How to generate £40,000 TAX-FREE RETIREMENT INCOME
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- Опубліковано 14 чер 2024
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In this video, I explain how it is absolutely possible to generate £40,000 TAX-FREE retirement income.
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A BORING BUT IMPORTANT DISCLAIMER:
This channel provides information on general financial planning. It is for educational purposes only and does not constitute financial advice. The information based is believed to be accurate and currently however should not be solely relied upon. Unless you take regulated financial advice only YOU are responsible for your own decisions therefore we cannot be responsible for any action or inaction you take. Please take advice specific to you before making any decisions. Principles Personal Finance is an educational channel and is not affiliated with my employer. As such views are stated are individual and should be seen as such.
Investment involves risks. The investment return and principal value of an investment may fluctuate so that an investor's portfolio, when redeemed, may be worth more or less than its original value. Past performance is no guarantee of future results. The information provided in this presentation has been compiled from sources believed to be reliable and current, but accuracy should be placed in the context of the underlying assumptions.
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There are some scams on UA-cam where a profile image is copied and then used to promote cryptocurrency scams and all that nonsense. I will never, ever, contact you selling any investment product or service. I would never do that, am not allowed by regulation and it goes against the intention of this channel to educate and inform.
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yet another good video , This was my fav topic , your video quality is improving too , your content is amazing anyways , well done.
That's very kind! Glad you enjoyed it.
Grateful for your support and means a lot that you've taken the time to watch and comment so thank you! 🙏
Excellent graphics and content, George. Your creative imagination is one of the best on UA-cam! Words translated into pictures are powerful.
Thanks David, as always. Very grateful for your support!! 🙌
Brilliant videos mate, been binge watching your other videos. Keep up the good work. Would you do a video on defined benefit pensions. I.e transferring it a Sipp or taking it early.
Thanks for watching Mangal, appreciate your support!
DB is always a tough area to navigate well as there are many considerations and it's a complex area of advice, but thanks for the suggestion. I will certainly consider it. 👍
Fantastic advice, I’ve been mentally juggling this type of stuff as I near retirement, this is just what I needed
Thanks Tony, glad it has been of use and thanks very much for watching!
Really good and useful video. You did miss another tax bucket though - the rent a room scheme. You get £7500 extra tax free allowance if you rent out rooms in your primary residence.
Ah, good point!!
You can also have a lodger which is £7000 + tax free per year. It’s not as bad as it sounds. I have a Monday-Friday lodger who I hardly see. A good idea to specify someone who works from an office rather than your home. I believe you can also earn £1000 per year on a side hussle - like selling stuff on vinted etc.
That's true! Good point and ones i didn't include here, thank you!
Premium bonds? if you have 50k (and maybe a partner have 50k) you can get 4.65% return on it TAX Free. (circa 4k a year!) extra
A good point and one that I missed! Thanks for flagging. 🙌
Only if you are lucky! 🤣. Hopefully very lucky!
I guess i must be lucky? we get a good return each year.
George, you may want to look at the book download process -- it redirects us to a webpage that doesnt exist after we register etc ......
Thank you very much for flagging this. Hugely appreciate you taking the time to do this as otherwise I may have missed it. 🙌🙏
I've just gone through and sent a follow up to all who had already subscribed and fixed the link.
Very grateful for your feedback!
Excelent video!!!
Could you please make a video about being your own bank in the UK Using personalized life insurance policies?
All the content available online at the moment is based on US. Is it even possible in the UK?
Thank you
Hi Sam, thanks for watching. Very grateful for your kind words and taking the time to comment!
I'll level with you. I've never heard of trying to 'be your own bank' or even what that means??
I do know that there are a lot of US products which claim to be life insurance policy with investment led options in-built. From the US advisers I follow, they generally absolutely slate those products for high commission nonsense sold by financial advisers with limited qualifications. We've been there in the UK,...we don't want to go back. (That is my take, it may not be accurate, I ultimately don't work in the US so could be wrong.) We do have investment bonds in the UK which are classed as a life assurance policy, which may be similar. They can sometimes be suitable in rare client situations. They are certainly are not a preference to more standard accounts.
What I would say is, most financial products which are complex, difficult to explain and understand. Tend to benefit one party. The seller.
Hi George - great content....appreciate the education! Just noticed your higher tax shows capped at £125,000 when it should be £125,140, otherwise there's a £140 gap! Also basic and higher start at £12,571 and £50,271 respectively - Cheers
Yea, you're right apologies for that. Can see that at 1.06 it should start at the following pound technically for the transition between bands. No idea why the £140 wasn't on the 40% higher rate on the right hand side. I must spend less time editing a fancy bucket and more time checking both sides of the figures!
Thanks for watching and your input.
Great video as always. Am I being naive, but on CGT allowance, you cant just slice off your gain? You'd have to sell enough underlying assets as well so significant more tax free cash there?
Thank you very much, very grateful for you watching!
You're absolutely right on the technicals there on the gain. Apart from some very rare planning situations where you could receive shares at nil market value (perhaps restricted stock units that have been transferrers from overseas) You are going to have an initial capital value which you need to return to realise the gain. For example £10,000 shares which grew to £16,000 as a gain would have a £6,000 gain which would fall in the CGT allowance. Therefore you would get your return of capital but it would be a return of investment instead of tax-free income.
Great comment and appreciate your support! 👍
Daft question but do I need to complete a self assessment in retirement if I’m maximising the tax benefits?
Not a daft question at all! It's a tricky one as it does depend on the other sources of income you have as-well as the level of income you are in receipt of in retirement and whether it is within allowances or not, so no 'hard and fast rule' sadly. I've included a link below from the HMRC site which provides further information on this. As-well as a useful link below with more detail.
www.gov.uk/self-assessment-tax-returns/who-must-send-a-tax-return
www.litrg.org.uk/tax-guides/savers-property-owners-and-other-tax-issues/savings-and-tax
Thanks for watching 🙏
Interesting,but as you alluded to,not many people are able to" tick" many boxes on your list
Yes, as you say, not many people will have all of these. Hopefully some may have a few and it can be used as a guide for what may be possible.
Thanks for watching and taking the time to comment John. Appreciate it! 🙏
If we know about the allowances, then it’s up to us to structure our investments to make sure we can take advantage of them to optimise tax efficiency.
1:11 Technically the tax rate between £100,000 and £125,140 is 60% due to the withdrawal of the personal allowance.
I enjoyed this comment as when I was making this video I had exactly that back and forth in my own mind of:
(one thought) 🤔
'Are you going to caveat the 60% effective tax rate over £100k??'
(the next) 🤬
'NO - YOUR VIDEOS GO ROUND THE HOUSES ENOUGH! No-one's going to subscribe to captain caveat' ⦗🏴☠⦘
You are a 100% right on this of course. Always tricky with this stuff as it's a battle of being trying to be both succinct and comprehensive.
Appreciate you watching and taking the time to comment.
@@PrinciplesPersonalFinance if only we had a simple tax system! 😀
Are we absolutely certain that "The first £1000 of dividend income is taxed at 0%, regardless of how much income you earn"? If you're a higher rate tax payer and then take £1000 dividend on top, does that not eat up more personal allowance and push another £1000 into 40% tax at the top end? :S
Hi, thanks for watching.
The dividend allowance is now £500 from the previous year's dividend allowance of £1,000. It was correct at the time of recording.
www.gov.uk/tax-on-dividends
In relation to your question and doing it justice with an answer I'd be happy wouldn't get misinterpreted... this really is far too long an answer that I can address with a UA-cam comment.
The short answer is - dividend allowances are provided irrespective of income levels, unlike say the personal savings allowance which ceases for additional rate taxpayers. The interaction with different income sources and the overall position as far as net income is subject to the HRMC prescribed order or income rules.
Does this apply to self-employed?
Hi, thanks for watching. Tax free allowances (subject to the rules of those allowances) are generally available to individuals regardless if they are employed or self-employed. The key thing is the structure of the income an individual takes a pay can vary more between employed and self-employed options.
When retired, you will be neither employed or self employed but a retired individual with income which is taxable/non taxable subject to these allowances. Good luck.
These are allowances not incomes
..and you generate tax-efficient income by using allowances effectively Simon. 👍
Clickbait - meanders into generic scenarios after explaining how to get to £29k tax free !!
Great video and i am trying my best to get there within the next 7 years max
Great stuff, wish you all the best to get there.
Keep a lookout for my next video as that goes over how far pension pots may stretch based on different values.
Very grateful for you watching the channel!