Reasons 1 and 2 are not really reasons. You've not *lost* those allowances just because you retire part way through the tax year. Regarding Reason 3, for the sake of 6 months or so, you could put any lump sum into a GIA, then bed-and-ISA it in the new FY and almost certainly not exceed the IHT allowance. Same for your spouse. As for Reason 4, to need £50K+ of IHT allowances, you would presumably be selling a significant set of assets. All-in-all, I think trying to get all these allowances back-to-back simply points to very poor retirement planning. You shouldn't need to sell down lots of assets to live off. The only part of the video I agree with is that retiring in Spring is a good idea!
Like he says at the end, f you are in a DB scheme check the scheme rules. I was checking those for the Career Average scheme I am in and it gets revalued today, 5th April ready for the new tax year. With CPI so high there will be a 6% increase for employees. Compare that to the 2.5% pensioners and deferred pensioners will get. With an accrual rate of 1.5% that is over two years worth of extra pension for delaying your retirement from March to the end of April. I was talking to someone in a final salary scheme and they are in a similar position. With their already announced, annual pay increase in April they will actually be beating the pensioners this year.
Oh dear 😕 Wrong, wrong, wrong. Retire a month or two (or more ) before the end of the year: if you are in 40% tax you will already have paid tax you don’t actually owe (employers apportion your expected annual tax across the year - so, simple example, leave when you hit 50,270 salary and you owe no 40%, but you will have paid it for say 9, 10, or 11 months - 9/12 or 10/12 , etc.) - so you’ll get that tax back! And you can invest in ISAs in this tax year, and again, soon enough, in the new tax year.
It's certainly one way to go in the scenario you describe. The example in the video is just trying to show how clean you can make everything by having a full year of allowances and starting at the beginning of the tax year.
I don’t think this video is sound advice at all. In fact it is poor. I get what’s trying to be said, but it’s not well communicated. For example, the point about ISAs. In order to get the “double” ISA allowance, you’ll need to withdraw £80k from your pension at the end of the tax year. £20k would be tax free (to go into the ISA), but the other £60k is taxable. And if you’ve already worked that whole year, some, most or even all of that £60k will be taxed at 40%. It’s very poor advice to do that, and will cost £000s in unnecessary income tax payments. Retire at the start of the tax year, not the end! This is made clear in point 1, to be fair, however it is completely contradicted by point 3. Not good.
Reasons 1 and 2 are not really reasons. You've not *lost* those allowances just because you retire part way through the tax year.
Regarding Reason 3, for the sake of 6 months or so, you could put any lump sum into a GIA, then bed-and-ISA it in the new FY and almost certainly not exceed the IHT allowance. Same for your spouse.
As for Reason 4, to need £50K+ of IHT allowances, you would presumably be selling a significant set of assets.
All-in-all, I think trying to get all these allowances back-to-back simply points to very poor retirement planning. You shouldn't need to sell down lots of assets to live off.
The only part of the video I agree with is that retiring in Spring is a good idea!
Like he says at the end, f you are in a DB scheme check the scheme rules. I was checking those for the Career Average scheme I am in and it gets revalued today, 5th April ready for the new tax year. With CPI so high there will be a 6% increase for employees. Compare that to the 2.5% pensioners and deferred pensioners will get. With an accrual rate of 1.5% that is over two years worth of extra pension for delaying your retirement from March to the end of April.
I was talking to someone in a final salary scheme and they are in a similar position. With their already announced, annual pay increase in April they will actually be beating the pensioners this year.
I miss your long detailed videos.
Oh dear 😕 Wrong, wrong, wrong. Retire a month or two (or more ) before the end of the year: if you are in 40% tax you will already have paid tax you don’t actually owe (employers apportion your expected annual tax across the year - so, simple example, leave when you hit 50,270 salary and you owe no 40%, but you will have paid it for say 9, 10, or 11 months - 9/12 or 10/12 , etc.) - so you’ll get that tax back! And you can invest in ISAs in this tax year, and again, soon enough, in the new tax year.
It's certainly one way to go in the scenario you describe. The example in the video is just trying to show how clean you can make everything by having a full year of allowances and starting at the beginning of the tax year.
I don’t think this video is sound advice at all. In fact it is poor. I get what’s trying to be said, but it’s not well communicated.
For example, the point about ISAs. In order to get the “double” ISA allowance, you’ll need to withdraw £80k from your pension at the end of the tax year. £20k would be tax free (to go into the ISA), but the other £60k is taxable. And if you’ve already worked that whole year, some, most or even all of that £60k will be taxed at 40%.
It’s very poor advice to do that, and will cost £000s in unnecessary income tax payments.
Retire at the start of the tax year, not the end!
This is made clear in point 1, to be fair, however it is completely contradicted by point 3.
Not good.