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Savings and Investments thread

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  • 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?
    Couple of places generally 

    bullion by post
    hatton garden metals, you can go in person rather than post if you prefer.
  • Hatton are also good if you want a particular year.
  • When you divorce is there like inheritance tax on that?  
  • When you divorce is there like inheritance tax on that?  
    It’s called spouse tax!
  • edited October 31

    A few anecdotes of behaviour post hoc te proct (© Derek & Clive).

    One friend has put his company up for sale - effectively his life's work of 30 years.  He's relieved entrepreneurs relief has not been touched too much (bar the CGT) but has decided that's just really bought him time and he's not going to wait until it's too late.  NI increases are going to cost him 20 grand/year (he employs 20-30 people), which will also mean about a loss of about 50-100k after tax to him when he sells his share.  He's selling his BTL , as it now costs him money to run (he mortgaged his main house and bought a smaller one when he was having cash flow issues).  Selling the company to a trade buyer, which will inevitably mean redundancies of 5-10 people.

    A property developer friend is moving abroad and taking his 50m with him.  Relieved there's no exit tax but is going to wait until it's too late.  Employs about 5 people.

    A restauranteur is looking to sell his very successful business.  Again, direction of travel sees the smaller CGT changes as buying some time to get the right deal done.

    A friend who has a very senior exec job at Google, is moving to Switzerland.  You need to be paying $1m in tax per year for that to make sense, and I think he's paying £2m here.

    A cyber company is about to go under because it hasn't been run well.  I was putting together some investors to bail it out and turn it around but we decided today that the rewards weren't worth the risks.  The former have decreased with the CGT changes and, in the turnaround time frame, likely to get worse.  The latter have risen with the employment 'protections' being put in place and now rising NI.  Barring a miracle, that business will go bust in the next 3-6 months.  The owner will lose twenty years of graft, his house and 30 people will need to find work (which I'm sure most will).  25 cyber apprentices will also need to find new trainers.  The taxman will lose a few quid, of course and bounce back loans will go unpaid (total about 500k).

    Me? Well, instead of buying and running a business or going back to a corporate job, I cashed in my lump sum, paid off the mortgage and am now in the process of signing a contract to supply my services to the government for 3-4 days a week on half my usual rate.  That will lose HMRC 80% of what I've paid on average for the last 18 years, without taking into account the jobs I used to create or the fact that I will now reign in my spending.  I guess we'll all end up working for the government sooner or later.

    Mean time, I'm actively looking to move abroad in the next two years to avoid inheritance tax.  Much as I intend to have a good go at spending everything I've got and I've told my daughter to assume I will, you never know what's round the corner and I don't see why the government should take a single penny of anything I've already paid tax on.

    Add all that up and it's dozens of job affected directly, hundred more indirectly and the equivalent of many hundreds of people on a median wage being taken out of the tax take.  And I'm only scratching the surface of people I know.
    Fascinating insight, thanks for that. 

    They said yesterday that NI taxes would cover £25bn, I just looked and apparently there's 31m people working in the UK.

    That's about £800 per worker, and the reduction in NI thresholds from £9k to £5k is around £520 alone, making it the bulk of the increase. If the average worker is on let's say £35k, that's a good couple percent onto the payroll costs for businesses, but it disproportionately impacts low wage employers.

    For comparison here's 3 scenarios each with a gross payroll bill of £105k

    1 person on £105k, the company loses that £520 (13% or £4k) plus 1.2% of the £100k above £5k =£1.7k extra cost 

    Take someone that employs 3 people on £35k each. They lose £520 x 3, plus 1.2% on £90k, which is £2.64k extra cost. 

    Go one further and look at someone who maybe needs a lot of seasonal staff and as such hires 5 people averaging £21k a year which would be close to minimum wage on a 30 something hour working week...

    That company would lose £520x5 plus 1.2% on £80k, which is a pretty staggering £3.56k extra

    I think I've got that right....
  • Huskaris said:

    A few anecdotes of behaviour post hoc te proct (© Derek & Clive).

    One friend has put his company up for sale - effectively his life's work of 30 years.  He's relieved entrepreneurs relief has not been touched too much (bar the CGT) but has decided that's just really bought him time and he's not going to wait until it's too late.  NI increases are going to cost him 20 grand/year (he employs 20-30 people), which will also mean about a loss of about 50-100k after tax to him when he sells his share.  He's selling his BTL , as it now costs him money to run (he mortgaged his main house and bought a smaller one when he was having cash flow issues).  Selling the company to a trade buyer, which will inevitably mean redundancies of 5-10 people.

    A property developer friend is moving abroad and taking his 50m with him.  Relieved there's no exit tax but is going to wait until it's too late.  Employs about 5 people.

    A restauranteur is looking to sell his very successful business.  Again, direction of travel sees the smaller CGT changes as buying some time to get the right deal done.

    A friend who has a very senior exec job at Google, is moving to Switzerland.  You need to be paying $1m in tax per year for that to make sense, and I think he's paying £2m here.

    A cyber company is about to go under because it hasn't been run well.  I was putting together some investors to bail it out and turn it around but we decided today that the rewards weren't worth the risks.  The former have decreased with the CGT changes and, in the turnaround time frame, likely to get worse.  The latter have risen with the employment 'protections' being put in place and now rising NI.  Barring a miracle, that business will go bust in the next 3-6 months.  The owner will lose twenty years of graft, his house and 30 people will need to find work (which I'm sure most will).  25 cyber apprentices will also need to find new trainers.  The taxman will lose a few quid, of course and bounce back loans will go unpaid (total about 500k).

    Me? Well, instead of buying and running a business or going back to a corporate job, I cashed in my lump sum, paid off the mortgage and am now in the process of signing a contract to supply my services to the government for 3-4 days a week on half my usual rate.  That will lose HMRC 80% of what I've paid on average for the last 18 years, without taking into account the jobs I used to create or the fact that I will now reign in my spending.  I guess we'll all end up working for the government sooner or later.

    Mean time, I'm actively looking to move abroad in the next two years to avoid inheritance tax.  Much as I intend to have a good go at spending everything I've got and I've told my daughter to assume I will, you never know what's round the corner and I don't see why the government should take a single penny of anything I've already paid tax on.

    Add all that up and it's dozens of job affected directly, hundred more indirectly and the equivalent of many hundreds of people on a median wage being taken out of the tax take.  And I'm only scratching the surface of people I know.
    Fascinating insight, thanks for that. 

    They said yesterday that NI taxes would cover £25bn, I just looked and apparently there's 31m people working in the UK.

    That's about £800 per worker, and the reduction in NI thresholds from £9k to £5k is around £520 alone, making it the bulk of the increase. If the average worker is on let's say £35k, that's a good couple percent onto the payroll costs for businesses, but it disproportionately impacts low wage employers.

    For comparison here's 3 scenarios each with a gross payroll bill of £105k

    1 person on £105k, the company loses that £520 (13% or £4k) plus 1.2% of the £100k above £5k =£1.7k extra cost 

    Take someone that employs 3 people on £35k each. They lose £520 x 3, plus 1.2% on £90k, which is £2.64k extra cost. 

    Go one further and look at someone who maybe needs a lot of seasonal staff and as such hires 5 people averaging £21k a year which would be close to minimum wage on a 30 something hour working week...

    That company would lose £520x5 plus 1.2% on £80k, which is a pretty staggering £3.56k extra

    I think I've got that right....
    Expect the cost of your Big Mac to rise substantially!!
  • Rob7Lee said:
    When you divorce is there like inheritance tax on that?  
    It’s called spouse tax!
    Is that like Scouse Tax when you try to park your car going to Anfield or Goodison Park?
  • Rob7Lee said:
    Rob7Lee said:
    meldrew66 said:
    Pensions falling into IHT from 2027  :s
    Can someone explain what this means/how this actually works please?
    As it stood, were you to die before 75, your pension pot (i.e. SIPP, not and DB scheme) passed to your survivors tax free. Now it will simply form part of your estate and be added to the overall estate.

    I.E. if you were single and had a home worth £400k and £100k in the bank your estate would not pay IHT as at the £500k limit. Now if you have to include say a £350k of pension pot on top you are now £350k over the limit and the estate would pay £140k in IHT. 
    ‘e.g.’ I think you mean and not ‘I.e.’ 😉😉😀

    Sorry a pet hate for me when these aren’t used as I understand the grammar should be. 

    But I make you right it’s more logical to spend the pension pot or gift early to your beneficiaries than let it be swallowed in  tax. 
    My current thoughts are to limit IHT…… mortgage my main home up to the hilt and gift to children to buy both a property each and cross everything I live 7 years. That way takes the most part property out of my estate (as will be mostly debt).

    what could possibly go wrong…..😑 
    the trouble is, how long will you live. I don't know how old you are, but as your still working your life expectancy is going to be over 20 years. Also the cost of care in old age is only going to get higher as the state won't be able to afford much. 
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  • edited October 31
    The biggest issue with IHT in the London area is property prices.
    I'm considering investigating putting the property in Trust and hoping we survive 7 years.
    There's likely a lot of pros and cons.
    Has anyone done this?
  • The biggest issue with IHT in the London area is property prices.
    I'm considering investigating putting the property in Trust and hoping we survive 7 years.
    There's likely a lot of pros and cons.
    Has anyone done this?
    I'm no expert, but it seems highly complicated and I've certainly had varying advice from different people. There's exit charges and sometimes 10 yearly charges (think currently 6%). I believe whilst it avoids the IHT rate potentially (after 7 years) there are some taxes such as 20% entry (for values over £325k) and the 6% exit.
  • The biggest issue with IHT in the London area is property prices.
    I'm considering investigating putting the property in Trust and hoping we survive 7 years.
    There's likely a lot of pros and cons.
    Has anyone done this?
    Is this your residential property & do you intend to still live in it or have some interest in it ?  If so it will most likely to be deemed a Gift with Reservation and will still be included in your Estate.
  • I’ve also heard that putting property in Trust involves a lot of administration to keep it ticking over. 
  • The biggest issue with IHT in the London area is property prices.
    I'm considering investigating putting the property in Trust and hoping we survive 7 years.
    There's likely a lot of pros and cons.
    Has anyone done this?
    Is this your residential property & do you intend to still live in it or have some interest in it ?  If so it will most likely to be deemed a Gift with Reservation and will still be included in your Estate.
    Yes it is, in which case you can't put your residential property in trust for your kids to avoid IHT.
  • You can gift your property to a trust or directly to your kids BUT you will need to pay a full market rent to continue to live there and (hopefully) avoid gift with reservation rules. This means you will need to have the spare income to pay the rent and to maintain it. Also the rent will be taxable at marginal rates in the hands of the recipient whether that is a trust or your kids. A subsequent sale of the property may also have CGT implications on any gain in value following transfer. Discretionary trust tax rates are best avoided if possible!
  • Nothing for me again this month on premium bonds. 

    Last year I won £1175 over the year on 22k.
    That was a decent return of over 5%.

    This year I've won £200 with only one month left which is quite pathetic. 

    I shall be looking to switch to something else next year 

    Any suggestions people 
  • Nothing for me this month either 
  • £150 for me this month.
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  • Who knows how long anyone will live and you could end up needing to pay for life in a care home (if you’re lucky enough to be able to afford it ) for who knows how many years .
    You don’t wanna be double taxed on IHT give your dough to kids and ask them to pay off care home bills
    they have a gambling/drink/drug/partner is a Cnut and divorces problem and it’s all frittered away quickly 
    what’s the point 
    graft for years and pay your taxes and the benefit of which you’d want your kids (if sane) to see but no got to pay for more mistakes made elsewhere by useless fuckwits 
  • edited November 2
    Wife £150 on £30k
    Me nothing on £35k

    I can't wait until a new tax year to move £40k of that into ISAs, even though £150×12 = £1,800, which on £65k joint holding is just shy of 3% tax free so actually not bad. 

    It's the hope that kills you though!
  • £900 over 5xmax
  • Who knows how long anyone will live and you could end up needing to pay for life in a care home (if you’re lucky enough to be able to afford it ) for who knows how many years .
    You don’t wanna be double taxed on IHT give your dough to kids and ask them to pay off care home bills
    they have a gambling/drink/drug/partner is a Cnut and divorces problem and it’s all frittered away quickly 
    what’s the point 
    graft for years and pay your taxes and the benefit of which you’d want your kids (if sane) to see but no got to pay for more mistakes made elsewhere by useless fuckwits 
    Don't forget some of these people don't even know they are in a care home paying £60000 a year.
  • edited November 2
    Paying to be in a care home, is a whole, another situation, do people plan to save for this years in advance?

    Im hearing crazy numbers,  Like 6-8k a month, and that’s before inflation kicks in, how on earth is that affordable to give someone the decent care they deserve, at end of life, especially if they haven’t got a decent pension.
  • Wouldn't it be cheaper to employ a live in carer? Depends on individual needs I suppose.
  • Me - £100 (full) 
    er indoors- £100 (45k) 
  • £50 on max
  • I got £75 on max. 

    Total of £2000 for 2024, so overall likely to end up for the calendar year on about 4% return which is better than savings with no tax due. That said, it’s pretty uninspiring !
  • £100 on half holding. Waiting for a big win next month to bring me to a palatable return
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