Thanks @UkNorthampton . I have looked into much of this previously and discounted. However my circumstances have changed so I will be able to after all.
Regarding Lombard loans - the issue that we have come up against is not being diversified.
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UK pre/post retirement strategies
- Thread starter Buckminster
- Start date
Regarding Lombard loans - the issue that we have come up against is not being diversified.
UkNorthampton
TSLA - 12+ startups in 1
I was wondering longer term (decade+) whether I should diversify - safety long term or eventually Tesla might have different management or lose its way.
I follow Home - Ticker Symbol: YOU on youtube/twitter. He's an ex rocket scientist turned financial youtuber (world is weird!)
He mostly talks ARK funds & if I were FORCED to diversify (eg Lombard), I'd be tempted to look at whatever ARK are buying, research & select a few & buy share/options/LEAPS (depending on Lombard rules). I'd hope that large % of Tesla plus some genomics & tech would be enough diversification. Almost worth trying 49% $TSLA plus small % in lots of companies to appear very diversified.
I forgot to mention for those feeling generous to family/friends that ANYONE can contribute to Junior ISAs & SIPPs - so as long as parents (themselves if ADULT SIP) have set them up & you collectively keep to limits, nephews/nieces, friends kids could be provided for Uni/retirement etc as well as adults (SIPP)
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Semi off topic:
I have two Cybertrucks on order - as potential robotaxis. Anyone think that their size could have a place on UK roads? In which case I might order more.
I can see folk having them as trinkets. Stag Dos would work but a little niche. They could do airport drop-offs I guess.
Parking in town is impossible:
I have two Cybertrucks on order - as potential robotaxis. Anyone think that their size could have a place on UK roads? In which case I might order more.
I can see folk having them as trinkets. Stag Dos would work but a little niche. They could do airport drop-offs I guess.
Parking in town is impossible:
UkNorthampton
TSLA - 12+ startups in 1
I've got a few on order. Intended as airport/hen/graduations/taxis. If they don't do delivery in UK, I'm considering asking for delivery to USA & running Turo, similar services in USA. I wonder if worth doing anything collective. No rush
For those of you that want a UK friendly CT:
Munro® - Electric 4x4 Vehicles | EV manufacturer based in the UK
Not quite the same but still interesting.
Munro® - Electric 4x4 Vehicles | EV manufacturer based in the UK
Not quite the same but still interesting.
UkNorthampton
TSLA - 12+ startups in 1
If Cybertrucks not coming to UK/Europe... I'd Turo/sell/rent out in Canada to avoid W8BEN/USA tax complications of having a footprint in USA and holding TSLA/USA shares.
Otherwise, I've decided to sell a few shares (0.5-1% a year), even though I'm working. This is to pay some tax (done), bills (done), debts (partly done) & have some emergency/treat money as we've lived frugally for a long time. When retired, I won't ever sell more than 3% in a year. If TSLA is as high as I hope it will be, percentage will be lower. So this becomes sustainable & can form basis of generational wealth.
I drew a line between peaks & then angled it up a bit to get some prices I'd be willing to sell for. If these prices aren't hit, I'll just rinse & repeat, unless I really need to sell.
So I've set up a few limit sells for
1380+ by end of Jan 2022
1680+ in next 90 days (late March 2022)
Platform has a limit of 90 days, not sure what maximum limit sell prices are compared to current price, so a bit of research/experimenting required.
I won't ever time the peaks, but might catch some of the rapid FOMO moves. Initially taxable accounts (me & spouse), so have to watch out for Capital Gains Tax, hence only a few shares in this tax year. Later on ISA, later still SIPP - mix and match for CGT/Income allowances.
I'm intending to ease into early retirement, cutting my work commitments over time. Main aim is to be able to travel, but not in a hurry until travel is more fun.
Any thoughts?
Otherwise, I've decided to sell a few shares (0.5-1% a year), even though I'm working. This is to pay some tax (done), bills (done), debts (partly done) & have some emergency/treat money as we've lived frugally for a long time. When retired, I won't ever sell more than 3% in a year. If TSLA is as high as I hope it will be, percentage will be lower. So this becomes sustainable & can form basis of generational wealth.
I drew a line between peaks & then angled it up a bit to get some prices I'd be willing to sell for. If these prices aren't hit, I'll just rinse & repeat, unless I really need to sell.
So I've set up a few limit sells for
1380+ by end of Jan 2022
1680+ in next 90 days (late March 2022)
Platform has a limit of 90 days, not sure what maximum limit sell prices are compared to current price, so a bit of research/experimenting required.
I won't ever time the peaks, but might catch some of the rapid FOMO moves. Initially taxable accounts (me & spouse), so have to watch out for Capital Gains Tax, hence only a few shares in this tax year. Later on ISA, later still SIPP - mix and match for CGT/Income allowances.
I'm intending to ease into early retirement, cutting my work commitments over time. Main aim is to be able to travel, but not in a hurry until travel is more fun.
Any thoughts?
Not sure if FICs are worthwhile but something to think about:
Securing your wealth using a Family Investment Company (FIC) - Haines Watts Group
Securing your wealth using a Family Investment Company (FIC) - Haines Watts Group
UkNorthampton
TSLA - 12+ startups in 1
Useful if dividends are a big thing, capital gains at 19% and no allowances, maybe not. I've read that these FICs are getting more popular, perhaps property works well with these. I guess ability to pay family members a salary, National Insurance and a pension could be useful. NB company pension contributions don't have the same limits as personal pensions. AFAIK, you could pay a £20k salary and a £40k pension contribution (DYOR etc)
One aspect for children inheriting from parents that I've recently heard about is that a half share in a house could be inherited by children when the first parent passes away. No ability to sell the house (if done correctly), but moves the inheritance date, doubles allowance to one per parent. Care home effects/charges etc. Presumably property sales could go into a FIC, as indeed a property might also.
Pensions are outside of a person's estate and can be inherited to provide for generations (tesla to da moon). They are already in trust, not sure if could/sensible to go into FIC.
Going back to FIC - maybe ISA inheritance makes sense when recipient isn't a spouse. Another one to ask a professional advisor about, I guess. I've read somewhere that sometimes it's best to set up things like trusts (maybe FIC) before a person's death and not ON death.
Having enough money for this, it would be a nice problem to have... seems like professional advice would be needed & complexity is high for the various choices.
As for selling shares... yeah, not yet
JupiterMan
Active Member
You cannot put pension assets inside a corporation without first paying the money out of the pension wrapper, which would incur high income taxes, lose the IHT status and possibly incur lifetime allowance charges if it is a large pension. In other words, would not be much point in doing this!
as for this FIC itself, such schemes are vulnerable to changes in HMRC legislation, who often look to crack down on schemes like this which could be classified as avoidance.
Should the scheme fail in the future you would be left with all your assets in a structure with high costs, that does little and may not be easy to unravel.
Not quite sure how this scheme avoids the POAT/GWR rules for Inheritance tax either. For me, I would avoid schemes like this.
(Not financial advice)
UkNorthampton
TSLA - 12+ startups in 1
Yeah, I didn't really see the point of Family Investment Companies for my situation. I was wondering if I was missing something, perhaps property or offshore assets (property owning offshore companies?). Maybe useful when family members are in different tax jurisdictions? Worries about unstable or vulnerable family members getting hands on assets? Or large fees in managing might lead to greater incentive to promote.
With a pension being moved to a company - I assumed after a person's death, so some of your above-mentioned items might not apply. As pension is in trust anyway, I'd have to be persuaded of an advantage of using a company.
For some UK Tesla investors who struck lucky (or will soon, again) - they might have larger ISAs than pensions, especially if they were in some NHS/Teacher/other scheme that was well regarded - and so didn't self manage/select. For those, ISA allowance allows spouse to inherit all, tax-free into their ISAs. But what of the next generation after spouse passes? I guess it's either some kind of trust before death, after death or straight inheritance and pay the tax. So tax of 40% above £325k
Musings, from an amateur, not advice (which I will get from a professional, but I want to be as informed as possible before meetings)..
It seems that for those with larger ISAs than pensions (or houses)
- on first parent's death:
- leaving UP TO half the parents' main residence to kids - inheritance taxable/included in allowance (NB £500k allowance for houses if rest of estate under £2m - How Inheritance Tax works: thresholds, rules and allowances)
- all of pension to kids - not inheritance taxable
- any remainder from ISA up to £325k, or beyond if happy to pay tax on amount above
- rest of ISA to spouse (and family life is complicated, this has assumptions of a nuclear family!)
- So children inheriting up to a £650k house (50% share, % and value could vary) plus a pension plus remainder of £325k limit from estate/ISA would mean only income tax on pension withdrawals and no inheritance tax.
- £500k inheritance tax allowance on property if the whole estate (excluding pension) is less than £2 million eg £1 million house, but that would allow the surviving spouse/parent only 50% of house plus up to £1 million from estate (ISAs inherited by a spouse still SEEM to be part of an estate but a special rule means no tax for spouse inheriting, but it does mean that the £2 million estate / £500k property inheritance rule is in play).
- on second parent's death
- not sure!
- give away over many years (rules/tax)
- rest of house in trust? How to allow use/fairness?
- ISAs & taxable estate - probably some kind of trust for control. Reduces risks from gold-diggers, gambling, substance abuse. Scope for longevity, even multi-generational
- before death
- after death
I had to look up acronyms, so for others:- POAT: Could it affect you? - Tax Insider
JupiterMan
Active Member
It is normally best, if possible, to keep pension benefits on death within a pension tax wrapper, rather than to seek re-invest them in another structure.
With defined contribution pensions, make sure you have a death benefit nomination in place, this allows the beneficiary to receive the funds, but can retain them inside a pension tax wrapper (rather than receiving a cash payout).
different tax position applies to such pensions as follows:
- received by beneficiary free from Inheritance tax
- received by beneficiary net of lifetime allowance charge (if applicable)
- if previous owner died < 75, all proceeds can be withdrawn at any time tax free (can be drawn as an income or lump sums)
- if previous owner died > 75, all proceeds can be withdrawn subject to income tax (note no 25% tax free cash applies)
- no capital gains tax on growth or income tax on investments within pension tax wrapper
- does not count to beneficiaries lifetime allowance
- does not fall into beneficiaries estate for Inheritance Tax
- further nomination can made to pass down assets on death of beneficiary to another beneficiary
hope this helps.
UkNorthampton
TSLA - 12+ startups in 1
This post and one of your previous ones was helpful (as were others')...
Decided to take as much as possible out of Ltd company via company contributions to spouse's pension (SIPP). Keeping £12k salaries x 2 on accountant 's advice - no longer taking any dividends, will be saving on corporation tax.
My SIPP is likely to breach Lifetime Allowance if Tesla does well, so I don't see the point of contributions. Spouse's SIPP is very small.
I'm selling Tesla shares out of my trading account and lending to company - to ensure enough cash in bank accounts, paying back directors' loans. Keeping below Capital Gains Tax allowance (CGT).
Our spending will have to come from salaries plus selling Tesla shares SLOWLY in normal trading accounts (CGT limits, 2 people) and Individual Savings Accounts (ISAs).
ISA is the biggest account as I was lucky on when I bought Tesla in that account.
No plans to move house but if we chose to, getting a mortgage will be hard unless I can get approval in an unconventional way, I can't see us passing normal affordability tests, so might have to pay any increase in cost in cash (ISA Tesla share sales). Difficulty would seem to be low regular income and assets discounted in affordability calculations. We would much prefer to keep as many shares as possible. I now see wealth as number of
Contributions seem to be limited by
- company profit
- available cash in company bank account (topped up by personal loan from me to company)
- £40,000 annual limit (info on this for company contributions is sparse)
- current year + 3 years back (carry forward rule)
- NOT limited by annual salary (applicable to personal contributions, which get 25% /40% tax relief added on so £100 > £125 or £140 contribution).
Didn't feel particularly secure about it all after having spoken to accountant and read up on subject. There's some subjectivity in it and slightly concerned that spouse getting pension contributions, but not me might concern HMRC (tax authority). Other sources online seem fine about this.
Annoying that it seems to be falling between two stools, Accountant and Financial / Pension advisor. One-stop shop would be better.
JupiterMan
Active Member
thanks, always happy to help if I can!
This is the "wholly and exclusively" rule.. its very grey to be honest, and best to take an accountants advice on this one. I've never had a client reviewed on this... but there are never guarantees.
essentially as long as the pension contribution for your spouse can be shown to be part of the remuneration/compensation package from the company then you should be fine, irrespective of your personal position, which as you say is complicated by your personal lifetime allowance position.
So it is more a question of justifying the package for your spouse than comparing it to your own position.
mine already does. nice problem to have!
I've agreed with my employer to stop my personal pension contributions, but to maintain employer contributions (my employer is good like that!), that way I don't lose out on employer pension funding, but my own pension contributions are paid (and taxed) as salary rather than added to my pension pot and liable to future 55% pension tax charge (also my contributions by investing outside of pensions are available before 55 which is important for me).
Remember in retirement the three small pot rule which can allow £30k out of your pension to be not assessed for the lifetime allowance. it's small but helps avoid some lifetime allowance charges.... every little helps.
My plan is to withdraw tax free cash up to the LTA on retirement (around age 55), then draw from the excess pension pot an income of £12,570 p.a. up to state pension age (at which point state pension covers most of your personal allowance). spreading this capital and income over early retirement should allow the (lifetime allowance surplus) pension income withdrawals up to £12,570 to be taxed at 25% (i.e. income), rather than 55% (i.e. capital) assuming no other taxable income. again, small tax savings, and depends on your overall income needs, but potentially helps.
It will be important for benefits to be structured with a pension provider that allows this flexibility - not all providers will.
UkNorthampton
TSLA - 12+ startups in 1
Thanks, I'd forgotten about small pots - I don't think it applies to me as other pension is occupational and above £30k. It doesn't seem to apply to a SIPP worth LTA + 30+k.thanks, always happy to help if I can!
This is the "wholly and exclusively" rule.. its very grey to be honest, and best to take an accountants advice on this one. I've never had a client reviewed on this... but there are never guarantees.
essentially as long as the pension contribution for your spouse can be shown to be part of the remuneration/compensation package from the company then you should be fine, irrespective of your personal position, which as you say is complicated by your personal lifetime allowance position.
So it is more a question of justifying the package for your spouse than comparing it to your own position.
mine already does. nice problem to have!
I've agreed with my employer to stop my personal pension contributions, but to maintain employer contributions (my employer is good like that!), that way I don't lose out on employer pension funding, but my own pension contributions are paid (and taxed) as salary rather than added to my pension pot and liable to future 55% pension tax charge (also my contributions by investing outside of pensions are available before 55 which is important for me).
Remember in retirement the three small pot rule which can allow £30k out of your pension to be not assessed for the lifetime allowance. it's small but helps avoid some lifetime allowance charges.... every little helps.
My plan is to withdraw tax free cash up to the LTA on retirement (around age 55), then draw from the excess pension pot an income of £12,570 p.a. up to state pension age (at which point state pension covers most of your personal allowance). spreading this capital and income over early retirement should allow the (lifetime allowance surplus) pension income withdrawals up to £12,570 to be taxed at 25% (i.e. income), rather than 55% (i.e. capital) assuming no other taxable income. again, small tax savings, and depends on your overall income needs, but potentially helps.
It will be important for benefits to be structured with a pension provider that allows this flexibility - not all providers will.
Just to be sure, another one for the question list when visiting an Independent Financial Advisor (IFA) in some time.
An IFA quoted about £3,000 for a plan, but I'm assuming some of that was for things I already do including picking providers and investments. I'll get some more quotes in a few months from now maybe - suggestions (I won't take as recommendations) welcome by private message or here. I also assume I have to spend out for a solicitor for will/trust for ISA, 50% of house, pension (default discretionary trust exists with SIPP provider & I'll filled in primary/secondary beneficiaries). I'm ready for worst but also thinking about if $TSLA goes way up - I'd like there to be multi-generational wealth for my descendants, some relatives and even a couple of friends.
I hope I'm not being too nosy, but wanted to understand/clarify this part:-
At 55 - withdraw the tax-free cash up to LTA - I can read that 2 ways (I'm assuming first, but if I don't ask a dumb question, I might miss a trick)
1) Withdraw 25% of LTA ie c 250k, 750k in drawdown (left invested in shares) - withdrawal subject to 25% tax above tax allowance - so c £12,570 (unless increase with spouse marriage allowance - not much though, if spouse is younger)
2) Withdraw 100% of LTA ie 1 million, and leave 3 million in drawdown - I'm assuming this isn't what was meant
One thing I'm curious about is whether it's worth doing voluntary National Insurance contributions. Perhaps not required now, just wondering about NHS (healthcare coverage) or future changes to state pensions.
JupiterMan
Active Member
Yes (1), so my plan is to withdraw tax free cash of 25% of LTA, c£250k, and then spread that as income over around 5 years (for example), giving me £50k net p.a. income - I will not be using my Personal Allowance before state pension age, so plan is to withdraw £12,570 each year from the LTA surplus pot (not the crystallised pot), which will then, if taken as income, be subject to 25% LTA charge and income tax at my marginal rate of income tax, which would be zero in this case.
this way I get 5 x £12,570 at 25% tax rather than 55%, saving nearly £19k in tax charges over 5 years.
get a BR19 form (google search it) and post it to the DWP for your state pension record (or get this online through government gateway). this does not cost you anything.
As soon as you have done 35 qualifying years of NI contributions you will qualify for the maximum state pension. So if you already have 35 years, or are forecast to by the time you retire, there should be no need for voluntary NI contributions.
the BR19 results will give you this info.
Small pot rules works regardless of the overall size of your pension funds. there are some pension providers which will structure a plan to take the 3 x small pots form a single (larger) plan.
Check with your future IFA for a plan that meets these requirements, you may need to transfer to make use of this rule.
UkNorthampton
TSLA - 12+ startups in 1
No updates to this thread for a long time.
Changes (proposed/actual) to Lifetime Allowances means I've started paying into a pension again. I suspect 1 or 2 people tempted to retire ASAP to lock in any changes & avoid risks as much as possible. No guarantees, but normally pension changes aren't retrospective as far as I've noticed.
I'm now looking at partly living off ISAs for a sabbatical/trial early retirement/retraining period.
Current ISA provider charges 1.5% foreign exchange fees of USD to GBP.
Looking at partial transfers to spread amongst a few providers (provider risk may be small, but would be awful for me, hacks, financial failure, fraud). Not all receiving ISA providers offer partial transfers.
CMCInvest do allow partial transfers of TSLA- their USD/GBP fees are 0.5% & they're £10 a month for ISA. £50-250 bonus for opening account at the moment (extended).
IKBR do ISAs, but not partial transfers, only full transfers which I don't want. Exchange fees stated as being 0.03%. Protection is USA, not UK & $500,000 (might be lower - I can't remember what conversation with IKBR said on phone).
I'll look through The Lemon Fool, Broker comparison: cheap investment platforms UK & other places for ideas.
Current idea is to do partial ISA transfer of TSLA shares to CMC, then later, full transfer from CMC to IKBR or other after 6th April (new ISA, one per year). It is important to tell CMC that I want to keep it open & do partial transfer from original ISA provider.
That will lead me to have 3 providers. Higher monthly fees, but a little more safety. At some point, I'll turn some TSLA into something boring like an index tracker, so fees may be important. UK based index fund may be better for handling the fund dividends (if any) as otherwise W8BEN form doesn't protect ISA (unlike SIPP) from USA dividend taxes.
Any thoughts?
Changes (proposed/actual) to Lifetime Allowances means I've started paying into a pension again. I suspect 1 or 2 people tempted to retire ASAP to lock in any changes & avoid risks as much as possible. No guarantees, but normally pension changes aren't retrospective as far as I've noticed.
I'm now looking at partly living off ISAs for a sabbatical/trial early retirement/retraining period.
Current ISA provider charges 1.5% foreign exchange fees of USD to GBP.
Looking at partial transfers to spread amongst a few providers (provider risk may be small, but would be awful for me, hacks, financial failure, fraud). Not all receiving ISA providers offer partial transfers.
CMCInvest do allow partial transfers of TSLA- their USD/GBP fees are 0.5% & they're £10 a month for ISA. £50-250 bonus for opening account at the moment (extended).
IKBR do ISAs, but not partial transfers, only full transfers which I don't want. Exchange fees stated as being 0.03%. Protection is USA, not UK & $500,000 (might be lower - I can't remember what conversation with IKBR said on phone).
I'll look through The Lemon Fool, Broker comparison: cheap investment platforms UK & other places for ideas.
Current idea is to do partial ISA transfer of TSLA shares to CMC, then later, full transfer from CMC to IKBR or other after 6th April (new ISA, one per year). It is important to tell CMC that I want to keep it open & do partial transfer from original ISA provider.
That will lead me to have 3 providers. Higher monthly fees, but a little more safety. At some point, I'll turn some TSLA into something boring like an index tracker, so fees may be important. UK based index fund may be better for handling the fund dividends (if any) as otherwise W8BEN form doesn't protect ISA (unlike SIPP) from USA dividend taxes.
Any thoughts?
petit_bateau
Active Member
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