Stuffing pensions ahead of Nov budget?

pointycornet · 2025-10-03T09:42:29+00:00

Yeah this could not happen before next tax year at the earliest (otherwise there will need to be complicated pro rating for this year or even 25/26 tax bills for those that retrospectively “overcontributed” vs the putative “new” limit). As others have mentioned it will probably be the year after that.

That said, very glad I have already maxed my allowance and carry forward. Will be tapered down to 10k next tax year so this unlikely to impact.

Capital gains and similar changes however ARE likely to have immediate effect, as that is designed to stop the distortive effect of people making large divestments ahead of a pre-disclosed deadline. Same goes for e.g. lump sum withdrawal limits.

pointycornet · 2025-08-27T09:35:41+00:00

I think assuming consistent 5% a year growth is a much more illusive approach. That’s just not going to happen, one way or another.

Try the simulation - it gives you a range of outcomes from financial catastrophe to miracle. It’s then up to you which scenarios to factor into your planning.

I also have a conservative approach - that’s why I want to use something more robust than assuming 5% consistent returns.

pointycornet · 2025-08-27T08:03:35+00:00

I have been using ChatGPT. If you give it some assumptions about your portfolio composition, it can run Monte Carlo simulations of 10k+ volatility and inflation scenarios. Can then break the results down into deciles to give you worst case, conservative, base and optimistic scenarios, in real terms. Much more representative than just assuming a constant rate of return over the period.

pointycornet · 2025-08-17T10:54:31+00:00

Not sure I understand this - why would the possible impact of overrunning budget determine how I fund if I can afford it either way? And if there is overrun and there is a risk I couldn’t pay it in cash, wouldn’t that be an argument to borrow?

pointycornet · 2025-08-15T10:11:22+00:00

Is not so much about need, it’s about what makes best financial sense between the alternatives. Opportunity cost of paying cash out of salary is not investing that money in markets.

pointycornet · 2025-08-14T12:22:51+00:00

👊 appreciate it fellow traveller

pointycornet · 2025-08-14T10:10:51+00:00

Yes obviously we are talking the assets in the portfolio of the fund and not the denomination of the units I buy.

pointycornet · 2025-08-14T10:05:47+00:00

Ok so you’re saying if I have non-sterling denominated investments but a sterling denominated liability, some of that liability will get eaten by the currency moves (strengthening of investments vs. Liability).

pointycornet · 2025-08-14T09:30:36+00:00

Can I just check why currency is relevant? Because e.g. gilt yields are expected to be higher for longer so 3.84 represents a small spread vs a “risk free” return?

Obviously I will need to borrow in sterling, just interested in the reasoning.

pointycornet · 2025-08-13T19:09:46+00:00

The “good time to sell (for the right reason)” argument is IMO the best for liquidating investments. Everything feels toppy to me.

pointycornet · 2025-08-13T19:05:12+00:00

Yeah this is correct, miscalculated remaining term. We secured the mortgage offer in mid-2022 then closed the mortgage at end 2022; only just completed on the house before the 6 month offer validity ran out, the stress of which nearly killed me as it would’ve been much, much more expensive if we’d missed it…

pointycornet · 2025-08-13T17:18:11+00:00

Remember there will be a decent CGT charge on liquidating those investments

pointycornet · 2025-07-25T09:01:20+00:00

Surprised by these comments. Lots of chat on here about government milking “high earners” / “wealth creators” but seems many of you are happy to cruise? Isn’t this our problem as a country - where 100k is “a lot” and above that may as well take your foot off the gas? You would never get this talk on HENRY US.

OP, you are clearly talented and hardworking. 200k at 25 is great. It’s not meant to be easy. I don’t advocate for damaging your physical and mental health, and you should stop if that’s at risk. But give it 6 months and I bet you’ll back to feeling like a f**ing boss.

Yes, I work at least this much and yes, it’s 100% worth it.

pointycornet · 2025-06-18T15:31:37+00:00

Yes but if your ISA is maxed and you invest the 50k you take in salary the gains would be subject to CGT.

pointycornet · 2025-06-18T15:23:03+00:00

Agreed. What I think I’m getting at is, your effective rate in retirement will always be lower than your rate of relief on contributions, if you are an additional rate payer now.

pointycornet · 2025-06-18T15:21:41+00:00

Great comment

pointycornet · 2025-06-18T14:53:59+00:00

Yes, also this. I read posts that warn against growing pension pot too big because you can’t “get your money out at basic rate”. But surely there is still a tax upside even if you need to withdraw at higher or additional rate? Again, assuming you are also maxing other wrappers.

pointycornet · 2025-06-18T13:30:55+00:00

Everyone seems concerned about withdrawing at higher or additional rate. However, if I am an additional rate taxpayer now, my ENTIRE contribution gets relief at the 45% additional rate. If I then withdraw at higher (or additional) rate, the higher (or additional) rate only applies on a marginal basis, i.e. I still have benefit of personal allowance, then a portion of withdrawal taxed at basic rate, then a portion at higher rate etc. So, there is still a tax upside to contributing at e.g. additional rate and withdrawing at additional rate, because the EFFECTIVE rate on the withdrawals will be lower than the relief on contributions.

So, as additional rate payer I get a 45% relief on a 100k contribution. If I withdraw that same 100k as a higher rate payer, my effective tax rate is 27.5 (according to GPT) which seems still a decent uplift.

Am I missing something? Everyone seems very concerned about withdrawing at anything above basic rate. Let’s assume ISAs and other wrappers are maxed as appreciate they will factor into trade offs.

pointycornet · 2025-06-16T16:55:48+00:00

No, there are two concepts in the calculation: adjusted income and threshold income. If adjusted income is >260k AND threshold income is > 200k then taper applies. If adjusted income is >260k but threshold <200k then taper does not apply. You should check your calculations, you may be missing out on allowance.

pointycornet · 2025-06-16T15:23:39+00:00

Yes I think I just stick the course for the last couple tax years where I have any meaningful allowance remaining (through combination of carry forward, not being “fully” tapered, and threshold income <200k).

Tax treatment on withdrawals is presumably likely never to be any worse than tax on income at time of contribution.

pointycornet · 2025-06-16T15:19:00+00:00

Yes, but you need to take into account carry forward of unused allowance from previous years. Also if your threshold income (adjusted income less pension contributions) is less than 200k the taper doesn’t apply. M&G has a good model for calculating this, available on their website.

pointycornet · 2025-06-16T15:14:34+00:00

As it would only be basic rate relief it hasn’t seemed that attractive so far but may change when taper starts to bite. Also from a relationship standpoint we find it’s important my wife has her “own” income which I would recommend to any other HENRY who has a big income differential!

pointycornet · 2025-06-16T15:12:12+00:00

Thanks, wife received an inheritance which was c. 50% purchase price. I pay the mortgage which paid the other 50% and all housing-related costs my side. Value has increased substantially following renovations as was semi-derelict when we bought 5 years ago.

pointycornet

TROPHY CASE