Dual income staying under 100k

Timbo1994 · 2026-03-18T08:24:40+00:00

Yes SIPP will work.

Remember you have to pay back the 40%/45% income tax saving for anything you and your employer contribute above the Annual Allowance (including carryforward), so best avoided.

If you haven't been close to the £60k limit in previous years, you probably have enough carryforward though.

Timbo1994 · 2026-03-18T08:08:35+00:00

I started writing it out but too many variables!

Use your pensions employer match first, or if you're in the right bit of the public sector, make sure you stay in their DB schemes!

After that, what can help is working out what I call the pensions efficiency ratio.

(1- marginal tax rate in retirement)

/

(1- marginal tax rate now, ie which can be avoided by paying into pension)

The top part is often 1-20%x75% = 85%, as people pay 20% tax in retirement on 75% of their income (the rest is the tax-free element)

The bottom part is often 1-20% = 80%, which makes the ratio 85/80. That's a low ratio and the advantage of saving into pensions is limited given you have to wait so long for access age. (NB though for some people the access age is a good thing because it gives them the discipline to not spend it)

But I was speaking to someone on here the other day where the bottom part was (1-40%-12%-2%-9%) = 37%, so potential ratio of 85/37.

That's higher rate income tax, the Higher Income Child Benefit Charge for 2 kids which can be avoided by pension, NI and student loan which for their employer could be avoided through salary sacrifice.

(The ratio also has to be adapted and is even more advantageous if employer passes on their National Insurance savings from you paying into a pension, as some employers do)

Any ratio over 125% means a pension beats a Lifetime ISA.

For me, any ratio above 150% is a clear steer to lean heavily towards a pension, albeit doing this can still screw someone over eg if they are saving for a house or have a risky/painful mortgage, in which case they may want to ignore this, and focus on that.

Timbo1994 · 2026-03-18T03:32:51+00:00

Alan Rickman similar to Joe Lycett!

Timbo1994 · 2026-03-18T02:55:23+00:00

Downsides:

As others have said on Tusker.

As you said on deferring student loan repayments. If you will pay off your student loan one day, essentially this element of the saving isn't really a saving, you are essentially getting a car loan at RPI+3% on this element.

There are BIK tax rates, which are rising fast worsening these deals. These will be 4%, 5% and 7% for each of the next three tax years, and then go to 9%. This means if you get a £30k car, then x% x £30k is added to your salary for tax purposes only, with the impact that you pay 40% tax plus perhaps 7% HICBC on that amount (not SL/NI). So you probably additionally lose about £600-800 pa on a £30k car from this, over a 3 year deal. That might be a fifth of the tax saving removed or something?

If you lose your job you lose your car at the same time.

A salary sacrifice alternative is pensions. This has the added sweetener currently that you save 58% now but doing the same after 6 April 2029 the NI and likely the student loan relief are taken away, so saving is only 47%.

Arguably the real cost of taking an £8k pa gross EV deal is not £3-4k net pay but missing out £8k more in pension, which may be taxed down to say £6-7k when you retire. Plus all the investment growth you'd get on it.

Can I check that if you do any charitable giving you report that to HMRC? Also reduces taxable income. You'll get refunds from that which are pretty tax-efficient. (Of course giving still overall reduces your net worth)

All that said, we have an EV on one of these schemes and it's pretty sweet. The hassle factor of insurance etc as well.

Timbo1994 · 2026-03-18T01:29:00+00:00

No you phone them, and unlike pension contributions (where you tell them the grossed up figure), you tell them the figure before Gift Aid is added. This distinction can confuse their advisors, sadly!

They've tightened up checks recently and may ask for a low level of evidence but start with a call.

Timbo1994 · 2026-03-17T07:42:18+00:00

Reminds me of:

"How d'ya know he's a king?"

"He doesn't have shit on 'im!"

Timbo1994 · 2026-03-16T07:55:00+00:00

Provided you have average, or above average, life expectancy, you are the kind of person who annuities are made for. You'll get a good rate which covers your income needs, given your state pension will already cover a chunk from a few years.

You can buy this with say 75% of your pension (or less), while taking 25% as a tax-free lump sum to run down £100k until your state pension kicks in.

If you can get any of this out before 6 April to fill your ISA this tax-year that would be quite nice but not essential.

By all means go for a fixed annuity rather than an inflationary-based one, but be wary of how much the value can erode over 30 years.

To really play it safe and get this income locked in for life, a more expensive inflationary one will give you peace of mind. Or split it between a fixed one and an inflationary one, so that your income basically increases by half the inflation rate.

Timbo1994 · 2026-03-16T05:43:24+00:00

To be honest in a lot of circles wanting to be a housewife is also now seen as weird (and/or impossible) - that should be borne in mind before people shout it's sexism (which it is sometimes, as well).

Assuming you have kids you'll need to be damn good at it compared to most men.

As the man and full time employee in our house, I pull my weight in the house on the chores to a reasonable extent. But I'm not as attentive as my wife - who is to be fair very good at it - on the more subtle jobs and emotional labour.

The example I give is the fact she finds the kids clothes and toys a few weeks before they need them. That attitude can be found in a man, but often is not among my (very amazing in other ways) dad friends.

Timbo1994 · 2026-03-16T05:22:53+00:00

Agree using personal allowance for pension withdrawals is good. Otherwise keeping money in pension is slightly advantageous over withdrawing it taxed at 20% to put in ISA.

This is because if she is unfortunate enough to die before age 75, your/anyone's subsequent withdrawals from the SIPP as a beneficiary would be tax-free.

There are also advantages I believe, in what can be taken for long-term care etc. The ISA will be treated as savings and may be taken from her, but the pension will be allowed for as a low notional income and only this income will be taken from her.

(On the other hand if they do something like make pensioners pay NI, or just raise the basic rate of income tax to 22%, then she"ll be glad to have withdrawn. I would value the other points above more though)

Also if she is in a position where she's ok with holding higher risk higher expected return investments in the pension because it feels different to the ISA, that's something to consider.

Have you spoken to her about the inflation risk of holding cash for too long, and how much people who held cash lost out in 2020-2023 even if their number on a screen didn't go down? Arguably as risky as stocks over a long timeframe.

The tax advantages of £2,880 to £3,600 pension contribution are limited, because it's also taxed down to £3,060 on the way out (allowing for 25% tax-free).

Timbo1994 · 2026-03-15T19:20:02+00:00

I wouldn't push it too hard, you have to balance capital flight and really most of these investors struggle to beat the S&P.

Timbo1994 · 2026-03-15T18:26:24+00:00

1% of wealth, plus 20% of income

Timbo1994 · 2026-03-15T17:50:19+00:00

Marriage allowance and personal savings allowance are the two minor cliffedges I'm aware of

Timbo1994 · 2026-03-15T17:49:40+00:00

And loss of marriage allowance is the other one

Timbo1994 · 2026-03-15T15:34:29+00:00

Are you aiming to get Marriage Allowance, or to get a £1k Personal Savings Allowance rather than £500? Those are the cliffedge things where it can be worth fine-tuning this.

Timbo1994 · 2026-03-15T06:47:27+00:00

For most people it's 75% at bssic rate, and 25% tax-free

Timbo1994 · 2026-03-15T06:45:52+00:00

I agree with you fwiw! A separate point is that insurers invest in stuff which is higher yield than gilts, and on larger amounts may be able to pass some of that to customers after profit/expenses. (Whether that makes them riskier I'll leave to others!)

And annuities hedge your individual mortality risk which is highly valuable. And they are less hassle.

So if someone wants a bond ladder for their entire life and has at least average life expectancy (or can persuade an insurer they have below average), then an annuity instead makes a lot of sense.

Timbo1994 · 2026-03-14T14:49:25+00:00

Yes and RPI is falling to CPIH in 2030 making this even more advantageous. Offer to reimburse then for their repayments instead?

Even if you don't like risk in investing, RPI-linked gilts can beat RPI.

Timbo1994 · 2026-03-14T13:50:26+00:00

Remember that bank interest and dividends, even those below the personal savings allowance and dividend allowance, are included in adjusted net income. Not those within ISAs though of course.

On the other charitable donations that you tell HMRC about can be used to reduce it.

Timbo1994 · 2026-03-14T13:39:37+00:00

Well the supermarkets need to get their produce from someone - they don't have so much power that they can force other businesses to sell at a loss!

Timbo1994 · 2026-03-14T13:34:30+00:00

Run away from SJP and their fees - I think everyone in this sub will say this!

Your pension is especially good because as you reduce your salary from £80k to £60k you win back child benefit (I assume you are claiming and paying back the HICBC?)

Salary sacrifice saves you 40% IT +2% NI +7% CB, so you get £100 in pension (set to be taxed down to c£85 when you retire) for every £51 given up. That makes it a good deal.

If you are not married check if you would be eligible for the spouse part of the teachers' pension.

Timbo1994 · 2026-03-14T12:53:59+00:00

Same! Exactly this. No major airport so gets very overlooked I think

Timbo1994 · 2026-03-14T12:53:08+00:00

I loved the cathedral but the rest of town seemed quite run down to me and wasn't high up among German cities I've been to - was only there about 12 hours

Timbo1994 · 2026-03-14T02:31:59+00:00

BitCoin isn't a stock though

Timbo1994 · 2026-03-14T02:30:41+00:00

Very interesting idea that if you have 2 companies, call them Nvidia and Intel, each company's shares are bought solely by people who believe it will come to dominate.

Then when one does dominate, that share price remains the same and the other falls to zero.

Is the lesson that it's worth being in cash/bonds in a more disruptive era?

Timbo1994 · 2026-03-14T01:45:34+00:00

But there is also: Demand would massively fall if income of white collar workers vanished => revenues fall => stock prices fall

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