I’ve been trying to figure out how to lower my tax bill, especially now that I’m in my highest earning years. The more I make, the more it feels like taxes are eating away at my savings
Totally feel your pain! One mistake I made for years was not maximizing my retirement account contributions. I missed out on huge tax breaks, especially with my 401(k) and IRAs. Also, I used to overlook tax-loss harvesting-losing the chance to offset gains and reduce taxes on investments
I hear you. Another big problem people overlook is failing to diversify into tax-efficient investments. For example, municipal bonds can provide tax-free income, and Roth IRAs grow tax-free. It’s also a mistake to forget about timing withdrawals; withdrawing too early or too much can cause penalties or push you into a higher tax bracket
Agreed, I've always delegated my excesses to an advisor, since suffering major portfolio loss early 2020, amid covid outbreak. I'm now semi-retired and only work 7.5 hours a week, with barely 25% short of my $1m retirement goal after subsequent investments to date
Thanks for sharing your experience! I've been managing my portfolio myself, but it's not working out. Do you have any recommendations for a good investment advisor? I could really use some help
My CFA, Joseph Nick Cahill, is a renowned figure in his field. I recommend researching his name online; you'll find all his credentials and everything you need to work with a reliable professional. With many years of experience, he is a valuable resource for anyone looking to navigate the financial market.
The tax code seems overly complex, making it difficult to identify the most tax-efficient strategies for my income and investments. Are there resources available to help me understand relevant deductions and credits that could maximize my after-tax returns?
You're right, the code can be a beast. There are definitely resources available to help you understand deductions and credits. The IRS website has a wealth of information, but for a more personalized approach, consider consulting with a tax advisor who specializes in investments. They can help you identify strategies that maximize your after-tax returns.
I love the insight. Professionals could make a really big difference in investing, and I think everyone should have one. There are aspects of market trend that is difficult for the untrained eyes to see. I have made more than 350% through my estateplanner(fa) by alternative investing. The portfolio comes with perks as well.
One of my goals is to employ the service of an asset-manager this year. I've seen some off social media but wasn't able to get a response. Could you recommend one?
I’d like to know how he gets paid for giving the couple in this video great advice. I’ve never met a planner that cares about you they just care about how they can extract fees from you and lock you in .
Because ROTH IRAs are tax-free, you'll be able to keep more of the money you've worked so hard to earn.I want to invest more than $300k, but I'm not sure how to go.
Holding fixed-income assets in tax-deferred retirement funds as opposed to taxable accounts has additional advantages. If you don't know how to invest in the market, get some advice from a financial counselor.
I totally agree, I'm 60 and newly retired with about $730K outside retirement funds, no debt, and very small dollars in retirement funds compared to my portfolio balance over the past 3 years till date. tbh, the role of an advisor can only be overlooked, not denied. just have to do your research in finding a reputable one.
Where on Earth can you get retirement planning advice like this? And how do you pay for it? I’ve spoken to financial planners before and they are just trying to sell you their investment products with egregious fees and that suit them but don’t suit you. I’d concluded that financial planners are on the same spectrum as confidence tricksters. I’d love to meet a good one like this guy.
Great video James - thank you. Another tool in the box is holding UK Government Bonds (Gilts) with low coupons in the GIA as they are CGT free. Income is returned as capital gain as they mature.
Very interested in this idea, Adrian. Could you please let me know if something like the iShares Core UK Gilts is similar to what you are suggesting? I'm using Trading212 and am not sure if they offer what you are referring to. Thanks in advance.
Best you've done James, and demonstrates what value a financial adviser gives for a retiree given the complexity of taxation. No mention of funds, best ETF's, asset allocation etc. The more that governments attempt to tax, the more valuable your knowledge
So imagine that you've max'd out your ISA every year, and you've amalgamated all your pensions in a SIPP which was filled up with any leftover cash. You're going to sell the house (which will incur CGT) and will have a large amount of capital to invest. You'll delay taking the state pension until the next government. You're competent in the stockmarket and can routinely achieve gains of 20% pa in the ISA and the SIPP. How do you invest all that wonga?
I have always been an advocate of keeping it simple, throw money at the mortgage and the pension. I know James will be right and tax saving are probably achievable, but I know exactly where I am with no mortgage and everything in a tax efficient pension. Works for me and stress levels are at an all time low.
curious on this point as well. Compared to a simple self manageable strategy. Though I suppose once you've worked out the ongoing strategy much of this would be self manageable.
That's an option however, it's fiddly to implement in practice without messing up your asset allocation. I would only expect people with large portfolios to try and do this.
SO great to see this bit on Order of Taxation. Where is CGT in the Order of Taxation?? I am trying to work out whether I will be paying CGT at higher or lower rate!
Amazing video, A friend of mine referred me to a financial adviser sometime ago and we got to talking about investment and money. I started investing below the $100k mark and in the first 2 months, my portfolio was reading $234,800. Crazy right!, I decided to reinvest a huge percentage of my profit and it got more interesting.! For over a year we have been working together making consistent profit just bought my second home at the beginning of summer.
Hi. I’ve been forced to find additional sources of income as I got retrenched. I barely have time to continue trading and watch my investments since I had my second child. Do you think I should take a break for a while from the market and focus on other things or return whenever I have free time or is it a continuous process? Thanks
@@BrandonIvan-c6e However, if you do not have access to a professional like Clementina Abate Russo, quitting your job to focus on trading may not be the best approach. It is important to consider all options and seek guidance from reliable sources before making any major decisions. Consulting with an AI or using automated trading systems can also be helpful in managing investments while balancing other commitments.
Great video, James - I thought I'd sorted out my tax planning but this gives me a few more tools in the box (especially the starting rate for savings). In terms of asset allocation I guess there's one more optimisation tweak, which is to put the higher-growth assets (equities) into the lowest-taxed buckets (ISAs), and the lower growth assets (cash, bonds) into the higher tax buckets (GIA, taxable pension drawdown).
You could choose to do that, especially if you can use the starting rate for the savings band to shelter bond coupons. However, I would argue that, for DIY investors, keeping things simple is often more important than min-maxing the tax efficiency.
This was a great video albeit i had to concentrate to follow it. I think the biggest take away was the cavet in the last minute. Had they put more inyo ISAs and pensions they could have made life so much easier for themselves.
Showing your value add as a financial planner there. Great video. Could you do a video on all the tax efficient methods for achieving extra income if you are still working?
Although having run two small businesses for 25 years I worked it all out for myself. There is a lot to be said for doing your own company accounts and personal tax planning. You really get to understand all the nooks and crannies of our over complicated tax regime.
James, have you missed a trick on buying gold sovereigns or britannias? As these are 'coins of the realm' in the UK they are both tax free when you sell them and VAT free when you buy them, and as a rule grow in value at competitive rates. And they are simplicity itself when buying or selling. Simply sell a couple tax free to meet those unexpected expenses that hit everyone to avoid having to draw down other savings and investments.
@@3thinking Very true. But long term, that pretty much fades into insignificance. I only suggest them as an emergency, pretty much inflation proof, 'rainy day' investment.
Interesting example of methodology to minimise tax most of which I have been following for several years after early retirement without the need for any financial advice. The reduction of GIA capital gains and dividend allowances was something I could see coming a few years ago, so I maxed out ISA contributions after retiring by moving GIA into ISA for several years. Offshore bonds are however new to me and perhaps something to consider upon receiving an inheritance.
Could you please cover the Starting Rate Savers Band in another video in more detail please? I’m a director of a Ltd company so have asked my accountant if I can pay my £12,570 salary, then earn £5k in tax free interest in savings, then additional dividends after that upto the £50,270 and pay less tax to get the same income. Accountant has said I don’t qualify for the Starter Rate Savings Band so I’ve found this confusing as it contradicts your video how I understand it, Awesome video! Thanks
From the information you've given, it seems like your accountant is wrong. However, there may be some other factor that you have not mentioned that affects your eligibility. From the below link: The starting rate for savings band is £5,000 for 2024/25. The 0% rate applies to as much of the first £5,000 of taxed income (after deducting the personal allowance and blind person’s allowance, if eligible) that is savings income. Dividend income is taxed after savings income and therefore, dividend income will not affect eligibility for the starting rate for savings. www.mandg.com/wealth/adviser-services/tech-matters/investments-and-taxation/taxation-of-investment-bonds/chargeable-event-gains-bonds#:~:text=The%200%25%20rate%20applies%20to,the%20starting%20rate%20for%20savings.
Another great video. Please don't go mad with animations in videos, I like the simple format you have now :) Could you please one day do a video on fixed term annuities, thanks.
James is it true that if you only take the tax free element from your SIPP and don’t take income. You can still contribute up to 60k per year in the pension
You end saying it is sustainable but their GIA reduced by £30000 out of £50k, meaning completely different tax planning will be needed next year. Also if they want to use rent a room relief it needs to be their main residence; having the property let out in full while they are overseas will likely not qualify. Another option instead of the offshore bond is an onshore one, with the same 5% cumulative allowance. They do have tax on the growth in the UK but then will come with a basic rate credit and would be taxed after the other income instead of being part of savings as an offshore bond. This may in some cases be a better tool for allowing income to be tax free.
I like it very well explained. Why do you not use £100k allowance in premium bonds for the couple in the example, tax free, secure, instant access, from experience yields about 6% min obviously not guaranteed but chance of bigger prizes?
The normal yield for premium bonds is more like 4.15% and that's only if you use the full allowance and include the possibility of winning the biggest prizes which an individual investor is very unlikely to do, so they're not a great investment despite being tax-free. (I recommend reading the Martin Lewis article for more information about the odds) Alright for a bit of fun if you enjoy the gambling aspect, but not an ideal investment choice.
James - I have a question. Henry crystalizes £16,760 of his Pension. Thus 25% of that is the Tax Free Lump Sum part... £4,190. Does that £4190 get counted against the potential £5,000 Starting Rate for Savings ? (Or is it completely ignored - I could not see it wjen you covered the bank interest part of their earnings) . Thanks !
Because of its complexity, you would only set up an offshore bond as part of a full financial plan. What you pay for that depends on the complexity of your situation. At my company, we do not charge extra for setting up a bond over a GIA, and the ongoing fees are similar.
@@JamesShack Something glossed somewhat over was the matter of ongoing fees. These would normally be taken from the 5% annual tax-free capital withdrawal during the first 20 years, so the maximum capital that could be withdrawn "into the pot" without triggering a Chargeable Event would be (5% - Ongoing Fee%). Similarly, even if the account holder decides not to do a capital withdrawal one year, either they must accept the Ongoing Fee% will still be withdrawn to pay the IFA fee, or the fee that year must be paid from other funds external to the bond.
Amazing video, A friend of mine referred me to a financial adviser sometime ago and we got to talking about investment and money. I started investing with $150k and in the first 2 months, my portfolio was reading $274,800. Crazy right!, I decided to reinvest my profit and get more interesting. For over a year we have been working together making consistent profit just bought my second home 2 weeks ago and care for my family.
Hi. I’ve been forced to find additional sources of income as I got retrenched. I barely have time to continue trading and watch my investments since I had my second child. Do you think I should take a break for a while from the market and focus on other things or return whenever I have free time or is it a continuous process? Thanks
@@Bestjudy001 However, if you do not have access to a professional like Clementina Abate Russo, quitting your job to focus on trading may not be the best approach. It is important to consider all options and seek guidance from reliable sources before making any major decisions. Consulting with an AI or using automated trading systems can also be helpful in managing investments while balancing other commitments.
How on earth did you spot that! Yes, there is; it's supposed to be £356. That's what I have in my spreadsheet, so all the totals use the correct figure of £356.
You have to conclude that the UK tax system is over complex - at least it seems that way. Would be interesting how it compares in complexity with peer countries - probably not favourably from what we know about HM Treasury
Great video James, you said that reinvesting £2880 each back into pensions after already taking tax free cash out of a pension is allowed. Is this an actual fact or is it just an assumption that it just doesn't seem to be very much. This pension recycling rule is vague to say the least, I think HMRC like it that way. My understanding is as long as it's not more than you were previously paying in you "should" be OK, is that your thinking. Many Thanks
Excellent question - one that I was about to ask myself. Some additional points: as I understand it, the pension recycling rules are not broken if some of the tax-free lump sum is passed to a spouse/partner to invest in their pension?
@@JamesShackthank you for the link, that is a helpful and concise interpretation of the rules. I do have a couple of further questions however: can the pension contributions also be backdated (as with normal contributions from earned income)? Secondly, I thought I had read that the time limit for pension recycling was two years after the tax-free lump sum was received. Is that correct? The following is also very important: "It is worth noting however that HMRC do not classify income from pension plans as relevant UK earnings, and therefore the individual will need to have relevant UK earnings from another source so they are eligible for tax relief on the re-invested payments.". Therefore, for anyone to make contributions above the £2,880 net (£3,600 gross) permitted without other earned income, there must be some form of additional "relevant UK earnings". I had been considering the possibility of making SIPP contributions from DB schemes or annuity income, potentially up to the £10k MPAA, which was triggered by drawdown during the gap years before other pensions kicked-in, if there is a surplus after I start receiving the state pension but it seems that this is not permitted.
Very interesting but I’d still recommend they put 50k each into premium bonds where the income is tax free. Also short term low coupon gilts are a good home for GIA money.
Isn't the return from premium bonds too low to make them a good place to keep money? (3.5% or so?) Wouldn't you get more return from investing the money in stocks / bonds, even though you'd pay some tax on the gains?
@@tested211 You're right, the return on premium bonds is comparatively low. Martin Lewis estimated 4.15% if you invested the maximum 50k and that includes the possibility of winning the big prize which you're very unlikely to do. Fine if you know that going in and like the gambling aspect, but it's not a great investment if you have other options.
10:34 ?? 5% need corporate bond to get that, gilts are coming down. Also, they already have 30k in cash so that’s already used up the some savings allowance.
10:36 two and five percent of 50k is more than that isn't it? also, can't they just keep the overall portfolio 60/40 but keep proportionally less equities in the GIA's so they stay approximately under the dividends allowance? would there be enough leeway for the bonds interest with no tax? and the assets with less growth potential are taxable so hopefully they should get ploughed into the ISA quicker in future years if they don't grow as much.
@@JamesShack ah of course! We'll have to agree to disagree on my suggestion not being in the scope of the video. Paying less tax is the whole point of the video and my suggestion seems like it would help by lowering unsheltered dividends. Unless I got that maths or understanding of the tax wrong too?
@@manni192 So much easier said than done, you think that everyone has the acumen of a financial expert. There must be a reason that people dedicate years into becoming accountants and financial planners. You think a lay person can sort out their financial affairs in a few hours by just having the internet and knowing their tax allowances. You must also believe in flying pigs and unicorns or you have probably spent your life dealing with these products.
11:41 for equity, aren’t they buying similar but different equity funds to avoid the share matching rules ? E.g. buy ftse developed, sell and replace with msci world and after the time limit buy back? Cycling similar but different products to rebase their CGT ?
I sacked off SJP as my financial advisor but seeing videos like this makes me think I need to hire James ASAP!! 😂 When is the right time to get advice James? I'm 38 but don't want to miss a trick.
Don’t be lazy. All the information is out there if you go looking! Good decision to dump SJP. The most expensive fund platform of them all, leeching off pensioners that don’t understand they are being robbed blind.
Wondering if you could do a piece on Equity release as part of retirement planning, in the case where inheritance is not an issue is it worth considering to protect pensions and other tax efficient savings for say 5-7 years as I understand it is tax free, would be interested to hear you views on this, I’ve watched a lot of your posts but do not recall you ever mentioning this option
Very informative video. You mention that Anna had some gaps in her national insurance contributions and therefore would not qualify for the full state pension. I have a disabled daughter who is unable to work and make any NI contributions. Does this mean that she will have a zero state pension? That worries me!
Hi James, any chance of covering rolling old pensions into a current work place pension while considering ’protected tax-free cash’, in an old pension and its impact on planning for early retirement? Keep up the great content!
Thank you James. Another great vid. If someone has a db pension of £7k pa, and no other income, how much savings interest can they receive tax free please? I'm thinking it would be the full £5k. Thank you.
@James - Income and Income/Growth funds???? I just spent a couple of hours watching this and a few other (re)educational videos. I wonder if there is a topic that looks at tax free income (from an ISA) using income funds and stock? Im playing with a satellite (new term, like it) collection of funds and shares that offer 5%-10% income (monthly, quarterly, semi) as well as growth. Why wouldnt these be another useful source of tax-free money to include? Im anticipating they will need more management however?
Hi James, always a pleasure to watch your videos, they are next level. In minute 17, you mention £3k dividend income, but isn't the dividend allowance is £500 and the Capital gains allowance is £3K?
This is fantastically informative, I have another 25 years at work before i have to worry about how i get to my pension/savings. My question would be: How do I access these different savings accounts and report to HMRC what i have actually 'earned' from them? Do you have to do some form of self assessment during retirement?
Hi James. Great videos. So glad I found you this year.y family and i look so much better in the future thanks to your guidance. A quick question, if we were to come into a large sum of money, say £100k, we don’t not need this before retirement in 20 years, would it be wiser to put the whole amount into a single pension and take advantage of the fast compounding effect after 100k? Or should we split the funds 50/50 into both mine and my wife’s pensions? I appreciate your comments are not advice
Hi Adam, if you split it into two different pensions it should not affect the the rate of compounding. Whose pension you put it into will depend on who gets the most tax relief, the current size of each of your pensions and what other income you each expect to have at retirement.
Hi James - the Offshore bond interested me. I manage my Mums money. She’s 89 and in a nursing home. She gets c.40k in pensions and allowances. Her nursing home costs 55k. We sold her home and it’s invested in low cost funds - 90k in an ISA, 310k in a general investment account. It generates more than enough to pay the balance between her income and fees. Every year we switch the maximum into the ISA but that still leaves a lot in the general,account subject to Capital Gains tax. Any thoughts how we can reduce this tax liability?
Surely Henry could also take his 86k tax free cash and invest it in a GIA then transfer 20k per year to an ISA and still be tax efficient? Guess the trade off is the TER on investing in a GIA/ISA v the options available in the DC plan which "should" be cheaper
If most people don't get close to paying out both their ISA and Pension tax-free allowances, which one (or which combination) should somebody be focussing on? Is it even worth having both?
Ive always managed my own money because of the reluctance to pay annual fees to financial advisors but this video does highlight how much i don't know! Interested to know what percentages financial advisors charge now days ? Last time i looked into it it was 1% which i thought to expensive over extended long period of time, say 20/30 years
That depends on what you're getting for that 1%. Also, if you thought you were getting no value from working with a financial adviser, you would not keep working with them for 30 years. That would be madness. You'd stop after 2-3 years. I frame the risk and reward of working with an adviser here: ua-cam.com/video/HjzoCCFkJm0/v-deo.htmlsi=KIT1fglettVJdRuV&t=1354
Hi James, in many of your videos you are providing examples where people say how much their pension pot is worth. I have a final salary pension, so how do I evaluate its worth in similar terms? Or do I need to think differently in how I calculate it.
Thank you. Hum interesting, Children have left home ,so possibly renting some rooms in our large house might be tax efficient . I will be due to pay a lot of tax on saving this year. I think it is a pity that I can't get tax relief on paying for my wife's care. Old age care is the big expense for most middle class couples. I will see my financial adviser soon and will ask his advice.
That looks like a great deal of faffing about - and the idea of a 60:40 investment is madness, given that both shares and bonds are pretty much going to crash soon (end of this year or the beginning of the next). It is far, far better to be international and keep your money either in tax-free gold coins (i.e. Britanias) or completely out of the country. These complicated tax-free schemes end in tears far too often!
There are always crashes. Part of the cost of doing business. Doesn't actually matter in the long term as they come up again at some point. As long as you are still in your accumulation phase. When living off a portfolio it is more problematic, especially in the early years due to sequencing risk. A little gold isn't bad as a hedge against inflation. Bonds are good in the mix in a portfolio when you're getting nearer to retirement and in retirement. Keeping money/assets outside of the country doesn't doesn't necessarily reduce your tax burden either. Depending on setup. A lot of the traditional offshore centres have have high deposit and fee requirements too. Just my opinion of course.
Thanks had been, been meaning to nail down the taxation order and this was a perfect explanation. Also not really an issue for the professionals, but one of my overriding requirements is to avoid unnecessary paperwork. Especially a tax return, I'll happily trade a little return to avoid having to fill one of those in. To that end, I hold my emergency money in premium bonds as being tax free it also doesn't generate a reporting requirement, if I had that cash anywhere else it would. If I had to complete a tax return no matter what - I would likely deploy that money differently.
@@JamesShack My understanding was slightly different in that you can't use the £1,000 property allowance against the income related to the rent a room allowance, so you can't claim £1,000 property allowance *and* £7,500 rent a room allowance against a charge to your boarder of £8,500 for the *furnished room*, but you could claim £7,500 for the furnished room and the £1,000 separately for the driveway as the property allowance. Tried googling it to get some clarity but seems some accountants seem to think it's OK, others don't, and both sets say HMRC agree with them! ;-)
Is there more information on bond coupons and them counting towards a saving allowance tax free up to 1k? I didn't know you had a 1k allowance for them on top of the usual savings interest of 1k. Are they totally seperate?
Would it be a good idea to draw on money I have in ISAs in order to allow me to sacrifice salary to contribute to my pension thus avoiding paying tax on earnings? (Early 50s)
Whilst this method is best for paying £0 tax, how does it compare vs putting more cash in GIA which likely to earn around 10% income compared with interest on savings?
James, I think you should offer some form of financial advice for people in the early stages. I could really use some specific personal advice at this stage
@@JamesShack I’m 31, got £100k in index funds in ISAs, I don’t pay any tax on income (seafarer). I plan to max out my ISA every year. Mortgage is done in 3 years. Ideally 45-50 range. I don’t have a pension as I’d want access to funds earlier. £20k annually should do it for me adjusted for inflation.
Financial planners like this guy wouldn't like it, but the whole UK pension/tax system is far too complicated. The government should simply say any pension income, from whatever source is simply tax free up to a certain figure, say £35k year.
Great video. Does the non-earning person contributing £2880 to their pension put in £2880 and the uplift to £3600 happens automatically, or do they have to contribute £3600 and then claim back the £720 tax via their tax return?
@Chat___JamesShacK Thanks James, I wasn't 100% sure who that number had popped up from. In the meantime I'd checked on Gov.uk, which said that the pension provider would claim th 20% back automatically. Somewhere else suggested that it depends on the pension provider, so I'll contact them to check first.
I’ve been trying to figure out how to lower my tax bill, especially now that I’m in my highest earning years. The more I make, the more it feels like taxes are eating away at my savings
Totally feel your pain! One mistake I made for years was not maximizing my retirement account contributions. I missed out on huge tax breaks, especially with my 401(k) and IRAs. Also, I used to overlook tax-loss harvesting-losing the chance to offset gains and reduce taxes on investments
I hear you. Another big problem people overlook is failing to diversify into tax-efficient investments. For example, municipal bonds can provide tax-free income, and Roth IRAs grow tax-free. It’s also a mistake to forget about timing withdrawals; withdrawing too early or too much can cause penalties or push you into a higher tax bracket
Agreed, I've always delegated my excesses to an advisor, since suffering major portfolio loss early 2020, amid covid outbreak. I'm now semi-retired and only work 7.5 hours a week, with barely 25% short of my $1m retirement goal after subsequent investments to date
Thanks for sharing your experience! I've been managing my portfolio myself, but it's not working out. Do you have any recommendations for a good investment advisor? I could really use some help
My CFA, Joseph Nick Cahill, is a renowned figure in his field. I recommend researching his name online; you'll find all his credentials and everything you need to work with a reliable professional. With many years of experience, he is a valuable resource for anyone looking to navigate the financial market.
The tax code seems overly complex, making it difficult to identify the most tax-efficient strategies for my income and investments. Are there resources available to help me understand relevant deductions and credits that could maximize my after-tax returns?
You're right, the code can be a beast. There are definitely resources available to help you understand deductions and credits. The IRS website has a wealth of information, but for a more personalized approach, consider consulting with a tax advisor who specializes in investments. They can help you identify strategies that maximize your after-tax returns.
I love the insight. Professionals could make a really big difference in investing, and I think everyone should have one. There are aspects of market trend that is difficult for the untrained eyes to see. I have made more than 350% through my estateplanner(fa) by alternative investing. The portfolio comes with perks as well.
One of my goals is to employ the service of an asset-manager this year. I've seen some off social media but wasn't able to get a response. Could you recommend one?
Don't be hesitant to contact Sonya Lee Mitchell and follow her directions.
Google Sonya Lee Mitchell and do your own research. She has portfolio management down to a science
What a fantastic and informative video. It is refreshing to see an actual qualified and knowledgable financial advisor on UA-cam.
I’d like to know how he gets paid for giving the couple in this video great advice. I’ve never met a planner that cares about you they just care about how they can extract fees from you and lock you in .
Because ROTH IRAs are tax-free, you'll be able to keep more of the money you've worked so hard to earn.I want to invest more than $300k, but I'm not sure how to go.
Holding fixed-income assets in tax-deferred retirement funds as opposed to taxable accounts has additional advantages. If you don't know how to invest in the market, get some advice from a financial counselor.
I totally agree, I'm 60 and newly retired with about $730K outside retirement funds, no debt, and very small dollars in retirement funds compared to my portfolio balance over the past 3 years till date. tbh, the role of an advisor can only be overlooked, not denied. just have to do your research in finding a reputable one.
Could you kindly elaborate on the advisor's background and qualifications?
Melissa Terri Swayne is the licensed advisor I use. Just search the name. You’d find necessary details to work with to set up an appointment.
Found her, I wrote her an email and scheduled a call, hopefully she responds, I plan to start the year on a woodnote financially..
Where on Earth can you get retirement planning advice like this? And how do you pay for it? I’ve spoken to financial planners before and they are just trying to sell you their investment products with egregious fees and that suit them but don’t suit you. I’d concluded that financial planners are on the same spectrum as confidence tricksters. I’d love to meet a good one like this guy.
He does have a link in the description ...
You will be hard pushed to find ANYONE involved with pensions who ISNT a crook who will be charging you massive fees for nothing but basic admin...
Great video James - thank you.
Another tool in the box is holding UK Government Bonds (Gilts) with low coupons in the GIA as they are CGT free. Income is returned as capital gain as they mature.
Very interested in this idea, Adrian. Could you please let me know if something like the iShares Core UK Gilts is similar to what you are suggesting? I'm using Trading212 and am not sure if they offer what you are referring to. Thanks in advance.
Excellent. I'd never heard about the starting rate for savers.
Best sponsor ad I've heard in a while!
Just like watching a magician at work !! And with a good explanation, too!
Really good as ever James. Had to concentrate on this one more than usual!
Best you've done James, and demonstrates what value a financial adviser gives for a retiree given the complexity of taxation. No mention of funds, best ETF's, asset allocation etc. The more that governments attempt to tax, the more valuable your knowledge
I would love to see some videos for younger savers but homeowners in their 20s or 30s.
I find your content super interesting! 🙌🏻
So imagine that you've max'd out your ISA every year, and you've amalgamated all your pensions in a SIPP which was filled up with any leftover cash. You're going to sell the house (which will incur CGT) and will have a large amount of capital to invest. You'll delay taking the state pension until the next government. You're competent in the stockmarket and can routinely achieve gains of 20% pa in the ISA and the SIPP. How do you invest all that wonga?
I have always been an advocate of keeping it simple, throw money at the mortgage and the pension. I know James will be right and tax saving are probably achievable, but I know exactly where I am with no mortgage and everything in a tax efficient pension. Works for me and stress levels are at an all time low.
For the vast majority of people, a simple pension and ISA will suffice. It does not need to be more complicated.
Interesting... very complicated. James, how much would it cost for this advice & set-up? On-going fees as well presumably. Thx
curious on this point as well. Compared to a simple self manageable strategy. Though I suppose once you've worked out the ongoing strategy much of this would be self manageable.
James, excellent explanation of the starting savings tax rate thank you. Saved in our watchlist!
One thing you could have mentioned was low coupon gilts which have tax free capital gains.
That's an option however, it's fiddly to implement in practice without messing up your asset allocation. I would only expect people with large portfolios to try and do this.
SO great to see this bit on Order of Taxation. Where is CGT in the Order of Taxation?? I am trying to work out whether I will be paying CGT at higher or lower rate!
Amazing video, A friend of mine referred me to a financial adviser sometime ago and we got to talking about investment and money. I started investing below the $100k mark and in the first 2 months, my portfolio was reading $234,800. Crazy right!, I decided to reinvest a huge percentage of my profit and it got more interesting.! For over a year we have been working together making consistent profit just bought my second home at the beginning of summer.
Hi. I’ve been forced to find additional sources of income as I got retrenched. I barely have time to continue trading and watch my investments since I had my second child. Do you think I should take a break for a while from the market and focus on other things or return whenever I have free time or is it a continuous process? Thanks
@@BrandonIvan-c6e However, if you do not have access to a professional like Clementina Abate Russo, quitting your job to focus on trading may not be the best approach. It is important to consider all options and seek guidance from reliable sources before making any major decisions. Consulting with an AI or using automated trading systems can also be helpful in managing investments while balancing other commitments.
@@Susan00197 Oh please I’d love that. Thanks!.
@@BrandonIvan-c6e Clementina Abate Russo is her name.
Lookup with her name on the webpage.
Great video, James - I thought I'd sorted out my tax planning but this gives me a few more tools in the box (especially the starting rate for savings). In terms of asset allocation I guess there's one more optimisation tweak, which is to put the higher-growth assets (equities) into the lowest-taxed buckets (ISAs), and the lower growth assets (cash, bonds) into the higher tax buckets (GIA, taxable pension drawdown).
You could choose to do that, especially if you can use the starting rate for the savings band to shelter bond coupons.
However, I would argue that, for DIY investors, keeping things simple is often more important than min-maxing the tax efficiency.
I hope in 16 years time when I retire. Your still working. Wonderful work
This was a great video albeit i had to concentrate to follow it. I think the biggest take away was the cavet in the last minute. Had they put more inyo ISAs and pensions they could have made life so much easier for themselves.
I happily was aware of all these methods, I must be learning 😀 thank you
Showing your value add as a financial planner there. Great video. Could you do a video on all the tax efficient methods for achieving extra income if you are still working?
Although having run two small businesses for 25 years I worked it all out for myself. There is a lot to be said for doing your own company accounts and personal tax planning. You really get to understand all the nooks and crannies of our over complicated tax regime.
James, have you missed a trick on buying gold sovereigns or britannias? As these are 'coins of the realm' in the UK they are both tax free when you sell them and VAT free when you buy them, and as a rule grow in value at competitive rates. And they are simplicity itself when buying or selling. Simply sell a couple tax free to meet those unexpected expenses that hit everyone to avoid having to draw down other savings and investments.
Big spread in the buy to sell price.
@@3thinking Very true. But long term, that pretty much fades into insignificance. I only suggest them as an emergency, pretty much inflation proof, 'rainy day' investment.
there was a sneak unveling of the offshore investment at 5:32 🙂.
This is really how a couple can pay zero tax on £57,000, not how one person can pay zero tax on that amount.
he says 8 seconds in that its a couple😂
@@nickb2179 Yes, but the title is a bit misleading, maybe the title should be *"How Couples Can Pay £0 Tax on a £57,000 Retirement Income"*
@@caparn100stop being a pedantic bore.
A single person can use a lot of this. It's informative and awesome.
This is UA-cam!
Interesting example of methodology to minimise tax most of which I have been following for several years after early retirement without the need for any financial advice.
The reduction of GIA capital gains and dividend allowances was something I could see coming a few years ago, so I maxed out ISA contributions after retiring by moving GIA into ISA for several years.
Offshore bonds are however new to me and perhaps something to consider upon receiving an inheritance.
Could you please cover the Starting Rate Savers Band in another video in more detail please?
I’m a director of a Ltd company so have asked my accountant if I can pay my £12,570 salary, then earn £5k in tax free interest in savings, then additional dividends after that upto the £50,270 and pay less tax to get the same income.
Accountant has said I don’t qualify for the Starter Rate Savings Band so I’ve found this confusing as it contradicts your video how I understand it,
Awesome video!
Thanks
From the information you've given, it seems like your accountant is wrong. However, there may be some other factor that you have not mentioned that affects your eligibility.
From the below link:
The starting rate for savings band is £5,000 for 2024/25. The 0% rate applies to as much of the first £5,000 of taxed income (after deducting the personal allowance and blind person’s allowance, if eligible) that is savings income. Dividend income is taxed after savings income and therefore, dividend income will not affect eligibility for the starting rate for savings.
www.mandg.com/wealth/adviser-services/tech-matters/investments-and-taxation/taxation-of-investment-bonds/chargeable-event-gains-bonds#:~:text=The%200%25%20rate%20applies%20to,the%20starting%20rate%20for%20savings.
Another great video. Please don't go mad with animations in videos, I like the simple format you have now :)
Could you please one day do a video on fixed term annuities, thanks.
James is it true that if you only take the tax free element from your SIPP and don’t take income. You can still contribute up to 60k per year in the pension
You end saying it is sustainable but their GIA reduced by £30000 out of £50k, meaning completely different tax planning will be needed next year. Also if they want to use rent a room relief it needs to be their main residence; having the property let out in full while they are overseas will likely not qualify. Another option instead of the offshore bond is an onshore one, with the same 5% cumulative allowance. They do have tax on the growth in the UK but then will come with a basic rate credit and would be taxed after the other income instead of being part of savings as an offshore bond. This may in some cases be a better tool for allowing income to be tax free.
I like it very well explained. Why do you not use £100k allowance in premium bonds for the couple in the example, tax free, secure, instant access, from experience yields about 6% min obviously not guaranteed but chance of bigger prizes?
The UK's Dangerous Addiction to Premium Bonds
ua-cam.com/video/q1EcrlFiwP4/v-deo.html
The normal yield for premium bonds is more like 4.15% and that's only if you use the full allowance and include the possibility of winning the biggest prizes which an individual investor is very unlikely to do, so they're not a great investment despite being tax-free. (I recommend reading the Martin Lewis article for more information about the odds) Alright for a bit of fun if you enjoy the gambling aspect, but not an ideal investment choice.
James - I have a question. Henry crystalizes £16,760 of his Pension. Thus 25% of that is the Tax Free Lump Sum part... £4,190. Does that £4190 get counted against the potential £5,000 Starting Rate for Savings ? (Or is it completely ignored - I could not see it wjen you covered the bank interest part of their earnings) . Thanks !
A very informative video covering a wide range of investment products - clearly explained as always., Many thanks, James.
And how much does it cost to set up and run an offshore bond Inc advisors fees?
Because of its complexity, you would only set up an offshore bond as part of a full financial plan. What you pay for that depends on the complexity of your situation.
At my company, we do not charge extra for setting up a bond over a GIA, and the ongoing fees are similar.
@@JamesShack Something glossed somewhat over was the matter of ongoing fees. These would normally be taken from the 5% annual tax-free capital withdrawal during the first 20 years, so the maximum capital that could be withdrawn "into the pot" without triggering a Chargeable Event would be (5% - Ongoing Fee%). Similarly, even if the account holder decides not to do a capital withdrawal one year, either they must accept the Ongoing Fee% will still be withdrawn to pay the IFA fee, or the fee that year must be paid from other funds external to the bond.
Amazing video, A friend of mine referred me to a financial adviser sometime ago and we got to talking about investment and money. I started investing with $150k and in the first 2 months, my portfolio was reading $274,800. Crazy right!, I decided to reinvest my profit and get more interesting. For over a year we have been working together making consistent profit just bought my second home 2 weeks ago and care for my family.
Hi. I’ve been forced to find additional sources of income as I got retrenched. I barely have time to continue trading and watch my investments since I had my second child. Do you think I should take a break for a while from the market and focus on other things or return whenever I have free time or is it a continuous process? Thanks
@@Bestjudy001 However, if you do not have access to a professional like Clementina Abate Russo, quitting your job to focus on trading may not be the best approach. It is important to consider all options and seek guidance from reliable sources before making any major decisions. Consulting with an AI or using automated trading systems can also be helpful in managing investments while balancing other commitments.
@@DanielMose-s7e Oh please I’d love that. Thanks!
@@Bestjudy001 Clementina Abate Russo is her name
Lookup with her name on the webpage.
is there a typo in 7:23 for Anna's tax free cash? thought it was 356 rather than 365
How on earth did you spot that! Yes, there is; it's supposed to be £356. That's what I have in my spreadsheet, so all the totals use the correct figure of £356.
Hi, Have you ever done tax and investment advice videos for dual citizens, who live in a different third country?
If you want to do more complex multi-national examples, I’m happy to volunteer as well 😂
You have to conclude that the UK tax system is over complex - at least it seems that way. Would be interesting how it compares in complexity with peer countries - probably not favourably from what we know about HM Treasury
A brilliant video and perfect timing for me as we're soon to retire and will also be selling BTLs.
Love the new sponsor :) Good luck with the hire.
Good video James. Didn't know about Offshore bonds. Alex
Great video James, you said that reinvesting £2880 each back into pensions after already taking tax free cash out of a pension is allowed. Is this an actual fact or is it just an assumption that it just doesn't seem to be very much. This pension recycling rule is vague to say the least, I think HMRC like it that way. My understanding is as long as it's not more than you were previously paying in you "should" be OK, is that your thinking. Many Thanks
There is a nice little flow chart here : adviser.royallondon.com/technical-central/pensions/contributions-and-tax-relief/recycling-of-tax-free-cash/
Excellent question - one that I was about to ask myself. Some additional points: as I understand it, the pension recycling rules are not broken if some of the tax-free lump sum is passed to a spouse/partner to invest in their pension?
@@JamesShackthank you for the link, that is a helpful and concise interpretation of the rules. I do have a couple of further questions however: can the pension contributions also be backdated (as with normal contributions from earned income)? Secondly, I thought I had read that the time limit for pension recycling was two years after the tax-free lump sum was received. Is that correct? The following is also very important: "It is worth noting however that HMRC do not classify income from pension plans as relevant UK earnings, and therefore the individual will need to have relevant UK earnings from another source so they are eligible for tax relief on the re-invested payments.". Therefore, for anyone to make contributions above the £2,880 net (£3,600 gross) permitted without other earned income, there must be some form of additional "relevant UK earnings". I had been considering the possibility of making SIPP contributions from DB schemes or annuity income, potentially up to the £10k MPAA, which was triggered by drawdown during the gap years before other pensions kicked-in, if there is a surplus after I start receiving the state pension but it seems that this is not permitted.
Very interesting but I’d still recommend they put 50k each into premium bonds where the income is tax free. Also short term low coupon gilts are a good home for GIA money.
Isn't the return from premium bonds too low to make them a good place to keep money? (3.5% or so?) Wouldn't you get more return from investing the money in stocks / bonds, even though you'd pay some tax on the gains?
@@tested211 You're right, the return on premium bonds is comparatively low. Martin Lewis estimated 4.15% if you invested the maximum 50k and that includes the possibility of winning the big prize which you're very unlikely to do. Fine if you know that going in and like the gambling aspect, but it's not a great investment if you have other options.
How does one selectively draw down only part of the offshore bond? I assume it must operate like holding say 100 shares and selling off 10?
10:34 ?? 5% need corporate bond to get that, gilts are coming down. Also, they already have 30k in cash so that’s already used up the some savings allowance.
10:36 two and five percent of 50k is more than that isn't it? also, can't they just keep the overall portfolio 60/40 but keep proportionally less equities in the GIA's so they stay approximately under the dividends allowance? would there be enough leeway for the bonds interest with no tax? and the assets with less growth potential are taxable so hopefully they should get ploughed into the ISA quicker in future years if they don't grow as much.
Remember it's 2% on £30,000 and 5% on £20,000. 60/40 portfolio.
You could could do all of that but it was beyond the scope of this video.
@@JamesShack ah of course! We'll have to agree to disagree on my suggestion not being in the scope of the video. Paying less tax is the whole point of the video and my suggestion seems like it would help by lowering unsheltered dividends. Unless I got that maths or understanding of the tax wrong too?
The UK tax system is stupid complicated. Place your bets now on whether Labour will make it simpler or more complex 🤔. We need a system reset.
How is it complicated? Anyone with the internet can search tax allowances, order of taxation and build a planner within a few hours at most
Reform are offering the reset. Search Google for 'Reform UK our contract with you'
America enters the chat
@@manni192 So much easier said than done, you think that everyone has the acumen of a financial expert.
There must be a reason that people dedicate years into becoming accountants and financial planners.
You think a lay person can sort out their financial affairs in a few hours by just having the internet and knowing their tax allowances.
You must also believe in flying pigs and unicorns or you have probably spent your life dealing with these products.
I think it might get simpler, simplification is a potential justification for higher. Merging capital gains into income tax for example
Insane video.
Superb 👍.
11:41 for equity, aren’t they buying similar but different equity funds to avoid the share matching rules ? E.g. buy ftse developed, sell and replace with msci world and after the time limit buy back? Cycling similar but different products to rebase their CGT ?
Not here specifcially, but you may want to do that if you need to flush our CGT and make use of your (very small) allowance.
I sacked off SJP as my financial advisor but seeing videos like this makes me think I need to hire James ASAP!! 😂 When is the right time to get advice James? I'm 38 but don't want to miss a trick.
Don’t be lazy. All the information is out there if you go looking! Good decision to dump SJP. The most expensive fund platform of them all, leeching off pensioners that don’t understand they are being robbed blind.
@HostLine_JamesShack_1 Unsubscribed. You and anyone else that sends me dodgy WhatsApp notifications.
Wondering if you could do a piece on Equity release as part of retirement planning, in the case where inheritance is not an issue is it worth considering to protect pensions and other tax efficient savings for say 5-7 years as I understand it is tax free, would be interested to hear you views on this, I’ve watched a lot of your posts but do not recall you ever mentioning this option
Another excellent video- and I really like the current content format
I'm glad you found it useful!
Very informative video. You mention that Anna had some gaps in her national insurance contributions and therefore would not qualify for the full state pension. I have a disabled daughter who is unable to work and make any NI contributions. Does this mean that she will have a zero state pension? That worries me!
If she received Universal Credit, she would be given Class 3 NI contributions. If not, you could pay voluntary contributions for her.
@@ferncollins9126 Thanks...
If there's something I like in the UK's taxation system is its simplicity. So easy to understand and follow all the rules. 🙄
You think it’s bad over here go look at the US system. We’ve got it easy.
Great video... however, this method works now... law changes all the time, so then what do you do? ...
Adapt. That's why it can be useful to have assets in multiple tax buckets. It helps protect against changes.
@@JamesShack adaptation works well when you are still able... but when you are old and unable... adaptability is no longer adaptable...
Hi James, any chance of covering rolling old pensions into a current work place pension while considering ’protected tax-free cash’, in an old pension and its impact on planning for early retirement? Keep up the great content!
How large is your protected tax free cash?
Thank you James. Another great vid.
If someone has a db pension of £7k pa, and no other income, how much savings interest can they receive tax free please? I'm thinking it would be the full £5k.
Thank you.
@James - Income and Income/Growth funds???? I just spent a couple of hours watching this and a few other (re)educational videos. I wonder if there is a topic that looks at tax free income (from an ISA) using income funds and stock? Im playing with a satellite (new term, like it) collection of funds and shares that offer 5%-10% income (monthly, quarterly, semi) as well as growth. Why wouldnt these be another useful source of tax-free money to include? Im anticipating they will need more management however?
Really great video James, thank you
Hi James, always a pleasure to watch your videos, they are next level. In minute 17, you mention £3k dividend income, but isn't the dividend allowance is £500 and the Capital gains allowance is £3K?
HIS CONTENTS ARE REALLY GOOD 💯
This is fantastically informative, I have another 25 years at work before i have to worry about how i get to my pension/savings. My question would be: How do I access these different savings accounts and report to HMRC what i have actually 'earned' from them? Do you have to do some form of self assessment during retirement?
Yes, the same self assessment form that I used before retirement. I have income (from my pension) and interest (from savings) in just the same way.
@@TonyWhitley Thanks!
Hi James. Great videos. So glad I found you this year.y family and i look so much better in the future thanks to your guidance.
A quick question, if we were to come into a large sum of money, say £100k, we don’t not need this before retirement in 20 years, would it be wiser to put the whole amount into a single pension and take advantage of the fast compounding effect after 100k? Or should we split the funds 50/50 into both mine and my wife’s pensions?
I appreciate your comments are not advice
Hi Adam, if you split it into two different pensions it should not affect the the rate of compounding. Whose pension you put it into will depend on who gets the most tax relief, the current size of each of your pensions and what other income you each expect to have at retirement.
Hi James - the Offshore bond interested me. I manage my Mums money. She’s 89 and in a nursing home. She gets c.40k in pensions and allowances. Her nursing home costs 55k. We sold her home and it’s invested in low cost funds - 90k in an ISA, 310k in a general investment account. It generates more than enough to pay the balance between her income and fees. Every year we switch the maximum into the ISA but that still leaves a lot in the general,account subject to Capital Gains tax. Any thoughts how we can reduce this tax liability?
Surely Henry could also take his 86k tax free cash and invest it in a GIA then transfer 20k per year to an ISA and still be tax efficient? Guess the trade off is the TER on investing in a GIA/ISA v the options available in the DC plan which "should" be cheaper
No mention of gilts being CGT exempt…
@JamesShack-HostLine.1 should I give you my bank details now or later?
And the cost to set up and run???
If most people don't get close to paying out both their ISA and Pension tax-free allowances, which one (or which combination) should somebody be focussing on? Is it even worth having both?
If i draw 12500 from my taxable pension, can i top up with the non taxable and pay no tax at all. ?
Ive always managed my own money because of the reluctance to pay annual fees to financial advisors but this video does highlight how much i don't know!
Interested to know what percentages financial advisors charge now days ? Last time i looked into it it was 1% which i thought to expensive over extended long period of time, say 20/30 years
That depends on what you're getting for that 1%.
Also, if you thought you were getting no value from working with a financial adviser, you would not keep working with them for 30 years. That would be madness. You'd stop after 2-3 years.
I frame the risk and reward of working with an adviser here: ua-cam.com/video/HjzoCCFkJm0/v-deo.htmlsi=KIT1fglettVJdRuV&t=1354
Hi James, in many of your videos you are providing examples where people say how much their pension pot is worth. I have a final salary pension, so how do I evaluate its worth in similar terms? Or do I need to think differently in how I calculate it.
The HMRC valuation for a DB pension (eg: for Lifetime Allowance) is to multiply your annual DB pension income by 20.
Great insightful video . Thanks you have a sub. 👊🏻
Thanks James 🙌
Thank you.
Hum interesting, Children have left home ,so possibly renting some rooms in our large house might be tax efficient . I will be due to pay a lot of tax on saving this year. I think it is a pity that I can't get tax relief on paying for my wife's care. Old age care is the big expense for most middle class couples. I will see my financial adviser soon and will ask his advice.
Be careful of having spare rooms! Angela Rayner is placing migrants in private homes not hotels.
@@juliawigger9796 Thanks, interesting, I would probably be OK with that.
Did the growth on the 60% shares offset the loss on the 40% bonds?
That looks like a great deal of faffing about - and the idea of a 60:40 investment is madness, given that both shares and bonds are pretty much going to crash soon (end of this year or the beginning of the next). It is far, far better to be international and keep your money either in tax-free gold coins (i.e. Britanias) or completely out of the country. These complicated tax-free schemes end in tears far too often!
There are always crashes. Part of the cost of doing business. Doesn't actually matter in the long term as they come up again at some point. As long as you are still in your accumulation phase. When living off a portfolio it is more problematic, especially in the early years due to sequencing risk. A little gold isn't bad as a hedge against inflation. Bonds are good in the mix in a portfolio when you're getting nearer to retirement and in retirement.
Keeping money/assets outside of the country doesn't doesn't necessarily reduce your tax burden either. Depending on setup. A lot of the traditional offshore centres have have high deposit and fee requirements too.
Just my opinion of course.
Thanks had been, been meaning to nail down the taxation order and this was a perfect explanation. Also not really an issue for the professionals, but one of my overriding requirements is to avoid unnecessary paperwork. Especially a tax return, I'll happily trade a little return to avoid having to fill one of those in. To that end, I hold my emergency money in premium bonds as being tax free it also doesn't generate a reporting requirement, if I had that cash anywhere else it would. If I had to complete a tax return no matter what - I would likely deploy that money differently.
is the offshore bond drawdown not net of fees ? so say 4k rather than 5k
There's also another potential £1000 tax-free for renting out their driveway whilst they're not there (or renting out the driveway to the lodger...)
As I understand it, you can't use rent a room allowance and the property allowance against the same property.
@@JamesShack My understanding was slightly different in that you can't use the £1,000 property allowance against the income related to the rent a room allowance, so you can't claim £1,000 property allowance *and* £7,500 rent a room allowance against a charge to your boarder of £8,500 for the *furnished room*, but you could claim £7,500 for the furnished room and the £1,000 separately for the driveway as the property allowance. Tried googling it to get some clarity but seems some accountants seem to think it's OK, others don't, and both sets say HMRC agree with them! ;-)
Is there more information on bond coupons and them counting towards a saving allowance tax free up to 1k? I didn't know you had a 1k allowance for them on top of the usual savings interest of 1k. Are they totally seperate?
In all fairness your videos are great James. What editing and info graphics software do you use?
Final cut pro and I just make the slides on Canva. Simples.
Would it be a good idea to draw on money I have in ISAs in order to allow me to sacrifice salary to contribute to my pension thus avoiding paying tax on earnings? (Early 50s)
Good video but surprised that you expect 2% dividend yield, seems a little low. A video about offshore bonds would be interesting.
The FTSE ALL World index is currently yielding about 1.5%, so unless you're skewing heavily to dividend stocks, you won't get much more than that.
Is there a limit of the number of times you can take tax free lump sum up to the 25%?
Whilst this method is best for paying £0 tax, how does it compare vs putting more cash in GIA which likely to earn around 10% income compared with interest on savings?
James, I think you should offer some form of financial advice for people in the early stages. I could really use some specific personal advice at this stage
How early on are we talking?
@@JamesShack I’m 31, got £100k in index funds in ISAs, I don’t pay any tax on income (seafarer). I plan to max out my ISA every year. Mortgage is done in 3 years. Ideally 45-50 range. I don’t have a pension as I’d want access to funds earlier. £20k annually should do it for me adjusted for inflation.
@@lewisscott22 “don’t have a pension.” Are you self employed ?
@@JamesShack correct. Self employed. Not don’t have, just would prefer to access my pension earlier
@@JamesShack hi James, sorry could I get that number notification again?
Does this couple need to file tax returns? Is it easy to do this by themselves via Self Assessment?
Mind Blown. Too complicated I guess i’m gonna make lots of mistakes. :(
Are there any fees for using an offshore bond?
As always - excellent!
Glad you found it useful!
Are dividends from a pension drawdown account taxed when the dividends go into the account or only when you withdraw them?
No tax inside the pension. You're only potentially taxed when you withdraw.
Financial planners like this guy wouldn't like it, but the whole UK pension/tax system is far too complicated. The government should simply say any pension income, from whatever source is simply tax free up to a certain figure, say £35k year.
I do not like having to relearn the rules and amounts every year. I can tell you that.
The Starting rate for savings band is confusing.. I need to do more reading on this.
You get £5k allowance which is reduced for every pound you earn over 12,570 plus 1k basic rate saver allowance if basic rate tax payer
@@manni192There’s not a lot of knowledge on this in general, everyone seems to think they only have £1,000 headroom
How much did Henry and Anna pay you for this service? How long did it take, from start to finish?
Great video. Does the non-earning person contributing £2880 to their pension put in £2880 and the uplift to £3600 happens automatically, or do they have to contribute £3600 and then claim back the £720 tax via their tax return?
@Chat___JamesShacK Thanks James, I wasn't 100% sure who that number had popped up from. In the meantime I'd checked on Gov.uk, which said that the pension provider would claim th 20% back automatically.
Somewhere else suggested that it depends on the pension provider, so I'll contact them to check first.
My wife (61) is unable to pay 1 years NI to be able to receive the full pension from her early years, are any 35 years applicable?
Hi, Have you ever done tax and investment advice videos for dual citizens, who live in a different third country? If not do you fancy doing one ;)
When do the couple run out of the £57k a year start to earn less or just state pension?
They don't. As he said, it's sustainable. They can take it forever
Can you leave your investment in the offshore bond for 20 years then remove all of it tax free? Can you put crypto in this kind of thing?
No. The gain on the bond, if there is any, would be taxable.
Was using multiple identities the key to Henry / Harry tax efficiency?
Correct