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How does Buy to Let END!


macca
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What happens when generation rent retire with tiny pensions and massive rent bills!  

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30 minutes ago, JoeDavola said:

Was thinking about this the other day.

Lets say someone who is still working full time earning say £50K has (wisely!) done a Hovis and has their savings in index trackers.

For a lot of people, if you have kids, £50K is effectively the upper limit of earnings. That is unless you really, really like paying tax. Child benefit clawback between £50-£60K means that your marginal rate can up be up to around 70%. For the moment dumping anything over £50K into a pension is the way to go.

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4 minutes ago, GTM said:

For a lot of people, if you have kids, £50K is effectively the upper limit of earnings. That is unless you really, really like paying tax. Child benefit clawback between £50-£60K means that your marginal rate can up be up to around 70%. For the moment dumping anything over £50K into a pension is the way to go.

Yeah my mate is on the big money now (by NI standards - about 70-80K after bonuses), and as soon as he made the big jump in wage I had a chat with him and I understand he's Hovis-ing everything over 50K to avoid being a 40% tax chump.

Mind you his wife spent 600 fucking quid on christmas decorations this year so maybe he'll need a bit more than the 50K ;)

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12 minutes ago, JoeDavola said:

And this I think it at the core of the UK obsession with houses. It's the only appreciating asset people know of.

 

I said similar in RL on Wednesday when someone was saying tgat they were baffled as to why a nesr neighbour kept adding unnecessary extensions to their house which were making their garden smaller and smaller.

Most people have a binary approach to wealth: it's either in cash or property.

When inflation (RPI) is nudging 6% then they can see that they are losing money on cash so want to "invest" it into their house.

I would personally be put off a house if it had extensions added but other people seem to like them.

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8 minutes ago, JoeDavola said:

Mind you his wife spent 600 fucking quid on christmas decorations this year so maybe he'll need a bit more than the 50K ;)

 

If I want some new ones then I buy them at B&M after work on Christmas Eve.

They are usually reduced to a quarter of the usual price so that they don't have to pay to store them for another year.

Why not have him suggest that to his wife? ;)

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10 minutes ago, JoeDavola said:

As I have said before the working (and to a lesser extent middle) classes are either completely ignorant of all this or are too scared of it.

Yup, that's been my experience very often when you talk to people about this. But putting money into a pension is the easiest way to make money. For every £1000 you put in the Government gives you back (at least) £250 of your tax money. Buy something in your pension and it can lose 20% (ignoring stamp duty at 0.5% (not all stocks) and transaction fees of maybe a tenner) and you're back at break even. Even better if it is money that you were being taxed 40% on.

The beauty of it being in a pension means you are in the market for a long time which is probably the most important factor in getting the best returns. Far easier than being poorly paid rent collectors for the bank.

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AlfredTheLittle
5 hours ago, Wight Flight said:

Buy to let has pretty much ended down here.

Unsurprisingly, those ex BTL properties don't seem to have been bought by their tenants.

As a consequence, rents are up 30% and homelessness rates have soared.

Be careful what you wish for.

What's happened to them? Presumably either holiday lets or second homes?

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1 hour ago, JoeDavola said:

Yes if the savings are cash.

I think you're underestimating the ability of a meaningful number of people to provide savings in any form when taking into account what's available after cost-of-living, knowledge, discipline, god-like patience, forward planning and resistance to consumerism.

Most people don't have piss to put in a pot, let alone a pot in which to piss.

A debt-based system consumes cash in multiple ways. Building of personal wealth is way down the list whether by choice or ability.

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30 minutes ago, Frank Hovis said:

 

If I want some new ones then I buy them at B&M after work on Christmas Eve.

They are usually reduced to a quarter of the usual price so that they don't have to pay to store them for another year.

Why not have him suggest that to his wife? ;)

And this is why marriage wouldn’t have worked for you Frank!

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3 hours ago, GTM said:

Yup, that's been my experience very often when you talk to people about this. But putting money into a pension is the easiest way to make money. For every £1000 you put in the Government gives you back (at least) £250 of your tax money. Buy something in your pension and it can lose 20% (ignoring stamp duty at 0.5% (not all stocks) and transaction fees of maybe a tenner) and you're back at break even. Even better if it is money that you were being taxed 40% on.

The beauty of it being in a pension means you are in the market for a long time which is probably the most important factor in getting the best returns. Far easier than being poorly paid rent collectors for the bank.

 

See I've considered this, and I'd like other's input on it.

I'm not a high rate tax payer, but I have enough savings and low enough spending habits that I could live on just the £12,570 tax free allowance, eat into my existing savings for any other costs I have above that during the year, and chuck everything else as you say into my pension and get the 20% tax back plus accumulated value over say 20-30 years.

I have enough savings that assuming I remain childless I could do that now pretty much for the next 20 years.

However my only fear is that by doing that I might never live long enough to actually access the money? Is there not a chance that rules might change and all of a sudden you need to be ridiculously old like 65+ to be able to access a pension pot?

What's the current lowest age you can access it?

Edited by JoeDavola
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20 minutes ago, JoeDavola said:

 

See I've considered this, and I'd like other's input on it.

I'm not a high rate tax payer, but I have enough savings and low enough spending habits that I could live on just the £12,570 tax free allowance, eat into my existing savings for any other costs I have above that during the year, and chuck everything else as you say into my pension and get the 20% tax back plus accumulated value over say 20-30 years.

I have enough savings that assuming I remain childless I could do that now pretty much for the next 20 years.

However my only fear is that by doing that I might never live long enough to actually access the money? Is there not a chance that rules might change and all of a sudden you need to be ridiculously old like 65+ to be able to access a pension pot?

What's the current lowest age you can access it?

55 at present for SIPPS, but they are in progress of raising it to 57.

Cant see them raising it to 65 for private pensions, as they need this money in the economy.

 

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10 minutes ago, Hancock said:

55 at present for SIPPS, but they are in progress of raising it to 57.

Cant see them raising it to 65 for private pensions, as they need this money in the economy.

Aye 57 would be grand. I've no plans or desire really to stop working completely before that age.

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Bobthebuilder
6 minutes ago, JoeDavola said:

Aye 57 would be grand. I've no plans or desire really to stop working completely before that age.

You do not need to max out the SIPP every year, if you have 20 to 30 years to build your pension then you should have a decent amount come 57 with some growth and compound dividends.

It's a good idea to keep using your ISA allowance every year as well, SIPPS are good, but remember ISAs are tax free on the way out, SIPPs are not.

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3 hours ago, Hancock said:

55 at present for SIPPS, but they are in progress of raising it to 57.

Cant see them raising it to 65 for private pensions, as they need this money in the economy.

 

If they go through with the proposal I'll miss accessing my SIPP at 55 by less than a week. I'll need to wait to 57 instead. So they will push it through. I'm utterly convinced that they enact policies for the sole purpose of infuriating me. 

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4 hours ago, JoeDavola said:

What's the current lowest age you can access it?

The rule change is intended to ensure access to a private pension, such as a SIPP remains 10 years before state pension age. I'd work on the assumption that SPA goes to 70 before long, so a SIPP should be able to be accessed at 60.

But equally they haven't been pushing forward with raising the access age from 55 to 57 very quickly at all. They would like to alter the private pension arrangements between a citizen and the private pension provider they have chosen. Other than certain tax rules, that has nothing to do with the Government at all. Wanting to step in and meddle with citizen's private arrangements, but not possibly meddle with the (unaffordable) pension arrangements of millions of public sector workers and pensioners.

Sometimes the Government heads down a road because they think the solutions are quick and easy. Before long they are in the middle of a massive minefield and nobody can remember how the hell they got there. 

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AlfredTheLittle
4 hours ago, JoeDavola said:

 

See I've considered this, and I'd like other's input on it.

I'm not a high rate tax payer, but I have enough savings and low enough spending habits that I could live on just the £12,570 tax free allowance, eat into my existing savings for any other costs I have above that during the year, and chuck everything else as you say into my pension and get the 20% tax back plus accumulated value over say 20-30 years.

I have enough savings that assuming I remain childless I could do that now pretty much for the next 20 years.

However my only fear is that by doing that I might never live long enough to actually access the money? Is there not a chance that rules might change and all of a sudden you need to be ridiculously old like 65+ to be able to access a pension pot?

What's the current lowest age you can access it?

What's the point of this plan? You'll be building up such a big pension that you'll be paying the tax when you retire rather than now. So you're not actually saving anything, just putting off living till you reach your 60s, at which point you'll find a reason to put it off again. 

There's also an extremely decent chance, in my view, that the government will raid pensions at some point in the next 20 years. They'll almost definitely need to do something about public sector pensions, because they can't afford them, and it wouldn't be fair to only penalise the public sector. The budget deficit at the moment is £250bn per year and it only seems to grow. No way your money's safe long term with a government that budgets like that.

Enjoy your money now - buy a house, go on a few dates, treat your loved ones. You don't need to be a particularly high earner to have a nice life, you seem to have that part well worked out, but saving endlessly for no reason isn't a good thing.

 

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49 minutes ago, GTM said:

If they go through with the proposal I'll miss accessing my SIPP at 55 by less than a week. I'll need to wait to 57 instead. So they will push it through. I'm utterly convinced that they enact policies for the sole purpose of infuriating me. 

Yes i see they closed the loophole where some SIPP providers could still allow it.

I was born in 1975 so definitely miss out, still if its only 10.5 years to wait its not so bad.

Remember starting work at a welding company aged 16 and thinking fuck having to do this for another 50 years, seemed like an eternity. Light is at the end of the tunnel and i'll only be working 50/60 days a year up until then.

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4 hours ago, Bobthebuilder said:

You do not need to max out the SIPP every year,

Ive gone from £0 in my pension in April 2018, to circa £160k today.

If you can max it out for a few years its a good thing.

I remember speaking to a lad who was a couple of years older than me when i was in my teens and he was talking about saving in his pension so he could retire at 45.

I couldnt help but think why the fuck is he not spending all his money on drink drugs and having a good time like everyone else did. Even in my 30s saving for a pension seemed like something boring bastards done.

Live and learn!

Edited by Hancock
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VeryMeanReversion
19 hours ago, JoeDavola said:

 

They should really actually, and I'm not joking here, be giving it to me and my brother to max out our ISA's every year, with us just keeping tabs on what they've given us with the understanding that we will give it all back to them if they ever need it. Basically inflation protection combined with tax avoidence - both income and inheritence.

That's what my mum is doing, sheltering 60k per year, trying to get her estate down to the IHT limit whilst having enough to live on and a safety net for care. Otherwise, we  could end up with a £250k tax bill.

There are other IHT implications to consider (7 year rule). Gifts from excess income is the simplest and most tax efficient.

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