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Higher Rate Taxpayer And Renting, Paying Higher Rate Tax On Savings So Should I Buy?

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Been renting for 2 years. Want to continue renting for another 1-3years. I may become a higher rate taxpayer soon. Does this mean it is now more efficent and rational to buy?

I dont want to put the money into a pension as I may want to buy one day 1-3yrs. I have the maximum Cash ISA subscription and premumum bonds. Any other strategies to avoid paying 40% of my interest to taxman.

Your thought appreciated.

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Been renting for 2 years. Want to continue renting for another 1-3years. I may become a higher rate taxpayer soon. Does this mean it is now more efficent and rational to buy?

I dont want to put the money into a pension as I may want to buy one day 1-3yrs. I have the maximum Cash ISA subscription and premumum bonds. Any other strategies to avoid paying 40% of my interest to taxman.

Your thought appreciated.

There are other methods for taxpayers to avoid HRT but unless you are holding vast quantities of cash are you sure it's material?

On the assumption you deposit your money with say ING who I think are currently paying 4.75% you would be liable to BRT at the savings rate of 20% so you lose broadly 1%. As an HRT you would lose another 1% pa but only on the component that is above the personal allowance plus £31400. So assuming you have £200k on deposit total gross interest would be £9500. If we assume ALL of the interest is liable to HRT then you will be paying an "extra" £1900 per annum in tax.

I would humbly suggest that the stamp duty alone on a £200k property is well in excess of the amount of extra tax being paid. Similarly a 5% fall in property prices in the year after you buy would eradicate the tax saving for the next 5 years!

On those numbers alone it would be neither efficient nor rational to buy. Factor in the odds-on or at least evens prospect of falling prices and it becomes very ill-advisable.

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  • 301 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%



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