Jump to content
House Price Crash Forum
Sign in to follow this  
longtomsilver

Considering Going Interest Only!

Recommended Posts

For personal reasons Mrs Posh would like to get herself into the lower tax bracket from April 2012 onwards... this will involve sacrificing a significant chunk of her salary and any bonuses that she may accrue to her pension going forward. Our mortgage provider has agreed that we would be able to go interest only if we submit a suitable repayment vehicle.

The company pension has performed no better than if the cash had just sat under our mattress since it's inception (2007) so I don't trust their wildly optimistic 7% per annum projections.

Can anyone recommend a SIPP provider that gives us control over where the money is invested (we'd go short on houses and long on tuna steaks, clued up cookies here).

Edit: also, does anyone have concerns about future governments tapping personal retirement funds for their own dubious means. I know that I do :rolleyes:

Edited by tomposh101

Share this post


Link to post
Share on other sites

For personal reasons Mrs Posh would like to get herself into the lower tax bracket from April 2012 onwards... this will involve sacrificing a significant chunk of her salary and any bonuses that she may accrue to her pension going forward. Our mortgage provider has agreed that we would be able to go interest only if we submit a suitable repayment vehicle.

The company pension has performed no better than if the cash had just sat under our mattress since it's inception (2007) so I don't trust their wildly optimistic 7% per annum projections.

Can anyone recommend a SIPP provider that gives us control over where the money is invested (we'd go short on houses and long on tuna steaks, clued up cookies here).

Edit: also, does anyone have concerns about future governments tapping personal retirement funds for their own dubious means. I know that I do :rolleyes:

Try HL - should do most of what you need with competitive charges.

Share this post


Link to post
Share on other sites

For personal reasons Mrs Posh would like to get herself into the lower tax bracket from April 2012 onwards... this will involve sacrificing a significant chunk of her salary and any bonuses that she may accrue to her pension going forward.

Seems a bit like cutting of her nose to spite her face. This is like the tail wagging a dog. Decisions shouldn't be based on tax saving as the main or only factor. Of course tax will influence decisions but it shouldn't be the only reason.

Share this post


Link to post
Share on other sites

Seems a bit like cutting of her nose to spite her face. This is like the tail wagging a dog. Decisions shouldn't be based on tax saving as the main or only factor. Of course tax will influence decisions but it shouldn't be the only reason.

Mrs Posh pays out a huge sum in Tax+NI contributions (a good gross salary equivalent in itself) and we are set to lose our only tax break (child benefit) - this has ramifications for me as I don't work and claiming the allowance in my name ensures that I have no 'gap' years in my own NI record. It's a rational decision.

Share this post


Link to post
Share on other sites

Mrs Posh pays out a huge sum in Tax+NI contributions (a good gross salary equivalent in itself) and we are set to lose our only tax break (child benefit) - this has ramifications for me as I don't work and claiming the allowance in my name ensures that I have no 'gap' years in my own NI record. It's a rational decision.

There are other ways you could maintain your N. Ins contributions. You can pay voluntary contributions. You could become self employed and pay class 2 contributions of £2.60 per week. You could start a limited company and pay yourself a salary. If the salary is above the earnings threshold but below the lower earnings level then National Insurance is payable at 0%.

If you're not working and are presumably looking after your own child why not look after others children as well. That would be your business. Self employed class 2 works out at £135.20 a year. Voluntary contributions are more expensive but you are only looking at roughly £300 a year in any case.

In any case claiming child benefit in itself maintains your National Insurance contributions. HMRC

You might mean losing your entitlement to Tax Credits, the amounts are larger but I guess you're only talking about £3000 or £4000 a year anyway. It makes the breakeven amount larger but even without knowing the numbers its not a good strategy to base your career and working aspirations on tax savings.

Share this post


Link to post
Share on other sites

There are other ways you could maintain your N. Ins contributions. You can pay voluntary contributions. You could become self employed and pay class 2 contributions of £2.60 per week. You could start a limited company and pay yourself a salary. If the salary is above the earnings threshold but below the lower earnings level then National Insurance is payable at 0%.

If you're not working and are presumably looking after your own child why not look after others children as well. That would be your business. Self employed class 2 works out at £135.20 a year. Voluntary contributions are more expensive but you are only looking at roughly £300 a year in any case.

In any case claiming child benefit in itself maintains your National Insurance contributions.HMRC

You might mean losing your entitlement to Tax Credits, the amounts are larger but I guess you're only talking about £3000 or £4000 a year anyway. It makes the breakeven amount larger but even without knowing the numbers its not a good strategy to base your career and working aspirations on tax savings.

Cheers, a well written and informative reply.

Mrs Posh earns above the threshold for receiving tax credits so we are entitled to nothing in that respect. You are correct re. child benefit but therein lies the rub - we lose that and i'm left out to hang and dry.

I had thought about looking after other children alongside my two as a small business, however being male the usual suspicious minds come in to play.

The original plan was to pay off our mortgage over a shorter timeframe (before we are 45) and then start to think about pensions - but I was thinking we could kill two birds with one stone this way... use the overpayments as gross salary into a SIPP at roughly £1k per month for 20 years, taking the 25% at 55 to pay off the mortgage. Any work that I do around my children will be within my tax allowance (it's a full time job looking after children anyway) and we'd put the equivalent of my earnings into Mrs Posh's SIPP additionally to the overpayments with a view to increasing her pot substantially (with ancillary widows pension entitlement for myself, however I doubt I'll live much past 65 - hence my provisions don't matter so much, full state provision would be a hedge against not snuffing it.

:D

Your thoughts please? :)

Edited by tomposh101

Share this post


Link to post
Share on other sites

Try HL - should do most of what you need with competitive charges.

I'm with HL, for similar reasons. If I buy a house I'll expect to borrow IO with the pension lump sum as payment vehicle.

Started the SIPP in May 2008 when I found myself on PAYE and higher-rate tax. The current value is more than twice what I've paid in.

Share this post


Link to post
Share on other sites

Divorce, move out and claim all the benefits going in your name. Simples.

Isn't that what the market is telling us all to do?

+1

High house prices and government policy are driving a wedge between married couples in the 'middle'.

Edited by tomposh101

Share this post


Link to post
Share on other sites

Isn't it April 2013 when it stops?

And whilst divorce may seem a little facetious, it is the direction we are being pointed in. Now, if I could get some work away from home, it would be an easy stunt to pull off...

Share this post


Link to post
Share on other sites

Isn't it April 2013 when it stops?

And whilst divorce may seem a little facetious, it is the direction we are being pointed in. Now, if I could get some work away from home, it would be an easy stunt to pull off...

I'm doing some pension projections right now re. OP and it looks as though we should either divorce now and I move into another house that i'm currently paying 75% council tax that has remained unoccupied for 29 of the last 30 years (long story) claiming every benefit under the sun or...

Divorce at age 55 in order the we can share her pension pot equally, taking out separate annuities to make full use of our personal allowances. Widows pensions are an even more expensive con and this way we are both guaranteed a private pension. As main carer for our two children I intend to pick up low paid part time work earn under the tax/NI threshold and use the wife's pension as a conduit for getting 40% relief - i.e. say I earn £450 a month, give OH £250 that she offsets against her own SIPP contributions.

Edited by tomposh101

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 276 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.