If the state pension exists and is not means tested away, that's a bonus. I can't see how anyone can retire on a DB scheme unless they are putting away 30+% of gross per year. My simple maths is "work for 45 years, save 15 years gross. Retire for 30 years spending 50% gross". People can hope for investment gains but I wouldn't rely on it, especially allowing for charges that most people seem to pay. All I can guess is that people still believe like they are in good DC schemes that will pay out 2/3rd salary for a long period of time. The generation above me had those but no one in my family is in a good DC scheme now.
  21. Good post, sums it all up. I've noticed friends with kids going to University all seem to have fallen for the line "Don't worry, you'll never have to pay it back". They assume they will never earn enough, terms will never change and that the payments are small (only £300/month if they ever get to £40k/yr). I don't know where they get those ideas from, maybe presentations at the schools?? £300/month is a lot of money! Hopefully, my kids will earn enough that they will be liable to pay it back. So the trick is to get the qualification without the debt, I'm looking into the best ways to do that.
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