Really great video - if possible please add some more visuals cues show the %s on screen that you're talking through Easier to visualize what you're saying. Thanks! X
Great video. I'm really enjoying your channel. I've been trying to decide whether to withdraw the rest of my tax free lump sum to buy a holiday home. Your last point has made me decide I will. Enjoying your money is what it is all about at the end of the day. Plus the uncertainty over potential changes to the tax free element is giving me a headache.
Are there UK rules with what you cannot do with the Lump sum cash? For example, can I take max £268k tax free lump sum, then give it to wife (who has no private pension) and she invests it into an annuity?! Thus utilising her tax allowance....
Also, spreading the cash about reduces the risk of loss as the cash is only guaranteed to £85k per institution or group. You could also gift the cash easier. The tax free lump sum I think will be resolved then withdrawn. More tax rises on the way.
Another possible IHT-related reason to hold cash outside the pension wrapper - access to cash by the personal representative. Commonly people may have a house and a pension pot. Prior to the IHT tax changes, the house might well be within the IHT £1m couples limit, but now with the pension pot added together they are together well over the £1m, and IHT will be due from both the pension (paid easily by the pension provider) and also due from the remainder of the estate including the house (not so easy or perhaps desirable to liquidate within 6 months), in amounts pro-rata. Hence keeping enough in cash outside the pension to pay the likely IHT on the house and remainder of the estate would assist the personal representative if they had no other cash, and avoid the need for a quick sale of property. Does this sound reasonable?
Yes, it makes sense, but it's a terrible waste of big lump sum cash. Much better to give the cash to your beneficiaries more than 7yrs before you die, so it is overlooked in the IHT calcs. If you trust your beneficiaries?!, then they could hold the lump sum in trust for you and buy you everything you want in retirement.....
@@paulkane6645 Plan would be to run down the total by gifting, as you say, but there are other possibilities including insurance. Prob best to wait until the law is enacted with the final details.
My problem is that I have no debt and my pension fund has grown by 13% and 12% over the last two years. I doubt that I could beat that return if I tried investing that 25% on my own.
You can easily, put it into most Vanguard ETFs or use a company like Fisher, invest in 100% equities, you’ll beat 13% over the long term, just be prepared for bumps on the journey, max out ISAs every year.. Not financial advice 😮
I don’t understand number 2 - withdrawing TFLS and moving to ISA - even if you leave it in the pension you can still withdraw as income without worry about income tax for that portion. And it can grow as well?
@ surely they can if they can reduce your TFLS you’ve already gained? They’re unlikely to do that, its been frozen for ages, it’ll just stay frozen so will ‘increase’ with inflation by not putting it up. That’ll do the job quietly and without too much fuss and is the favourite game of recent governments
@@MrKlawUK not getting your point, at anytime they can reduce the TFLS, maybe give a couple of years notice, if you’ve taken out an ISA they cannot mess with this. e.g 100 k pension should be 25% TF, if they change the rules might reduce to 15-20%, If you take 25% now invest it same funds in ISA wrapper they cannot touch that I believe. I have 600k so got a bit of thinking to do myself but it’s bloody hard who’s advice to follow 🤔
Gold is stable and thus a poor investment. One ounce of gold has not increased in value any faster than one standard hour of pay over the last 100 yrs, Warren Buffett.
If you drawn the maximum lump sum, then you will lose the potential for further growth to generate more lump sum. I think if you are going to invest or spend the lumo sum it makes sense, but drawing it just for ISA or savings isn't great. The tax free lump sum is capped at £268k which would need a pot of over £1m however if the lump sum was taken in stages it could grow even if the pension was smaller at the start.
Really great video - if possible please add some more visuals cues show the %s on screen that you're talking through
Easier to visualize what you're saying. Thanks! X
good video bud, as ever , the recent budget changes have made the retirement landscape more complicated/nuanced, keep up the great work
Thanks very much - you're spot on RE the ever changing retirement landscape. Hope to see you in the comments in future videos!
Great video. I'm really enjoying your channel. I've been trying to decide whether to withdraw the rest of my tax free lump sum to buy a holiday home. Your last point has made me decide I will. Enjoying your money is what it is all about at the end of the day. Plus the uncertainty over potential changes to the tax free element is giving me a headache.
Thanks very much Matt! Glad the videos are helping and enjoy the holiday home!
At 68, I'm in the process of selling my second home. Too much of a liability as I get older. Cash in & blow the money 😁
Are there UK rules with what you cannot do with the Lump sum cash?
For example, can I take max £268k tax free lump sum, then give it to wife (who has no private pension) and she invests it into an annuity?! Thus utilising her tax allowance....
Basically, take your money out & piss up against the wall, as the tax man will only get it. Back to the 1970s ..... 😅
Also, spreading the cash about reduces the risk of loss as the cash is only guaranteed to £85k per institution or group. You could also gift the cash easier. The tax free lump sum I think will be resolved then withdrawn. More tax rises on the way.
Another possible IHT-related reason to hold cash outside the pension wrapper - access to cash by the personal representative. Commonly people may have a house and a pension pot. Prior to the IHT tax changes, the house might well be within the IHT £1m couples limit, but now with the pension pot added together they are together well over the £1m, and IHT will be due from both the pension (paid easily by the pension provider) and also due from the remainder of the estate including the house (not so easy or perhaps desirable to liquidate within 6 months), in amounts pro-rata. Hence keeping enough in cash outside the pension to pay the likely IHT on the house and remainder of the estate would assist the personal representative if they had no other cash, and avoid the need for a quick sale of property. Does this sound reasonable?
You certainly make sense.
I don't think that's currently how IHT works - although hoping it may change as part of the consultation around pension IHT
Yes, it makes sense, but it's a terrible waste of big lump sum cash. Much better to give the cash to your beneficiaries more than 7yrs before you die, so it is overlooked in the IHT calcs. If you trust your beneficiaries?!, then they could hold the lump sum in trust for you and buy you everything you want in retirement.....
@@paulkane6645 Plan would be to run down the total by gifting, as you say, but there are other possibilities including insurance. Prob best to wait until the law is enacted with the final details.
My problem is that I have no debt and my pension fund has grown by 13% and 12% over the last two years. I doubt that I could beat that return if I tried investing that 25% on my own.
You can easily, put it into most Vanguard ETFs or use a company like Fisher, invest in 100% equities, you’ll beat 13% over the long term, just be prepared for bumps on the journey, max out ISAs every year.. Not financial advice 😮
I don’t understand number 2 - withdrawing TFLS and moving to ISA - even if you leave it in the pension you can still withdraw as income without worry about income tax for that portion. And it can grow as well?
Wha5 if Labour stop or reduce the 25% tax free, they can’t retroactively stop your cash free ISA
@ surely they can if they can reduce your TFLS you’ve already gained? They’re unlikely to do that, its been frozen for ages, it’ll just stay frozen so will ‘increase’ with inflation by not putting it up. That’ll do the job quietly and without too much fuss and is the favourite game of recent governments
@@MrKlawUK not getting your point, at anytime they can reduce the TFLS, maybe give a couple of years notice, if you’ve taken out an ISA they cannot mess with this. e.g 100 k pension should be 25% TF, if they change the rules might reduce to 15-20%, If you take 25% now invest it same funds in ISA wrapper they cannot touch that I believe. I have 600k so got a bit of thinking to do myself but it’s bloody hard who’s advice to follow 🤔
You can only put £20k into an ISA
@ you can build it up over several years though
Sometimes l just think keep your money under your bed, not advisable l know ,but lam just sick of the taxes that you get hit with here in the uk.
How to throw retirement planning up in the air....By "Racheal Thieves".
Turn some into gold soveriegns
Gold pretty expensive right now 😢
Gold is stable and thus a poor investment. One ounce of gold has not increased in value any faster than one standard hour of pay over the last 100 yrs, Warren Buffett.
The working man has fallen in the Tax up to 90% could be lost of what you have worked for
BEFORE labour decide to tax it! The clock’s ticking
Unlikely - too much impact on all, not just the wealthy
If you drawn the maximum lump sum, then you will lose the potential for further growth to generate more lump sum.
I think if you are going to invest or spend the lumo sum it makes sense, but drawing it just for ISA or savings isn't great.
The tax free lump sum is capped at £268k which would need a pot of over £1m however if the lump sum was taken in stages it could grow even if the pension was smaller at the start.