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Thread: Early retirement

  1. #451
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    Martyn,

    I have been reading every ones comments with interest. I retired at 50 three and a half years ago and will say to any one that can to do it.
    I am busier than before with all i want to do and did not realise until i saw the Dr recently (routine check up) how stressed i was before retirement. When i retired my resting heart rate was 76, now it is 62. There are benefits that go beyond what you initially think.

    So best of luck, keep active and enjoy your life.

  2. #452
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    Quote Originally Posted by Scepticalist View Post
    As my wife is Spanish we're 5-6yrs away from moving there ourself. I'll be taking early retirement, I'm happy with trading pension value for more years of semi/retirement. Wife will be picking up a job (for at least 5 years, probably 10) so that she qualifies for Spanish State pension (which is considerably more generous than here). We have a flat already so will use it as a base to find or build a retirement villa for ourselves.

    I know we're probably going to need to take some specific advice as Spanish taxation does vary within regions - espeically things like spousal transfers and property inheritance, but if anyone's got advice, then I'd be happy to hear it?
    Best advice is not to take taxation advice until you know what house you are going to buy. The variation between regions is enormous. I cringe when I hear the term "Spanish law", there is no such thing, just lots of different regional laws.

  3. #453
    Quote Originally Posted by Mick P View Post
    Best advice is not to take taxation advice until you know what house you are going to buy. The variation between regions is enormous. I cringe when I hear the term "Spanish law", there is no such thing, just lots of different regional laws.
    Or vice versa.

  4. #454
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    Quote Originally Posted by MartynJC (UK) View Post
    Slight update:

    Decision made: we are moving to Portugal, permanently. Wife and I have agreed on this next phase of our journey.
    Congrats on deciding. Without wishing to drag politics into it too much how does the U.K. leaving the EU affect this kind of move?

  5. #455
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    Quote Originally Posted by reecie View Post
    Congrats on deciding. Without wishing to drag politics into it too much how does the U.K. leaving the EU affect this kind of move?
    The truth is no one really knows.

    Spain in particular wants the weekly tourist to continue to flood out Benidorm and they also value the expats who bring their retirement pots over from the UK, therefore little change is expected. Mobile phone charges (roaming) and the EHIC system for health care will probably be extended and extended and extended. But no one knows for certain.

    The only thing that may change is heavier death duties when the expats expire this mortal coil. Death duties used to be 35%, the EU forced Spain to reduce it to 17.5% and they fumed over that, so it could possibly revert back to 35%.

  6. #456
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    Quote Originally Posted by MartynJC (UK) View Post
    Slight update:

    Decision made: we are moving to Portugal, permanently. Wife and I have agreed on this next phase of our journey.

    We have consulted with tax accountants here in Portugal (still in the middle of an extended stay looking at properties and to get a feel for life beyond the 2 week break) today and all looks promising.

    (...)
    Martyn
    Changes afoot apparently re tax treatment in Portugal, might be of interest (from today’s Financial Times): Portugal set to curb tax breaks for wealthy foreigners https://on.ft.com/3aW72Qf

  7. #457
    Further coverage in the Torygraph. If you sign up you can read one article free per week.


    https://www.telegraph.co.uk/tax/inco...x-free-status/

  8. #458

  9. #459
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    Quote Originally Posted by Mick P View Post
    Best advice is not to take taxation advice until you know what house you are going to buy. The variation between regions is enormous. I cringe when I hear the term "Spanish law", there is no such thing, just lots of different regional laws.
    Well, we have a flat already and the house will be in the same arera. I was thinking more of any tips for reducing general taxliability when moving there rather than property which as you say, varies so much that it needs to be sorted out at purchase time.

  10. #460
    10% doesn't sound too bad to me at all.

    R
    Ignorance breeds Fear. Fear breeds Hatred. Hatred breeds Ignorance. Break the chain.

  11. #461
    Grand Master ryanb741's Avatar
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    Quick question. If you take pensions from the UK such as a SIPP on drawdown how do you make sure you are only taxed in 1 country. My retirement is likely to be in Thailand (albeit in 20 years) and most pensioners there seek to pay UK tax and just hide it from Thai authorities but that's hardly sustainable in the long term.

    Sent from my SM-G950F using Tapatalk

  12. #462
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    Quote Originally Posted by ryanb741 View Post
    Quick question. If you take pensions from the UK such as a SIPP on drawdown how do you make sure you are only taxed in 1 country. My retirement is likely to be in Thailand (albeit in 20 years) and most pensioners there seek to pay UK tax and just hide it from Thai authorities but that's hardly sustainable in the long term.

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    Most countries have rules to avoid double taxation, I'm afraid you'll just have to find out how the Thai authorities handle it.

  13. #463
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    Quote Originally Posted by ryanb741 View Post
    Quick question. If you take pensions from the UK such as a SIPP on drawdown how do you make sure you are only taxed in 1 country. My retirement is likely to be in Thailand (albeit in 20 years) and most pensioners there seek to pay UK tax and just hide it from Thai authorities but that's hardly sustainable in the long term.

    Sent from my SM-G950F using Tapatalk
    If it is 20 years time I'd wager any answer given now will just be of historical interest then. As a country's general wealth comes up they will be less likely to want to turn a blind eye to tax evasion just for the general day to day currency influx foreigners provide

  14. #464
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    Quote Originally Posted by ryanb741 View Post
    Quick question. If you take pensions from the UK such as a SIPP on drawdown how do you make sure you are only taxed in 1 country. My retirement is likely to be in Thailand (albeit in 20 years) and most pensioners there seek to pay UK tax and just hide it from Thai authorities but that's hardly sustainable in the long term.

    Sent from my SM-G950F using Tapatalk
    most countries are in agreements that means you avoid double taxation. Can’t say about Thailand, but Portugal does. There is a current agreement with Portugal for non-habitual residents (NHR), who can receive a UK pension income (in either country tax free for ten years). This is not Brexit affected, but Britain may claw back the tax post-Brexit much like Norway did with their NHR scheme. Obviously - take professional advise on this.

    just read the article above about possible 10% tax rate on foreign investments.

    in any case we are not moving here for the tax breaks although that is nice, more for the lifestyle, weather and relaxation.

    M
    Last edited by MartynJC (UK); 31st January 2020 at 22:54.

  15. #465
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    Plans firm now. After spending most of 6 weeks viewing it most be between 10 and 15 properties valued between 350.000€ and 550.000€.

    We have had an offer accepted on a property in Portugal. Three bed, own water supply, central heating, wood burner, open plan kitchen and sitting / dining area, single story, 10x5m swimming pool, 8000sqm land currently (approx 2acres) mostly orange orchard, but we have plans. Amazing panoramic views down to the sea which you can just see as its 25mins drive to the coast. Big bonus it was a private sale so less than any of the agent properties.

    We have a local lawyer (friend recommended) who is dealing with the legalities. Luckily we know one of the two UK qualified surveyors in Portugal so are getting a reputable impartial survey done. If all goes to plan we should complete by May!!!

    back in the UK on Monday to see if our UK house is still in one piece. Apparently there’s been some high winds or something? Still plan to sell up in UK, but no pressure as this was priced well enough that we don’t need to sell immediately.

    really can’t wait to start the next phase of our lives. Very excited. A bit of trepidation moving country but we are still young enough to do it and fortunate enough to be in a financial position to do so.

    Not sure how this will affect abilities to trade in watches with UK folks post-Brexit, but that is another topic for a different thread (and forum).

    Martyn
    Last edited by MartynJC (UK); 13th February 2020 at 00:09.

  16. #466
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    Good luck to you Martyn, I'm sure a place out there toward the top.of that budget will be incredible. You'll miss a few things but it'll more than net out positive. Might even be easier to get a waitlist or two for something nice!

  17. #467
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    Great news Martyn!

    Will always be cheap flights for trade meet-ups.

    Quote Originally Posted by MartynJC (UK) View Post
    Plans firm now. After spending most of 6 weeks viewing it most be between 10 and 15 properties valued between 350.000€ and 550.000€.

    We have had an offer accepted on a property in Portugal. Three bed, own water supply, central heating, wood burner, open plan kitchen and sitting / dining area, single story, 10x5m swimming pool, 8000sqm land currently (approx 2acres) mostly orange orchard, but we have plans. Amazing panoramic views down to the sea which you can just see as its 25mins drive to the coast. Big bonus it was a private sale so less than any of the agent properties.

    We have a local lawyer (friend recommended) who is dealing with the legalities. Luckily we know one of the two UK qualified surveyors in Portugal so are getting a reputable impartial survey done. If all goes to plan we should complete by May!!!

    back in the UK on Monday to see if our UK house is still in one piece. Apparently there’s been some high winds or something? Still plan to sell up in UK, but no pressure as this was priced well enough that we don’t need to sell immediately.

    really can’t wait to start the next phase of our lives. Very excited. A bit of trepidation moving country but we are still young enough to do it and fortunate enough to be in a financial position to do so.

    Not sure how this will affect abilities to trade in watches with UK folks post-Brexit, but that is another topic for a different thread (and forum).

    Martyn
    When you look long into an abyss, the abyss looks long into you.........

  18. #468
    Sounds perfect. All the best

  19. #469
    Congrats!

    Pics please!

  20. #470
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    congrats; after a tricky few weeks your plan sounds more appealing by the day!!

  21. #471
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    Just re read this thread and wondered how many plans have now dramatically changed ?
    Scary times indeed

  22. #472
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    Been thinking the same thing. Things have taken such a battering and I don’t think ‘worldwide pandemic’ is a factor in most people’s planning.

  23. #473
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    Quote Originally Posted by Mick P View Post
    The only thing that may change is heavier death duties when the expats expire this mortal coil. Death duties used to be 35%, the EU forced Spain to reduce it to 17.5% and they fumed over that, so it could possibly revert back to 35%.
    Don't get me started on death duties..............too late, I've started, so I'll finish


    We live in France, and do not have any kids. Therefore the French state will take 60% of everything we leave behind - that is not solely confined to our assets in France, it is 60% of all our worldwide assets. They'd better pray that I die a quick sudden death, because if I outlive the wife and then get told I've got x amount of time left - I'll go on the biggest bender France has ever seen .

  24. #474
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    Quote Originally Posted by catflem View Post
    Don't get me started on death duties..............too late, I've started, so I'll finish


    We live in France, and do not have any kids. Therefore the French state will take 60% of everything we leave behind - that is not solely confined to our assets in France, it is 60% of all our worldwide assets. They'd better pray that I die a quick sudden death, because if I outlive the wife and then get told I've got x amount of time left - I'll go on the biggest bender France has ever seen .
    That's dreadfull! How can they take 60% of assets you hold in other countries though?
    That bender would be a sight to behold however

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  25. #475
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    Well one of my funds currently stands at 14% up in one year to the end of March.

    Mind you, some of the others are not so good.

  26. #476
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    Conversely one of mine is 20% down.

  27. #477
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    Quote Originally Posted by markrichardsonno9 View Post
    Just re read this thread and wondered how many plans have now dramatically changed ?
    Scary times indeed
    Took early retirement 15 months ago. My fund is down 11% since beginning of year so reasonably happy. Had about £20k worth of holidays booked so my expenditure will be down this year by a big chunk.
    No real changes planned as was prepared for at least 2/3 big drops during my retirement. Whole lot better position to be in than working!

  28. #478
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    Quote Originally Posted by craig1912 View Post
    Took early retirement 15 months ago. My fund is down 11% since beginning of year so reasonably happy. Had about £20k worth of holidays booked so my expenditure will be down this year by a big chunk.
    No real changes planned as was prepared for at least 2/3 big drops during my retirement. Whole lot better position to be in than working!
    Good to hear that. Not sure how many would have factored in a big drop like the one we’ve seen in the last month or so.

  29. #479
    Grand Master ryanb741's Avatar
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    My 'best' performing fund over 12 months is Fundsmith Equity which is -1.5%. Worst is Marlborough Special Situations at -16%.

  30. #480
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    Quote Originally Posted by bambam View Post
    Good to hear that. Not sure how many would have factored in a big drop like the one we’ve seen in the last month or so.
    A decent IFA would have done the scenario testing to ensure the future plan could support significant and sustained market events. When I looked into early retirement a couple of years ago my IFA "forced" me to sit through several sessions of "what if" to ensure that our plan achieved our goals with a conservative investment strategy. At the time I thought it was overkill but now I have to say he did a great job. As it turns out the majority of my funds are in cash right now so fortunately I have avoided significant value erosion.

    Bottom line. Get a decent IFA before making major long-term financial decisions.

  31. #481
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    Quote Originally Posted by downer View Post
    A decent IFA would have done the scenario testing to ensure the future plan could support significant and sustained market events. When I looked into early retirement a couple of years ago my IFA "forced" me to sit through several sessions of "what if" to ensure that our plan achieved our goals with a conservative investment strategy. At the time I thought it was overkill but now I have to say he did a great job. As it turns out the majority of my funds are in cash right now so fortunately I have avoided significant value erosion.

    Bottom line. Get a decent IFA before making major long-term financial decisions.
    Yep this!
    Went through a whole load of scenarios with my IFA too. Did seem like overkill. My funds are fully invested but strategy was “to not lose too much” rather than “to gain lots” so exposure to equities is less than 50%. I’m fortunate that my income isn’t huge compared to fund size.

  32. #482
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    Quote Originally Posted by downer View Post
    A decent IFA would have done the scenario testing to ensure the future plan could support significant and sustained market events. When I looked into early retirement a couple of years ago my IFA "forced" me to sit through several sessions of "what if" to ensure that our plan achieved our goals with a conservative investment strategy. At the time I thought it was overkill but now I have to say he did a great job. As it turns out the majority of my funds are in cash right now so fortunately I have avoided significant value erosion.

    Bottom line. Get a decent IFA before making major long-term financial decisions.
    Sounds like a great IFA.

  33. #483
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    Quote Originally Posted by markrichardsonno9 View Post
    Just re read this thread and wondered how many plans have now dramatically changed ?
    Scary times indeed
    mine remain unchanged and are working out just fine. I started drawing my DB scheme on April 6 taking the maximum tax free lump sum from the scheme. Toping up pension income from my cash payoff should last another 12 / 18 months I reckon until I need to touch the DC.

    So leaving the DC alone but moved most into cash and most of what’s left into risk Level 2 - bonds; gilts etc some are left into volatile trusts.

    Before lockdown applied and got NHR status in Portugal before end March deadline and tax residency there too. Potential for 0% tax on pension income for 10y - still not clear state of play there.
    Last edited by MartynJC (UK); 12th April 2020 at 18:48.

  34. #484
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    Down 6.5% from the start of the year, but almost 11% from the February peak. Not a disaster yet.

    I “stopped work” on Feb 28th with a view to moving the remaining work funds into the Vanguard LF 60 over the following weeks, but events took over, so was still probably 70-75% equities at that point and haven’t tried to change.

    My spreadsheet modelling was based around historic worst case scenarios. In theory should be fine, but the worst cases do lead to a fair amount of squeaky bum time in places. For example if you put £1million into the model in August 1929 it shows a drop of 25% in the first 3 months followed by 6 months of recovery, but the actual low point doesn’t happen until month 34 when the fund drops to £277K! It wouldn’t surprise me if a similar trend happens this time, but hopefully not breaking any new ground!

    One other thing I noticed watching the money in my Vanguard LF 60 fund - the initial losses (following the markets) were quite sharp, but in the second half of March further drops in the market didn’t seem to be quite as closely followed. I assume this is because the equity part had dropped considerably such that the 60:40 fund was actually now 50:50 or less. Vanguard don’t say when they rebalance the funds, but if it’s quarterly for example it would have a damping effect on short term fluctuations (downwards). Any views/inside knowledge on that one?

    In terms of a rethink, I wasn’t planning to touch any of this money for a couple of years anyway while my wife continues to work, but it has made me think seriously about a few recent approaches I’ve had to go back to work.

  35. #485
    Most of my pension is DB, but I do have a smaller DC pension.

    When the FTSE rebounded by 20% (although still 20% off the peak), I converted my DC pension from significant % higher risk equities to effectively a zero risk deposit fund.

    In 6 months I will switch it back from deposit to equities, on the basis I think there is going to be carnage on the stock market in the short term.

    One of my biggest failing in general management of my finances is inertia, so I am trying to combat this, this time.

  36. #486
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    Quote Originally Posted by ryanb741 View Post
    My 'best' performing fund over 12 months is Fundsmith Equity which is -1.5%. Worst is Marlborough Special Situations at -16%.
    Like for like figures, each in GBP, to 31st March 2020:

    1 Year
    Fundsmith Equity = 0.73%
    PH Equity = 14.27%

    3 Years
    Fundsmith Equity = 33.13%
    PH Equity = 65.47%

    5 Years
    Fundsmith Equity = 102.12%
    PH Equity = 263.76%

    10 Years (though 8 months short of this for Fundsmith as it launched on 1st November 2010)
    Fundsmith Equity = 327.84%
    PH Equity = 1,076.46%

    The defensive element: 18th November 2019 to 9th April 2020
    Fundsmith Equity = Down 3.23%
    PH Equity = Up 2.28%

    And the charges are lower as well.

  37. #487
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    Sorry if stupid question but what is PH Equity ?

    Thanks

  38. #488
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    Quote Originally Posted by markrichardsonno9 View Post
    Sorry if stupid question but what is PH Equity ?

    Thanks
    https://private-client.intelligentmoney.com/ph-equity/

    PH=Pistonheads

  39. #489
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    55 I was off.
    Mortgage free
    Kids sorted

    13 years on and still surviving very comfortably.
    Best decision ever

  40. #490
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    Three years after retiring, today I officially became a pensioner (59) and I started draw down from my SIPP. Only a small amount, but necessary to make sure I get tax codes sorted out.

    First time in ages since I saw money entering that account.

    Whoever does not know how to hit the nail on the head should be asked not to hit it at all.
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  41. #491
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    Quote Originally Posted by Andyg View Post
    Three years after retiring, today I officially became a pensioner (59) and I started draw down from my SIPP. Only a small amount, but necessary to make sure I get tax codes sorted out.

    First time in ages since I saw money entering that account.
    You missed four years of tax free annual personal allowance. That was sloppy planning.

  42. #492
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    Quote Originally Posted by Skyman View Post
    You missed four years of tax free annual personal allowance. That was sloppy planning.
    Not really. I could have taken my tax free allowance, but then what? Put it in a ISA and got a very small return on it or left it in my SIPP and hoped for a better than 1% return.

    Actually given the crash in the market in March I should have simply converted it all to cash.

    Whoever does not know how to hit the nail on the head should be asked not to hit it at all.
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  43. #493
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    Quote Originally Posted by Mr Pointy View Post
    Like for like figures, each in GBP, to 31st March 2020:

    The defensive element: 18th November 2019 to 9th April 2020
    Fundsmith Equity = Down 3.23%
    PH Equity = Up 2.28%
    Yep - you really need to know what the end product is you are invested in, PH defensive is not rocket science, just good solid sense of where the winners and losers will be under a lockdown scenario.

  44. #494
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    Quote Originally Posted by Andyg View Post
    Not really. I could have taken my tax free allowance, but then what? Put it in a ISA and got a very small return on it or left it in my SIPP and hoped for a better than 1% return.

    Actually given the crash in the market in March I should have simply converted it all to cash.
    I think you missed the point. You could have received income from your SIPP up to the tax allowance level (£12.5k/annum). This would have been tax free.

    Nothing to do with tax free cash/allowance - which is what you appear to be talking about.

  45. #495
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    Quote Originally Posted by craig1912 View Post
    I thought PH was Penniston Hill, the CEOs names. The fund is open to anyone but by using the Pistonheads code you do get to invest less than 100k and swerve the initial fee.

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    Quote Originally Posted by downer View Post
    I think you missed the point. You could have received income from your SIPP up to the tax allowance level (£12.5k/annum). This would have been tax free.

    Nothing to do with tax free cash/allowance - which is what you appear to be talking about.
    Exactly. Schoolboy error.

  47. #497
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    Quote Originally Posted by downer View Post
    I think you missed the point. You could have received income from your SIPP up to the tax allowance level (£12.5k/annum). This would have been tax free.

    Nothing to do with tax free cash/allowance - which is what you appear to be talking about.
    No, I didn’t miss the point. I could have taken the money, but because I didn’t need it, all I would have done with it is either put it under the bed or put it in a bank - both of which would have delivered the square root of bugger all in interest. Alternatively I could leave it in my SIPP account and benefited from increases in the market (which until Jan I had).

    I could have taken the money and put it back into my SIPP, but this is not considered very legal by HMRC, plus would have put me over my LTA

    In hindsight I should have taken the money and bought gold Britannia’s, but that’s the beauty of hindsight.

    Whoever does not know how to hit the nail on the head should be asked not to hit it at all.
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  48. #498
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    Quote Originally Posted by Andyg View Post
    No, I didn’t miss the point. I could have taken the money, but because I didn’t need it, all I would have done with it is either put it under the bed or put it in a bank - both of which would have delivered the square root of bugger all in interest. Alternatively I could leave it in my SIPP account and benefited from increases in the market (which until Jan I had).

    I could have taken the money and put it back into my SIPP, but this is not considered very legal by HMRC, plus would have put me over my LTA

    In hindsight I should have taken the money and bought gold Britannia’s, but that’s the beauty of hindsight.
    Andy I think you did miss the point they were both making - you could have taken up to your annual allowance without paying any tax on it. You don’t take it and it’s gone. You’ll probablyhave to pay At least 20% In the future to get it out unless your pension fund is small.

  49. #499
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    Quote Originally Posted by Devonian View Post
    Andy I think you did miss the point they were both making - you could have taken up to your annual allowance without paying any tax on it. You don’t take it and it’s gone. You’ll probablyhave to pay At least 20% In the future to get it out unless your pension fund is small.
    Agreed I could have taken it out, but there was no point in me doing it as I had no need for the money - debt free and all of that . Consequently money would have just sat in my account earning me next to nothing. Plus any earnings would easily be easy eaten up by inflation, currently running at about 1.5% higher, than any interest I might expect. So lose lose.

    Had I had a mortgage to pay, or interests rates were above 4% then I would used my allowance.

    Whoever does not know how to hit the nail on the head should be asked not to hit it at all.
    Friedrich Nietzsche


  50. #500
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    Quote Originally Posted by Andyg View Post
    Agreed I could have taken it out, but there was no point in me doing it as I had no need for the money - debt free and all of that . Consequently money would have just sat in my account earning me next to nothing. Plus any earnings would easily be easy eaten up by inflation, currently running at about 1.5% higher, than any interest I might expect. So lose lose.

    Had I had a mortgage to pay, or interests rates were above 4% then I would used my allowance.
    You just don't get it, do you? It's just logical to take the money out of your pension fund each year - up to the income tax threshold of 12.5k. That money is paid as income but free of income tax.

    As it is, come the glorious day you decide to take that 12.5k (multiplied by the four years of opportunity you have missed) you will pay tax on it - at least 20%.

    So, 4 x 12.5k = 50k. 20% tax = 10k.

    That's the opportunity cost of not having done the planning - and that's all that has been pointed out to you.

    It has nothing to do with being debt free / not needing the money etc. It is simply to do with maximising your tax allowance in each and every year.

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