Reducing tax ?

[Turra farmer]

A farmer.

And where do farmers get cash ? I know I don't get any

 

[mushnt grummmble]

Just because you dont doesn't mean that others dont

And where do farmers get cash ? I know I don't get any

 

[Pasty]

I would invest it all in fine wines. At least you have an exit plan then.

 

[The Agrarian]

It would but they dont do that much. To be fair the last statement I had showed mine had done very well last year but I have had my two small ones since 86/7 and when I worked it out had the money been in tessas and then isa it would have made as much, of course I wouldnt have tax relief on money into them but I wouldnt be paying tax on taking them out and could have it whenever i liked, I bought a house in 96 for 69,000 sold it in july for 185,000 and had a tad under 9% return from rent. I did spend 28,000 plus a fair bit of my time refurbing it last year . Each to their own tho

Some people have done well out of houses. I'm not knocking your investment. It's done ok. It looks to me like a 185-28=157, leaving a gain of 88k. And I'll bet that 28k spent last year wasn't the only money you've spent over the last 21 years, but moving on. That's a 3.99% gain per year for 21 years. More than half of that has been eaten by inflation - 69k in 1996 is 122 today to stand still (so it's a real gain of 35k). And, you bought it with tax paid money. So it cost 29% more if charged at basic rate self employed. That's really 89k. A real gain of 15k? And the gain has presumably been subject to capital gains tax, at a rate of 18 or possibly 28%. Some of that will be a tax of the inflation part, which is horrendous when you think about it.

The winning part is the income. Not sure what figure your 9% arrived from, but if youre a basic rate tax payer, again, make that 6%. Still good. Is that net of running costs like rates, insurance etc?

With a self invest pension, it's tax free going in, and the gains are tax free. It will be taxed at a time of your life when you would naturally expect to have less income than you do now, so probably a lower effective tax rate overall than if taxed today. But I fully agree that the big risk is government policy change. Probably best to split saving for retirement into several streams to spread risk.

 

[Cowcalf]

follow some of the advice given on here ( TFF ) and you will certainly be paying less tax

 

[Blod]

Some people have done well out of houses. I'm not knocking your investment. It's done ok. It looks to me like a 185-28=157, leaving a gain of 88k. And I'll bet that 28k spent last year wasn't the only money you've spent over the last 21 years, but moving on. That's a 3.99% gain per year for 21 years. More than half of that has been eaten by inflation - 69k in 1996 is 122 today to stand still (so it's a real gain of 35k). And, you bought it with tax paid money. So it cost 29% more if charged at basic rate self employed. That's really 89k. A real gain of 15k? And the gain has presumably been subject to capital gains tax, at a rate of 18 or possibly 28%. Some of that will be a tax of the inflation part, which is horrendous when you think about it.

The winning part is the income. Not sure what figure your 9% arrived from, but if youre a basic rate tax payer, again, make that 6%. Still good. Is that net of running costs like rates, insurance etc?

With a self invest pension, it's tax free going in, and the gains are tax free. It will be taxed at a time of your life when you would naturally expect to have less income than you do now, so probably a lower effective tax rate overall than if taxed today. But I fully agree that the big risk is government policy change. Probably best to split saving for retirement into several streams to spread risk.

Stick it in a SIP and it then invests in your house, or buys another one. Always get pro advice though. I know NOTHING !

 

[TomB]

Stick it in a SIP and it then invests in your house, or buys another one. Always get pro advice though. I know NOTHING !

Sipps don’t do houses.

 

[jed]

Put in pension fund for kids .
Have put 500 quid a year into something for the 3 of mine for last 15 years. Last years statements were showing almost 40 k a piece !
Not bad for a 7.5k investment.
Wish I'd put a ruck more in for them.

 

[Kiwi Pete]

Put in pension fund for kids .
Have put 500 quid a year into something for the 3 of mine for last 15 years. Last years statements were showing almost 40 k a piece !
Not bad for a 7.5k investment.
Wish I'd put a ruck more in for them.

"Invest in the afterlife"

The soundest investment there is, in most cases - not to spoil them, but wealth creation is unfortunately the way of the future generations.

Pension plans, insurances, asset portfolios... I know the usual thinking is to encourage them to work hard and get a good job, I actively encourage thinking your way ahead of the pack.
Started early, as you say; you can't take it with you when you die but your legacy is successful future generations IMO

 

[goodevans]

Buy more land. You'll not have to worry about tax for a very long time....

you could actually have to pay more tax ,paying off capital has to come out of taxed income and so you may end up paying more as put yourself into higher tax band

 

[GTB]

you could actually have to pay more tax ,paying off capital has to come out of taxed income and so you may end up paying more as put yourself into higher tax band

My comment was tongue in cheek...

 

[goodevans]

My comment was tongue in cheek...

sorry only just picked up thread and as soon as wrote it realised but cant delete

 

[dazza b]

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[Blod]

Sipps don’t do houses.

Can one not create a self investing pension plan and use it to buy a house. Something to do with reducing IHT and minimising income tax?

 

[dazza b]

Zzzz.zzzzzzzzzz

 

[Turra farmer]

Just because you dont doesn't mean that others dont

Can one not create a self investing pension plan and use it to buy a house. Something to do with reducing IHT and minimising income tax?

no
Sipp is commercial property only , it doesn't include house , or even a block of flats built from scratch to rent out ,

Before investing in a pension make sure you and wife use all isa allowances

 

[Blod]

no
Sipp is commercial property only , it doesn't include house , or even a block of flats built from scratch to rent out ,

Before investing in a pension make sure you and wife use all isa allowances

Is there not a way to self invest ones pension into property other than a fully commercial premises?

 

[Turra farmer]

Is there not a way to self invest ones pension into property other than a fully commercial premises?

No ,

I thought I'd get by , setting up limited company buying site building flats and renting out , but it's not allowable

My advice is pay the tax and keep the money , with a pension you aren't really saving tax only deferring it , your taxed on your pension income

 

[Blod]

The benefits of pensions may depend on ones age maybe? I’m thinking allowances for paying into a pension and the IHT of inheriting a pension rather than a capital asset. Different rules for CGT on pension funds.

 

[Turra farmer]

From

The benefits of pensions may depend on ones age maybe? I’m thinking allowances for paying into a pension and the IHT of inheriting a pension rather than a capital asset. Different rules for CGT on pension funds.

You could well be right ,but there is nothing better then farm to pass money down without tax implications