Stocks n Shares ISA

[Batdad]

But some on this thread think they’re doing well with 4 % pa

Not even anything fancy either. Just FWRG/ACWI and chill

 

[DaveI]

So if someone is near the top end of the child benefit bracket and a pay rise takes them over it, it’s a good idea to put the extra into a pension to keep them below? I get that bit. Does that then essentially mean you sacrifice pay rises going forward in favour of higher pension contributions?

That’s what I do. My pay goes up in December (if it does) which means I have to alter contributions sharpish so that it goes through for the last few months of the year.

 

[DufraisFTM]

Soz mate didn't mean to offend. I've been researching this for a couple of years as I'm close to early retirement. I don't intend to pay a financial adviser a single penny so I'm clued up on things.

No problem. I’m 43 now and it’s recently dawned on me that life events don’t half creep up on you quickly so have been thinking more about my financial situation in later years recently. I think I’m in a good place with a good workplace pension (DC) and a deferred (DB) pension but I’ve been investing in a S and S ISA recently (hence being on this thread) as a flexible bridging option. I’m just not really clued up on these things having never really taken any interest in tax efficiency or anything so that’s the reason for the really basic questions. Upping my pension contributions is something I will be looking to do soon and it was the mention of child benefit that peaked my interest here.

 

[Alchemist]

I started my T212 account ten months ago, it's gone from being 3.5% down three weeks ago to 31% up as of today.

Could all change again tomorrow, who knows.

 

[houghton cut head]

Just checked my pension pot, its only £4K down prior to Israel ordering the USA to invade Iran, so I think is 13% up after 18 months and £23K being drawn down. I am still waiting for the massive dip when he nukes some country though

 

[Shambo]

My pension is now back up higher than before Trump starting firing missiles into Iran

 

[Barista]

The money you pay into your pension via salary sacrifice reduces your salary so you pay less tax and national insurance. Unless you are applying for a mortgage it's a no brainer.

It’s a shame that salary sacrifice has been ‘sacrificed’ to a large extent by the chancellor from later this decade.
The other thing to consider with salary sacrifice is that if someone was made redundant the company could potentially base the redundancy payout on the reduced salary rather than the ‘real salary’.
Not all companies do this, but it may be worth checking with HR/benefits, especially if they have been with their employer a long time and/or their industry/company is prone to redundancies.

 

[Edinburgh Black Cat]

It’s a shame that salary sacrifice has been ‘sacrificed’ to a large extent by the chancellor from later this decade.
The other thing to consider with salary sacrifice is that if someone was made redundant the company could potentially base the redundancy payout on the reduced salary rather than the ‘real salary’.
Not all companies do this, but it may be worth checking with HR/benefits, especially if they have been with their employer a long time and/or their industry/company is prone to redundancies.

Salary sacrifice still works for taxable income. It's the NI element that is capped.

Of course, there's less incentive for companies to offer it without the additional NI savings so there is a risk availability reduces.

 

[Darlo1973]

Just checked my pension pot, its only £4K down prior to Israel ordering the USA to invade Iran, so I think is 13% up after 18 months and £23K being drawn down. I am still waiting for the massive dip when he nukes some country though

If we get nuked back then it won't matter what is in your pension pot.

 

[DBStar]

But some on this thread think they’re doing well with 4 % pa

That's right for some people though. You would be mad to use a S&S ISA for a house deposit or money you need within a short few years.

It’s a shame that salary sacrifice has been ‘sacrificed’ to a large extent by the chancellor from later this decade.

Almost nobody working in payroll thinks it will happen. It will mean loads of software is not viable. And kowtowing to very high earners to manage their finances for them is already a burden for many companies, without having to manage things for a significant portion of a workforce. Not to mention the likelihood that it will be presented as a tax cut just before an election if it doesn't happen.

 

[Darlo1973]

Almost nobody working in payroll thinks it will happen. It will mean loads of software is not viable. And kowtowing to very high earners to manage their finances for them is already a burden for many companies, without having to manage things for a significant portion of a workforce. Not to mention the likelihood that it will be presented as a tax cut just before an election if it doesn't happen.

The implementation date has been set at 2029 as nobody yet can work out how it will work. NI isn't calculated on annual earnings and there is no easy way of tracking it when someone changes jobs.

 

[Edinburgh Black Cat]

The implementation date has been set at 2029 as nobody yet can work out how it will work. NI isn't calculated on annual earnings and there is no easy way of tracking it when someone changes jobs.

Either they'll bin the cap or bin salary sacrifice altogether.

It's an entirely stupid idea.

 

[DBStar]

2029 by some coincidence is the last year an election can take place though. Most of the workforce won't even move in a tax year and it would still be a nightmare for most companies. HMRC have NIable YTD earnings as it is reported on an FPS (or at least what employers think is NIable earnings is), they just have no mechanism to act on it. They still can't even abolish P45 and it's at least five years since they were due to go. But they have never had a clue how much NI it should be receiving from payroll anyway.

 

[Barista]

Either they'll bin the cap or bin salary sacrifice altogether.

It's an entirely stupid idea.

Stupid idea, same as lowering the limit for cash ISAs to £12k pa for under 65s.
They know many people will get round it by simply holding cash or cash like instruments in S&S ISAs. Hence they are looking at somehow including MMFs and short term gilts etc held in S&S ISAs in this £12k limit. Implementation will be a nightmare, if not near impossible for the platforms.

 

[42]

The implementation date has been set at 2029 as nobody yet can work out how it will work. NI isn't calculated on annual earnings and there is no easy way of tracking it when someone changes jobs.

The only way to really do it is not a real annual allowance like with income tax but make it £40 pw or £167 a month. So if you make big payment in a single month, youll get stung compared to if it gets spread out.
Actual NI sort of works like that anyway as the allowance is advertised as the £12.5k but in reality its a weekly one & no refunds if youre out of work for a bit.

 

[Darlo1973]

The only way to really do it is not a real annual allowance like with income tax but make it £40 pw or £167 a month. So if you make big payment in a single month, youll get stung compared to if it gets spread out.
Actual NI sort of works like that anyway as the allowance is advertised as the £12.5k but in reality its a weekly one & no refunds if youre out of work for a bit.

Yes, could get very complex especially with lump sumo payments. I tend to put my annual bonus into my pension to save the tax.

Of course every time there is a complicated tax system someone will find a loophole in it.

 

[Edinburgh Black Cat]

Yes, could get very complex especially with lump sumo payments. I tend to put my annual bonus into my pension to save the tax.

Of course every time there is a complicated tax system someone will find a loophole in it.

It depends on individual circumstances (where you are in the thresholds, rules on varying contributions), but generally you could save more NI if you make large contributions from a couple of non-bonus months rather than bonus months.

 

[Ned Land]

This might have been asked before so apologies if SEB.

I may take voluntary redundancy effective from 31 October this year, and work a 3 month notice from 31 July 2026.

I already contribute to a workplace pension and a SIPP.

During the notice period can I move the maximum possible amount into the SIPP? It would be the lowest of £60k or a year salary, minus any contributions already made to the workplace pension (employee&employer), AVCs and SIPP?

E.g. if I earned £50k and have paid £10k into all pensions this tax year then I could add another £40k to SIPP from ‘earnings’ even though it would be from my savings.

I could get £30k tax free redundancy and ask for any more to be paid into SIPP via salary sacrifice?

If I am unemployed/not working then the max is £2880 bumped up to £3600?

 

[Edinburgh Black Cat]

This might have been asked before so apologies if SEB.

I may take voluntary redundancy effective from 31 October this year, and work a 3 month notice from 31 July 2026.

I already contribute to a workplace pension and a SIPP.

During the notice period can I move the maximum possible amount into the SIPP? It would be the lowest of £60k or a year salary, minus any contributions already made to the workplace pension (employee&employer), AVCs and SIPP?

E.g. if I earned £50k and have paid £10k into all pensions this tax year then I could add another £40k to SIPP from ‘earnings’ even though it would be from my savings.

I could get £30k tax free redundancy and ask for any more to be paid into SIPP via salary sacrifice?

If I am unemployed/not working then the max is £2880 bumped up to £3600?

For future years, aye. In the current year it would still be your total annual earnings that matter rather than your (nil) income at that particular point (let's say December 2026 when you're sunning yourself on a beach).

So you could add £40k in December if your Apr-Oct earnings were £50k and you'd only contributed £10k.

Have a think about what you're likely to earn next few years though. It may be more efficient not to contribute now, at basic rate, if you'll have the opportunity to contribute at higher rate next couple of years. Adding to a Stocks & Shares ISA or even a General Investment account now may be more tax efficient and flexible long term.

 

[Ned Land]

For future years, aye. In the current year it would still be your total annual earnings that matter rather than your (nil) income at that particular point (let's say December 2026 when you're sunning yourself on a beach).

So you could add £40k in December if your Apr-Oct earnings were £50k and you'd only contributed £10k.

Have a think about what you're likely to earn next few years though. It may be more efficient not to contribute now, at basic rate, if you'll have the opportunity to contribute at higher rate next couple of years. Adding to a Stocks & Shares ISA or even a General Investment account now may be more tax efficient and flexible long term.

Thanks for that I think that I’ll hedge bets between SIPP and ISA.