Good overview. A couple of small extra points. as a basic rate tax pay you can have up-to £1k of savings interest tax free, indeed there is a starter rate for interest savings which can boost this further by £5k if your not utilizing your full personal tax allowance. You can also use your spouses marriage allowance if they are not utilizing their full personal allowance.
@thomasmcdonald5542 Yes, according to HMRC website "If your other income is less than £17,570 your starting rate for savings is a maximum of £5,000. Every £1 of other income above your Personal Allowance reduces your starting rate for savings by £1." ...so you can benefit from earning more than £1k interest tax free even if you use up your £12,570 personal allowance.
Another consideration that I don't think was mentioned in the video was to use the £20k ISA allowance by selling down from the GIA and moving into the ISA. This may incur capital gains tax over the £3k limit. However, assuming growth in the GIA every year, this capital gains tax liability will only get worse when you do eventually sell.
Plus you could move £2880 from GIA into SIPP. HMRC would give you 25% on top of that giving you £3600 in SIPP. You can do this up to age 75 every tax year.
...being aware that as soon as you take a taxable amount from the crystallised part of your DC pension pot, you are capped as to how much you can now pay in to the pot (which limits your future ability to not go into the higher rate tax bands) - to £10,000 pa. So as an occasional consultant, this is a trap I must avoid. If I get 6 months work as a grey-haired expert, I could end up with a giant tax bill on the work as I am limited as to what I can put into a pension :(
Videos are good but consider leaving the graphics up for longer or have them alongside your face as you talk. At the moment, for myself at least, they are flashed up for a few seconds and frustratingly unreadable in detail.
Annuities are good if you’re an older person, a smoker with no family to pass pension on to. Not so good for younger retirees, non-smoker with family that you want to pass money to. I fall into latter category so annuity is not for me.
I'm looking at this example and wondering if it worth withdrawing more from the GIA to pay into the ISA(and accepting you pay more CGT now). The CGT issue with the GIA will only get worse over time with compounding returns as well as the impact of inflation reducing the "value" of that annual £3000 CGT allowance.
I have a DB pension and Ive been working on an assumption, especially since the recent budget, that i should draw from my SIPPs first and leave my ISA intact. Am i right in saying that when you hit 75 there is a mandatory crystallisation of remaining undrawn pensions?
Great content. I'm curious how sustainable it would be to keep taking £50k / year, increasing with inflation each year, based on the assets held in this example. I know it would depend on rates of return, but assuming say 6% growth for the pension? I haven't done the calcs, but my guess is the money would run out before the guy croaked!
Great video. If you have a DB pension that uses up your annual allowance, does it really matter if you draw from a SIPP or ISA first - assuming you remain a basic rate tax payer for both and don't mind triggering the MPAA? Many thanks
Good overview. A couple of small extra points. as a basic rate tax pay you can have up-to £1k of savings interest tax free, indeed there is a starter rate for interest savings which can boost this further by £5k if your not utilizing your full personal tax allowance. You can also use your spouses marriage allowance if they are not utilizing their full personal allowance.
@thomasmcdonald5542 Yes, according to HMRC website "If your other income is less than £17,570 your starting rate for savings is a maximum of £5,000. Every £1 of other income above your Personal Allowance reduces your starting rate for savings by £1." ...so you can benefit from earning more than £1k interest tax free even if you use up your £12,570 personal allowance.
Another consideration that I don't think was mentioned in the video was to use the £20k ISA allowance by selling down from the GIA and moving into the ISA. This may incur capital gains tax over the £3k limit. However, assuming growth in the GIA every year, this capital gains tax liability will only get worse when you do eventually sell.
Plus you could move £2880 from GIA into SIPP. HMRC would give you 25% on top of that giving you £3600 in SIPP. You can do this up to age 75 every tax year.
...being aware that as soon as you take a taxable amount from the crystallised part of your DC pension pot, you are capped as to how much you can now pay in to the pot (which limits your future ability to not go into the higher rate tax bands) - to £10,000 pa.
So as an occasional consultant, this is a trap I must avoid. If I get 6 months work as a grey-haired expert, I could end up with a giant tax bill on the work as I am limited as to what I can put into a pension :(
In summary make use of your allowances every year : CGT, income and savings (not mentioned) and preserve your tax free savings if you can.
Videos are good but consider leaving the graphics up for longer or have them alongside your face as you talk. At the moment, for myself at least, they are flashed up for a few seconds and frustratingly unreadable in detail.
Yes I agree
agreed
Pause is helpful.
full screen graphics are better
@@najib1 I don''t follow you. Pause when the graphic is full screen and you have as long as you want to read it.
Why would anyone have a gia when the pension is so small? Seems dumb
Or you can just buy an annuity, simples. I don't have of these multiple investments, only a pension worth £740k and a DB pension with an LTA of £170k.
Annuities are good if you’re an older person, a smoker with no family to pass pension on to. Not so good for younger retirees, non-smoker with family that you want to pass money to. I fall into latter category so annuity is not for me.
@@stevegeekthe tax can always change in the future with inheritance so drawdown is also a risk. Don’t discount annuities Always look at both
@@alwright8715 👍 True
Simples, but annuity income is always taxable. Many people have tax free ISA, in addition to only a pension.
@@patoises Yes, you can have both. It's a matter of preference.
I'm looking at this example and wondering if it worth withdrawing more from the GIA to pay into the ISA(and accepting you pay more CGT now). The CGT issue with the GIA will only get worse over time with compounding returns as well as the impact of inflation reducing the "value" of that annual £3000 CGT allowance.
I have a DB pension and Ive been working on an assumption, especially since the recent budget, that i should draw from my SIPPs first and leave my ISA intact. Am i right in saying that when you hit 75 there is a mandatory crystallisation of remaining undrawn pensions?
Great content. I'm curious how sustainable it would be to keep taking £50k / year, increasing with inflation each year, based on the assets held in this example. I know it would depend on rates of return, but assuming say 6% growth for the pension? I haven't done the calcs, but my guess is the money would run out before the guy croaked!
Bed and isa from gia?
Can I take 25% tax free of 325k and then draw down 12k pa tax free? Before state pension age? Topped up with isa money if needed.
Yes
Great video. If you have a DB pension that uses up your annual allowance, does it really matter if you draw from a SIPP or ISA first - assuming you remain a basic rate tax payer for both and don't mind triggering the MPAA? Many thanks
SIPP first? To minimise tax as your pot grows. ISA is always tax free.