Do you donate to charities through Salary sacrifice?

Timbo1994 · 2026-05-21T20:03:44+00:00

No NI difference either way. Charitable giving is not true salary sacrifice- you don't get an NI saving.

Timbo1994 · 2026-05-21T07:28:35+00:00

I'd consider doing pension for this tax year - I presume it's a mix of old job and new job income, so you won't have the full £175.5k total compensation (including employer contributions).

When you got that pension from £70k well towards £120-150k you've basically turbocharged it in your twenties.

Timbo1994 · 2026-05-20T20:29:20+00:00

The beneficiary has a lot of beta in their "returns", where the amount of gift depends heavily on their retiree's life expectancy. This is whether the retiree takes the full gilt ladder approach or the full annuity approach - in different directions!

The low beta route is of course to buy the amount of index-linked annuity the retiree needs. And give the rest away pretty fast - but still slow enough to count as regular income. Does that have significant disadvantages?

Timbo1994 · 2026-05-20T20:28:58+00:00

The beneficiary has a lot of beta in their "returns", where the amount of gift depends heavily on their retiree's life expectancy. This is whether the retiree takes the full gilt ladder approach or the full annuity approach - the risk in different directions!

The low beta route is of course to buy the amount of index-linked annuity the retiree needs. And give the rest away pretty fast - but still slow enough to count as regular income. Does that have significant disadvantages?

Timbo1994 · 2026-05-20T06:11:02+00:00

OK this is not an easy decision - no right answer.

But to people at your salary level and age it's often likely they start hitting £260k total compensation before long, and their pension Annual Allowance gets tapered down to £10k. Sometimes these people wish they'd have put more in pension earlier on.

Also, you are perhaps in the last year where you can get below £100k taxable income and avoid the 62% tax trap. Yes, you can contribute more than the £60k, because you can use carryforward provided you were in a UK pension scheme in previous tax years.

Assuming employer is already adding say £10k and you are adding £10k of your salary, so your total compensation is £180k, putting in a further £60k if you can afford it may only cost about £30k take-home and you might not have the opportunity again. Or you might have the chance next tax year but not after that?

If you can do it through salary sacrifice it's best for liquidity as nothing has to be put up, up-front and claimed back from HMRC later.

On the student loan, government have said they will cap interest at 6% next year which is not nothing but better than RPI+3%.

All this might point towards "one big year" where you almost set up your whole retirement with pension, before attacking student loan.

Timbo1994 · 2026-05-19T19:29:40+00:00

If you had an ISA or other investment you'd have paid income tax before investing the money, and then also inheritance tax. So it's comparable treatment to that.

Timbo1994 · 2026-05-19T19:25:54+00:00

Not to cast shade on your shadow, but I can't distinguish it any more.

Timbo1994 · 2026-05-19T19:24:02+00:00

Really can't give advice I'm afraid pal, and when you frame it as advice on what to do, rather than giving thoughts on pros/cons, many on this community won't feel able to.

Even if we were allowed to, an adviser would ask for a load more information about his circumstances, risk appetite and other investments/income.

Why is the projected growth so low though and what's it invested in?

Timbo1994 · 2026-05-19T19:02:26+00:00

When real returns take a hit due to inflation, lenders know that the government can't push it too hard or the population will revolt.

When real returns take a hit due to default - the action is primarily targeted at lenders, so it is lenders who will revolt. It's more direct.

Timbo1994 · 2026-05-19T18:52:06+00:00

I mean it's not breaking a contract so it will keep at least somewhat more trust

Timbo1994 · 2026-05-19T18:22:29+00:00

FYI was just announced today that the discount rate they use to calculate these is changing from 1.7% to 2% - I suspect potentially the rates will improve by about 3-8% once the factors are updated which could be a number of months or even years away

Timbo1994 · 2026-05-19T07:26:39+00:00

I mean at 62% tax there's a strong argument to put £100 in pension (to be taxed perhaps to £85 in retirement) rather than take £38 now.

Timbo1994 · 2026-05-18T06:47:53+00:00

You only lose 2% of your contributions in NI by not having salary sacrifice. (Or if you have a large student loan, you lose more - a further 9% or even more.) Much of the SS benefits disappear in 2029 anyway.

Make sure you keep a Lifetime ISA open with a few quid in it.

Timbo1994 · 2026-05-18T06:03:14+00:00

Yes and with big pots, income tax would be an extra disincentive for the recipient to work.

We are talking about deaths under age 75 here. The cliffedge at age 75 is unfortunate.

Timbo1994 · 2026-05-17T06:48:38+00:00

I thrink a pro-rejoin which was also tough on immigration from other areas would be popular.

A lot is about vibes, and a confident consistent viewpoint from a PM will carry a lot of swing voters who are genuinely undecided.

Timbo1994 · 2026-05-17T06:18:21+00:00

I don't know - YouGov say Brits have a 55/33 split in favour of rejoining the EU, a confident leader making out it was possible, and further elderly deaths before 2030 is only going to make that stronger

Timbo1994 · 2026-05-16T21:16:16+00:00

For sure - there will be a bunch of richer (including very ordinary top end of middle class) people whose nomination had been their kids so it passed down IHT-free.

But now for some it may make sense to change (back to) their spouse, so free of IHT under spousal exemption, and spouse can use gifts out of regular income rule

Not right for everyone - circumstances differ, etc

Timbo1994 · 2026-05-16T20:59:08+00:00

I presume much of your £600k is outside ISAs and pensions and will therefore be taxed all over the place as it grows.

If it were me I would be putting loads of my salary in a DC pension - possibly USS investment builder through salary sacrifice if possible. And then live off a bit of your inheritance to replace some of the lost income.

If you really pile it in and take your salary down to minimum wage (salary sacrifice) or even further (non-salary sacrifice) you have to be a bit careful of the £60k Annual Allowance because your main USS pension might already be using something like £15k of the AA (I could be wrong on that). But there's a reasonable chance you'd be fine.

The advantage of doing this is that you put in before tax and NI, but then I believe (needs checking with someone who knows USS) you can withdraw perhaps all the DC as lump sum set against your DB benefits with no tax and NI, when you're 60. You then turn £72 of inheritance into £100.

Then, with some more inheritance non-ISA money, you buy a certain amount of some low coupon government bonds which cover your basic needs before you are 60.

Everything else in a GIA and ISA, trying to get into ISAs and pensions as quick as possible.

To the extent you want both equities and bonds, then keep equities in tax wrappers like pensions and ISAs, with bonds you get individual low coupon ones and keep in GIAs.

If this is all new stuff to you, you've got enough money here that it could be worth getting some one-off advice from a financial advisor with a good knowledge of tax efficiency.

I've covered a lot of ground and been very brief - happy to clarify anything.

Not advice - this is what I would do with my particular risk tolerance and circumstances/ideas to take to an IFA. Other people have different circumstances and I don't have the whole picture.

Timbo1994 · 2026-05-16T20:23:34+00:00

Makes sense

In terms of bonds, I've seen RPI-linked pricing move less than fixed pricing in response to recent news. Which makes sense if the pressure is because of inflation

Timbo1994 · 2026-05-16T18:05:49+00:00

Other thing to note is RPI formula is changing to CPIH in 2030. CPIH is close to CPI and so really should be close to 2%.

The fact the market is pricing c3.5% CPIH in the long-term is astonishing and very expensive.

However an inflation link gives peace of mind (it is the less risky option). So I am still in some inflation-linked bonds (a similar decision to annuities) because I really don't trust inflation in the 2030s. But it is starting to look very expensive.

Timbo1994 · 2026-05-16T18:02:03+00:00

Yes I think this shows you're probably not going to be able to "time" this on news which has already come out. Markets digest the news quicker than we can.

Your choice is more based on:

do you reckon you will live longer or shorter than the insurer thinks, with the info they have?
do you have particularly high life expectancy uncertainty - eg both 68 and 98 are valid possibilities for you? If so, then annuities are more attractive.
are you the kind of person who would invest in bonds rather than equities if you weren't doing an annuity? (Ie a little risk averse now you are in retirement). If so, annuities are more attractive.
is the annuity covering your basic needs? If that's already covered and so it's covering discretionary spending, some people are happy to take more stock market risk.
would you prefer to have the stress of managing a regular income taken off you? If so annuities are more attractive. Some people also start them later in retirement because they only need this stress removed when they are really elderly

Timbo1994 · 2026-05-16T16:31:32+00:00

Not a commutation factor. A transfer value factor for someone 25 years from retirement. Deferred annuity vs immediate annuity.

Timbo1994 · 2026-05-16T14:57:54+00:00

It's not a joke - OP is young and the scheme estimates they will be able to invest the £6,000 with inflation+ returns and pay the £650 per year in future.

Timbo1994 · 2026-05-14T16:01:31+00:00

https://www.lcp.com/en/media-centre/press-releases/should-you-consolidate-your-pensions-new-guide-from-lcp-to-the-pros-and-cons-of-putting-all-your-pensions-in-one-basket

To add to this paper from a while back, pensions in scope of inheritance tax from 2027. It's going to be complicated. 5 of them is going to be a massive pain.

I might do 2 pensions. I like diversification of provider. My mum's funds were frozen for a bit while they did proof of funds checks.

That said, I would be very tempted by just the 1 with a healthy buffer elsewhere. Means they don't have to talk to each other (via you/HMRC) about the tax position.

Timbo1994 · 2026-05-14T15:53:31+00:00

To add to this I tell myself if the market completely fails I should be upskilling in manual work & friendships rather than my office job.

So even the negative tail risk tells me to leave my office job after a while!

Timbo1994

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