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Avoiding Tax Via A Not So Well Known Tax Haven

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Over the past few weeks there have been a few posts on changes to (read reducing the effectiveness of) current tax avoidance schemes in the UK. Whether that be the changes to how BTL interest is handled from a taxation perspective to expected changes to pension tax relief. With this in mind I've been doing some thinking as to how I also can get on the band wagon and avoid tax via that well known Tax Haven. For anyone interested my musings are here.

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Interesting article. Thanks. Also gives plenty of food for thought of what to do with any tax-free lump sum from a pension at the point of retirement.

Will also see what the score is on the pensions front next year as I'm currently taking a similar strategy to you and shovelling as much as I can into it.

Edited by StainlessSteelCat

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Interesting article. Thanks. Also gives plenty of food for thought of what to do with any tax-free lump sum from a pension at the point of retirement.

Will also see what the score is on the pensions front next year as I'm currently taking a similar strategy to you and shovelling as much as I can into it.

So many tax haven benefits listed and I didn't even think of the TFLS. Thanks for adding that in to the mix. If you took it as part of your monthly pension 'earnings' all of a sudden you're able to earn £10,800/75%+£5,000+£1,000+£6,000=£26,400 tax free. For a couple that's £52,800. Mad really when you think about it.

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Thanks. Very interesting.

If they do change the pension system into an N/ISA type savings vehicle, I wonder what will happen to employer contributions?

OT but I just took a look at your Lending Works P2P post. You say "With P2P lending it’s of crucial that you minimise time out of the market as until your money is actually lent you’re earning no interest." I just wanted to point out that there is a P2P lender called Wellesley (not sure how they compare to Lending Works) who say this in their blurb;

  • Funds begin earning interest straight away from the subscription date, even when funds are not allocated for lending.

(This is for the ISA bond though). https://www.wellesley.co.uk/isa/

Edited by fru-gal

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Thanks. Very interesting.

If they do change the pension system into an N/ISA type savings vehicle, I wonder what will happen to employer contributions?

OT but I just took a look at your Lending Works P2P post. You say "With P2P lending it’s of crucial that you minimise time out of the market as until your money is actually lent you’re earning no interest." I just wanted to point out that there is a P2P lender called Wellesley (not sure how they compare to Lending Works) who say this in their blurb;

  • Funds begin earning interest straight away from the subscription date, even when funds are not allocated for lending.

(This is for the ISA bond though). https://www.wellesley.co.uk/isa/

Thanks for highlighting them. I have heard of them but haven't done much investigation.

Lending Works was a positive (albeit short) experiment. I think (my opinion only, not based on any fact) the time out of the market problem at the moment is that they are a relatively new entrant and so don't yet have critical mass. They seem to be building it pretty quickly though with lending increasing from £12M to £14.7M in only 2 months.

My current main P2P lender is RateSetter (a few posts on them also). In comparison they have a bit over £457M on loan. I personally now have a bit over £40k with them so am taking P2P pretty seriously thus my blog focus. I'm finding on RateSetter that my money is back in the market on the same day of late so doesn't have the same problem. When I first started lending though I do remember it also took a few days to get into the market also.

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So many tax haven benefits listed and I didn't even think of the TFLS. Thanks for adding that in to the mix. If you took it as part of your monthly pension 'earnings' all of a sudden you're able to earn £10,800/75%+£5,000+£1,000+£6,000=£26,400 tax free. For a couple that's £52,800. Mad really when you think about it.

And here's another couple.

I believe you can rent a room out for <£4.25K a year tax-free.

All income from your solar panels via feed-in tariff etc is tax-free (at least for smaller installations). That's easily a couple hundred pounds a year for 20 years - even including the cost of the panels. Not to mention energy savings.

For woodlands, there are also some tax exemptions.

Edited by StainlessSteelCat

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And here's another couple.

I believe you can rent a room out for <£4.25K a year tax-free.

All income from your solar panels via feed-in tariff etc is tax-free (at least for smaller installations). That's easily a couple hundred pounds a year for 20 years - even including the cost of the panels. Not to mention energy savings.

For woodlands, there are also some tax exemptions.

...and it's going up to £7,500 per year

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One of the (many) appeals of staying in the UK has been tax treatment in FIRE. Before the budget it was even more remarkable - between us Mrs JTB and I would have been able to pull in a remarkably large amount of income entirely tax-free even before ISA wrappers were counted.

Unlike many countries, we have no "wealth tax" here - it's purely an income game. I occasionally worry that some populist/money-grabbing politician may one day start eyeing up capital pots.

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Thanks for highlighting them. I have heard of them but haven't done much investigation.

Lending Works was a positive (albeit short) experiment. I think (my opinion only, not based on any fact) the time out of the market problem at the moment is that they are a relatively new entrant and so don't yet have critical mass. They seem to be building it pretty quickly though with lending increasing from £12M to £14.7M in only 2 months.

My current main P2P lender is RateSetter (a few posts on them also). In comparison they have a bit over £457M on loan. I personally now have a bit over £40k with them so am taking P2P pretty seriously thus my blog focus. I'm finding on RateSetter that my money is back in the market on the same day of late so doesn't have the same problem. When I first started lending though I do remember it also took a few days to get into the market also.

Thought you might find this article interesting/useful; http://www.telegraph.co.uk/finance/personalfinance/investing/11918793/Peer-to-peer-what-would-happen-to-returns-in-a-financial-crisis.html

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Thanks. Brave call to say "lenders using the biggest P2P firms, who lend over a five-year period, should not lose capital during a crisis. They assume a severe scenario: a one in 100-year recession, roughly as extreme as the 2008 credit crisis." I'm certainly not as bullish as that but at the same time the article leaves me still happy with my RateSetter choice.

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