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Savings and Investments thread

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  • bobmunro said:
    Rob7Lee said:
    bobmunro said:
    Rob7Lee said:
    Pensions falling into IHT from 2027  :s
    Looks like we'll have to spend spend spend!

    Was always my plan anyway, so nothing changes.
    I have absolutely no issue in pension being included in an estate, it's an asset and no different to savings or property or shares. It's the change from not being included to being included that smarts.

    Just spend it ffs!
    I agree, just changes my IHT planning. Will likely mean I retire earlier to give me a chance to spend it! Every cloud……

    You've got until April 2027 to make any changes to your IHT planning.
    But many wont. The problem being that pensions are there to provide an income in retirement. I do have a couple of clients who are 65+ who dont need to take any income from their private pensions but the vast majority of people do.....I mean, that's what they are there for.

    I can't see too many people drawing down their pension fund just because they dont want it subject to IHT when they die (which could be 20 -30 years later). I expect many private pension "pots" to carry on as before and people will just accept that there will be IHT levied on it after 2027. 

  • bobmunro said:
    Rob7Lee said:
    bobmunro said:
    Rob7Lee said:
    Pensions falling into IHT from 2027  :s
    Looks like we'll have to spend spend spend!

    Was always my plan anyway, so nothing changes.
    I have absolutely no issue in pension being included in an estate, it's an asset and no different to savings or property or shares. It's the change from not being included to being included that smarts.

    Just spend it ffs!
    I agree, just changes my IHT planning. Will likely mean I retire earlier to give me a chance to spend it! Every cloud……

    You've got until April 2027 to make any changes to your IHT planning.
    But many wont. The problem being that pensions are there to provide an income in retirement. I do have a couple of clients who are 65+ who dont need to take any income from their private pensions but the vast majority of people do.....I mean, that's what they are there for.

    I can't see too many people drawing down their pension fund just because they dont want it subject to IHT when they die (which could be 20 -30 years later). I expect many private pension "pots" to carry on as before and people will just accept that there will be IHT levied on it after 2027. 

    This is where we are. I am 67 and retired with a few bob behind me. My Mrs is bringing in a six figure salary and we get £2k in state pensions between us per month.
    There simply is no need for us to start dipping into our private pensions yet 
  • So, once you have turned your pension pot into an annuity and getting a monthly pension is the value of the pot still included? The original pot is now under the ownership of the annuity provider....... anybody got any insight on this?
  • red10 said:
    So, once you have turned your pension pot into an annuity and getting a monthly pension is the value of the pot still included? The original pot is now under the ownership of the annuity provider....... anybody got any insight on this?
    No, don’t think so, once you have an annuity it dies with you (or if taken a spouse section when the last of you dies). It only affects those with a ‘pot’ at death. They won’t meddle with that type of pension (or DB).

    Very few though buy an annuity these days.
  • @red10 if you use all of your pension pot to buy an annuity you then have no pension pot as you have bought an insurance product that will either pay you a monthly amount for a fixed amount of time or until you die. They normally offer options to pay your spouse after you death etc

    if you are single or have taken a single life product and you die say 12 months after you take out the annuity then in most cases the insurance company keeps the rest of your money

    if you might want to look at the other options available by flexible pension schemes like flexible draw down or cash lump sums as these leave money in your pension pot which will be payable to your beneficiaries upon your death 
  • Most people who are investing in a rental property will do so at the bottom end of the market and in places far cheaper than SE London but even if you're looking at something twice as expensive it's still only £15k, that's peanuts over say a 20 year investment timescale.
  • Thanks @Rob7Lee & @SE9toDA2 thought that was the case. I'm staggered they did not tinker with the tax free lump sum !!
  • I assume the second home/stamp duty increase applies to holiday homes as well, not just BTL
  • Most people who are investing in a rental property will do so at the bottom end of the market and in places far cheaper than SE London but even if you're looking at something twice as expensive it's still only £15k, that's peanuts over say a 20 year investment timescale.
    Think you’d be surprised, once you take into account all buying fees including stamp duty, most BTL is simply not worth doing. You take all the downside risk but not the upside. Also as CGT doesn’t account for inflation you take all that hit as well. If a house price simply increase with inflation your taxed on that whole ‘gain’ amount when in reality the gain is zero.

    add in borrowing cost and it’s a dead duck/gamble no longer worth considering.

    I assume the second home/stamp duty increase applies to holiday homes as well, not just BTL
    Any second property, regardless of the usage.
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  • If owned outright I still think it's a reasonable investment. Any gain even if taxed is a gain after all and it's good to not have easy access to the money or I would be at the nearest Ferrari dealership !!!
  • SE9toDA2 said:
    @red10 if you use all of your pension pot to buy an annuity you then have no pension pot as you have bought an insurance product that will either pay you a monthly amount for a fixed amount of time or until you die. They normally offer options to pay your spouse after you death etc

    if you are single or have taken a single life product and you die say 12 months after you take out the annuity then in most cases the insurance company keeps the rest of your money

    if you might want to look at the other options available by flexible pension schemes like flexible draw down or cash lump sums as these leave money in your pension pot which will be payable to your beneficiaries upon your death 
    I'd go further to say that if you buy an annuity you can build in certain guarantees that means the annuity payments (usually monthly) can continue after your death. Similar to a DB scheme you can build in a spouse's pension so that 50% can continue until their death or a simple guarantee that continues to pay out for a set number of years (say 10 years). Remembering that this income is taxable and seeing as very soon the State Pension itself will take you into being a 20% taxpayer. 

    So it all depends if you are looking for a guaranteed income for life or flexibility that a Drawdown Pension gives you, knowing that when you die your pension will be subject to IHT.
  • I don’t understand the logic of taking a penny ‘off’ a pint. 


    The government gets less revenue but the ‘saving’ isn’t going to change any drinkers behaviour / volume consumed. 

    Seems counter productive to me. 

    Am I missing something?

  • I don’t understand the logic of taking a penny ‘off’ a pint. 


    The government gets less revenue but the ‘saving’ isn’t going to change any drinkers behaviour / volume consumed. 

    Seems counter productive to me. 

    Am I missing something?

    A gimmick.

    Just to show that someone, somewhere is going to be better off.

    Most likely the publican as I cant see them reducing a £6 pint down to £5.99. Easier to absorb the cost.
  • I don’t understand the logic of taking a penny ‘off’ a pint. 


    The government gets less revenue but the ‘saving’ isn’t going to change any drinkers behaviour / volume consumed. 

    Seems counter productive to me. 

    Am I missing something?

    A gimmick.

    Just to show that someone, somewhere is going to be better off.

    Most likely the publican as I cant see them reducing a £6 pint down to £5.99. Easier to absorb the cost.
    Maybe it is that simple. But spending so much time telling us how bad the finances are why deny sone income when the gimmick really won’t work / be noticed after today?

    Looks incompetent to me. 
  • edited October 30
    @Golfie, thanks, all of our pensions are already in flight, most have spouse to spouse benefits. Figured they might be tinkered with by future governments so banked them when we could to keep them out of risk. No kids so didn't need to worry about any residual pot to distribute.
  • red10 said:
    If owned outright I still think it's a reasonable investment. Any gain even if taxed is a gain after all and it's good to not have easy access to the money or I would be at the nearest Ferrari dealership !!!
    Think you miss the point, there is no consideration of inflation when we consider CGT. You are taxed on the inflationary element as well as any true gain (if indeed there is any).

    As an example:

    2024 buy a few bars of gold for £100k
    2034 That gold is now worth £140k. However inflation means your £100k should now be in 2034 terms £160k.

    So in reality you have lost £20k, however you'll be taxed on the £40k 'gain' @24%  reducing your holding to just over £130k, so you've lost in real terms £30k yet HMRC have had nearly £10k from you to worsen your loss when the reality is no gain has been made.

    I'd be all for CGT being at a higher rate but only taxing true gains. 

    On property specifically, take it from me a a Trustee of a friendly society with over 50 properties it's simply not worth it. The only reason it broadly washes its face for us is Friendly societies don't have to pay most taxes! So all rents received are tax free and no CGT if we sell. However even for us it's got to the point where the returns elsewhere are much better, we will likely sell most over the next few years (may keep some of the more modern one's).
  • edited October 30
    Rob7Lee said:
    red10 said:
    If owned outright I still think it's a reasonable investment. Any gain even if taxed is a gain after all and it's good to not have easy access to the money or I would be at the nearest Ferrari dealership !!!
    Think you miss the point, there is no consideration of inflation when we consider CGT. You are taxed on the inflationary element as well as any true gain (if indeed there is any).

    As an example:

    2024 buy a few bars of gold for £100k
    2034 That gold is now worth £140k. However inflation means your £100k should now be in 2034 terms £160k.

    So in reality you have lost £20k, however you'll be taxed on the £40k 'gain' @24%  reducing your holding to just over £130k, so you've lost in real terms £30k yet HMRC have had nearly £10k from you to worsen your loss when the reality is no gain has been made.

    I'd be all for CGT being at a higher rate but only taxing true gains. 

    On property specifically, take it from me a a Trustee of a friendly society with over 50 properties it's simply not worth it. The only reason it broadly washes its face for us is Friendly societies don't have to pay most taxes! So all rents received are tax free and no CGT if we sell. However even for us it's got to the point where the returns elsewhere are much better, we will likely sell most over the next few years (may keep some of the more modern one's).
    What really surprised me was the Tories reducing the CGT allowance like they did. Going from £12.5k to £6k to now £3k was quite a shock. As you say, there is the "inflation" element to take into account & so holding shares/funds for a number of years means you'll have to pay some CGT -  meaning you might have effectively lost money over that time. 
  • Rob7Lee said:
    red10 said:
    If owned outright I still think it's a reasonable investment. Any gain even if taxed is a gain after all and it's good to not have easy access to the money or I would be at the nearest Ferrari dealership !!!
    Think you miss the point, there is no consideration of inflation when we consider CGT. You are taxed on the inflationary element as well as any true gain (if indeed there is any).

    As an example:

    2024 buy a few bars of gold for £100k
    2034 That gold is now worth £140k. However inflation means your £100k should now be in 2034 terms £160k.

    So in reality you have lost £20k, however you'll be taxed on the £40k 'gain' @24%  reducing your holding to just over £130k, so you've lost in real terms £30k yet HMRC have had nearly £10k from you to worsen your loss when the reality is no gain has been made.

    I'd be all for CGT being at a higher rate but only taxing true gains. 

    On property specifically, take it from me a a Trustee of a friendly society with over 50 properties it's simply not worth it. The only reason it broadly washes its face for us is Friendly societies don't have to pay most taxes! So all rents received are tax free and no CGT if we sell. However even for us it's got to the point where the returns elsewhere are much better, we will likely sell most over the next few years (may keep some of the more modern one's).
    What really surprised me was the Tories reducing the CGT allowance like they did. Going from £12.5k to £6k to now £3k was quite a shock. As you say, there is the "inflation" element to take into account & so holding shares/funds for a number of years means you'll have to pay some CGT -  meaning you might have effectively lost money over that time. 
    But to play devils advocate I have to pay tax on credit interest already and that can under perform inflation?
  • Rob7Lee said:
    red10 said:
    If owned outright I still think it's a reasonable investment. Any gain even if taxed is a gain after all and it's good to not have easy access to the money or I would be at the nearest Ferrari dealership !!!
    Think you miss the point, there is no consideration of inflation when we consider CGT. You are taxed on the inflationary element as well as any true gain (if indeed there is any).

    As an example:

    2024 buy a few bars of gold for £100k
    2034 That gold is now worth £140k. However inflation means your £100k should now be in 2034 terms £160k.

    So in reality you have lost £20k, however you'll be taxed on the £40k 'gain' @24%  reducing your holding to just over £130k, so you've lost in real terms £30k yet HMRC have had nearly £10k from you to worsen your loss when the reality is no gain has been made.

    I'd be all for CGT being at a higher rate but only taxing true gains. 

    On property specifically, take it from me a a Trustee of a friendly society with over 50 properties it's simply not worth it. The only reason it broadly washes its face for us is Friendly societies don't have to pay most taxes! So all rents received are tax free and no CGT if we sell. However even for us it's got to the point where the returns elsewhere are much better, we will likely sell most over the next few years (may keep some of the more modern one's).
    What really surprised me was the Tories reducing the CGT allowance like they did. Going from £12.5k to £6k to now £3k was quite a shock. As you say, there is the "inflation" element to take into account & so holding shares/funds for a number of years means you'll have to pay some CGT -  meaning you might have effectively lost money over that time. 
    But to play devils advocate I have to pay tax on credit interest already and that can under perform inflation?
    Yes equally applies, although in general your original capital is not at risk.

    I'll keep buying my gold sovereigns until they change the tax status of those! (No CGT as classed as legal tender)
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  • They seem to hate anyone showing aspiration. That whole bollocks about working class and working people just wore me out. I'm firmly working class, I get my hands dirty to earn money and to try and get to the next level of life I entrust extra sums of money I can afford to the shiny faced posh boys in the city to invest it wisely and make that money turn into more money. I'm not going to be John Paul Getty or whatever his name is I'd just like to maybe pay my mortgage off a bit earlier or put that money back into the economy by buying a car or building an extension but God forbid that money makes money I get taxed again when I've already been taxed on the money I used to let someone else make a calculated gamble. Pretty much anyone my age who is self employed has had their traditional method of a pension (property) bent over now. 

    This bends my head, 3k gain is nothing. I thought it was low before but 3k. Whats the point 
  • Rob7Lee said:
    red10 said:
    If owned outright I still think it's a reasonable investment. Any gain even if taxed is a gain after all and it's good to not have easy access to the money or I would be at the nearest Ferrari dealership !!!
    Think you miss the point, there is no consideration of inflation when we consider CGT. You are taxed on the inflationary element as well as any true gain (if indeed there is any).

    As an example:

    2024 buy a few bars of gold for £100k
    2034 That gold is now worth £140k. However inflation means your £100k should now be in 2034 terms £160k.

    So in reality you have lost £20k, however you'll be taxed on the £40k 'gain' @24%  reducing your holding to just over £130k, so you've lost in real terms £30k yet HMRC have had nearly £10k from you to worsen your loss when the reality is no gain has been made.

    I'd be all for CGT being at a higher rate but only taxing true gains. 

    On property specifically, take it from me a a Trustee of a friendly society with over 50 properties it's simply not worth it. The only reason it broadly washes its face for us is Friendly societies don't have to pay most taxes! So all rents received are tax free and no CGT if we sell. However even for us it's got to the point where the returns elsewhere are much better, we will likely sell most over the next few years (may keep some of the more modern one's).
    Thanks Rob7, appreciate the gain is the issue vs inflation but in property terms with rental income we would have pulled in around 300k over the same 10 years and still retain the assets for future sale.

  • I don’t understand the logic of taking a penny ‘off’ a pint. 


    The government gets less revenue but the ‘saving’ isn’t going to change any drinkers behaviour / volume consumed. 

    Seems counter productive to me. 

    Am I missing something?

    A gimmick.

    Just to show that someone, somewhere is going to be better off.

    Most likely the publican as I cant see them reducing a £6 pint down to £5.99. Easier to absorb the cost.
    Maybe it is that simple. But spending so much time telling us how bad the finances are why deny sone income when the gimmick really won’t work / be noticed after today?

    Looks incompetent to me. 
    It will go straight into the pub's pockets and that's the point I think. No one is going to be annoyed about a pub not passing a penny saving on a £5 pint, they're giving all pubs a 0.2% profit boost effectively (assuming average selling price of £5 a pint). It'll help, but not as much as the NI increases today will hurt  :D

  • Huskaris said:
    I don’t understand the logic of taking a penny ‘off’ a pint. 


    The government gets less revenue but the ‘saving’ isn’t going to change any drinkers behaviour / volume consumed. 

    Seems counter productive to me. 

    Am I missing something?

    A gimmick.

    Just to show that someone, somewhere is going to be better off.

    Most likely the publican as I cant see them reducing a £6 pint down to £5.99. Easier to absorb the cost.
    Maybe it is that simple. But spending so much time telling us how bad the finances are why deny sone income when the gimmick really won’t work / be noticed after today?

    Looks incompetent to me. 
    It will go straight into the pub's pockets and that's the point I think. No one is going to be annoyed about a pub not passing a penny saving on a £5 pint, they're giving all pubs a 0.2% profit boost effectively (assuming average selling price of £5 a pint). It'll help, but not as much as the NI increases today will hurt  :D

    I tend to agree the pub will get the minuscule benefit. 

    But why bother when it is so  small and frankly more admin to change it etc?
  • Rob7Lee said:
    red10 said:
    If owned outright I still think it's a reasonable investment. Any gain even if taxed is a gain after all and it's good to not have easy access to the money or I would be at the nearest Ferrari dealership !!!
    Think you miss the point, there is no consideration of inflation when we consider CGT. You are taxed on the inflationary element as well as any true gain (if indeed there is any).

    As an example:

    2024 buy a few bars of gold for £100k
    2034 That gold is now worth £140k. However inflation means your £100k should now be in 2034 terms £160k.

    So in reality you have lost £20k, however you'll be taxed on the £40k 'gain' @24%  reducing your holding to just over £130k, so you've lost in real terms £30k yet HMRC have had nearly £10k from you to worsen your loss when the reality is no gain has been made.

    I'd be all for CGT being at a higher rate but only taxing true gains. 

    On property specifically, take it from me a a Trustee of a friendly society with over 50 properties it's simply not worth it. The only reason it broadly washes its face for us is Friendly societies don't have to pay most taxes! So all rents received are tax free and no CGT if we sell. However even for us it's got to the point where the returns elsewhere are much better, we will likely sell most over the next few years (may keep some of the more modern one's).
    Where elsewhere will you go R7L?
  • red10 said:
    Rob7Lee said:
    red10 said:
    If owned outright I still think it's a reasonable investment. Any gain even if taxed is a gain after all and it's good to not have easy access to the money or I would be at the nearest Ferrari dealership !!!
    Think you miss the point, there is no consideration of inflation when we consider CGT. You are taxed on the inflationary element as well as any true gain (if indeed there is any).

    As an example:

    2024 buy a few bars of gold for £100k
    2034 That gold is now worth £140k. However inflation means your £100k should now be in 2034 terms £160k.

    So in reality you have lost £20k, however you'll be taxed on the £40k 'gain' @24%  reducing your holding to just over £130k, so you've lost in real terms £30k yet HMRC have had nearly £10k from you to worsen your loss when the reality is no gain has been made.

    I'd be all for CGT being at a higher rate but only taxing true gains. 

    On property specifically, take it from me a a Trustee of a friendly society with over 50 properties it's simply not worth it. The only reason it broadly washes its face for us is Friendly societies don't have to pay most taxes! So all rents received are tax free and no CGT if we sell. However even for us it's got to the point where the returns elsewhere are much better, we will likely sell most over the next few years (may keep some of the more modern one's).
    Thanks Rob7, appreciate the gain is the issue vs inflation but in property terms with rental income we would have pulled in around 300k over the same 10 years and still retain the assets for future sale.

    Inflation has been mentioned several times in the thread recently.

    Inflation (Consumer Price Index or Retail Price Index) is quite a blunt measure, and whatever value is published by the Office for National Statistics is unlikely to have that exact percentage impact on your buying power.

    E.g. price of bananas in 
    2014: 0.86 £/Kg
    2024: 1.02 £/Kg
    18.6% increase 

    Petrol:
    Oct 2014: 1.26 £/Ltr
    Oct 2024: 1.34 £/Ltr
    6.3% increase 

    Average house in England:
    Jan 2013: £167k
    Jan 2023: £285k
    70.6% increase 

    £10 in 2014 would have bought goods and services then, that cost £13.43 in Sep 2024, if we use the CPI measure for inflation:
    34.3% increase

    The point is that official inflation measures are one of the bits of data you use to estimate how your purchasing power is changing.

    It is not the exact percentage change of how much you get for your pound for the things you want to buy.
  • I've now had time to read some briefing notes from the Budget. On the Pension pot/ IHT issue it seems that there will now be a 2 month consultation period with industry gurus into how exactly it should he dealt with cone April 2027.

    In essence.......on death the beneficiaries get in contact with the Pension Company & they swap info - Pension Company tells beneficiaries how much the pension is worth & beneficiaries say how much the Estate is worth. If total Estate (inc Pension) is over the IHT threshold then calculations are done and Pension Company will deduct IHT from Pension fund before beneficiaries inherit. 

    Then further tax might be due if over age 75 etc etc.

    Thats the gist of it but more details to follow after the consultation period. 
  • Rob7Lee said:
    red10 said:
    If owned outright I still think it's a reasonable investment. Any gain even if taxed is a gain after all and it's good to not have easy access to the money or I would be at the nearest Ferrari dealership !!!
    Think you miss the point, there is no consideration of inflation when we consider CGT. You are taxed on the inflationary element as well as any true gain (if indeed there is any).

    As an example:

    2024 buy a few bars of gold for £100k
    2034 That gold is now worth £140k. However inflation means your £100k should now be in 2034 terms £160k.

    So in reality you have lost £20k, however you'll be taxed on the £40k 'gain' @24%  reducing your holding to just over £130k, so you've lost in real terms £30k yet HMRC have had nearly £10k from you to worsen your loss when the reality is no gain has been made.

    I'd be all for CGT being at a higher rate but only taxing true gains. 

    On property specifically, take it from me a a Trustee of a friendly society with over 50 properties it's simply not worth it. The only reason it broadly washes its face for us is Friendly societies don't have to pay most taxes! So all rents received are tax free and no CGT if we sell. However even for us it's got to the point where the returns elsewhere are much better, we will likely sell most over the next few years (may keep some of the more modern one's).
    Where elsewhere will you go R7L?
    We are actually quite restricted as to what we can/can't invest in.

    Of the 50 plus we have about 5 modern (i.e. post 1980) that we may keep, otherwise it'll be predominantly the stock market, a little in cash and some gilts/government bonds. 
  • I don’t know what people mean the 1p off a pint is brilliant means I’m 70p a week  better off now.that will pay my bus fares that have gone up 50%. Politicians there so fucking out of touch with the real world.Fucking blow  em all up Tuesday.please. 
  • Rob7Lee said:
    Rob7Lee said:
    red10 said:
    If owned outright I still think it's a reasonable investment. Any gain even if taxed is a gain after all and it's good to not have easy access to the money or I would be at the nearest Ferrari dealership !!!
    Think you miss the point, there is no consideration of inflation when we consider CGT. You are taxed on the inflationary element as well as any true gain (if indeed there is any).

    As an example:

    2024 buy a few bars of gold for £100k
    2034 That gold is now worth £140k. However inflation means your £100k should now be in 2034 terms £160k.

    So in reality you have lost £20k, however you'll be taxed on the £40k 'gain' @24%  reducing your holding to just over £130k, so you've lost in real terms £30k yet HMRC have had nearly £10k from you to worsen your loss when the reality is no gain has been made.

    I'd be all for CGT being at a higher rate but only taxing true gains. 

    On property specifically, take it from me a a Trustee of a friendly society with over 50 properties it's simply not worth it. The only reason it broadly washes its face for us is Friendly societies don't have to pay most taxes! So all rents received are tax free and no CGT if we sell. However even for us it's got to the point where the returns elsewhere are much better, we will likely sell most over the next few years (may keep some of the more modern one's).
    What really surprised me was the Tories reducing the CGT allowance like they did. Going from £12.5k to £6k to now £3k was quite a shock. As you say, there is the "inflation" element to take into account & so holding shares/funds for a number of years means you'll have to pay some CGT -  meaning you might have effectively lost money over that time. 
    But to play devils advocate I have to pay tax on credit interest already and that can under perform inflation?
    Yes equally applies, although in general your original capital is not at risk.

    I'll keep buying my gold sovereigns until they change the tax status of those! (No CGT as classed as legal tender)
    Who do you use to buy your sovereigns?
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