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That is correct - and if you only take the 25% if doesn't trigger use of pension and you can continue to make contributions. I had the wizard idea of simply keep taking the 25% and recycling the monies back into the pension fund and keep taking the 25% tax free. Sadly my accountant put a stop to that bright idea .
given what I believe we're heading into and the fact that public pensions are a Ponzi scheme which will be HUGELY revealed over the next 5 years as the interest goes up and the bond crisis hits government (a whopping 75% of government expenditure globally is actually interest payments on debt to give you some idea of the scale of the problem) I have begun thinking that it's time to have the money in my pocket rather than government's (if you think this couldn't happen I would point to the following) .....
* government crises NEVER happen centrally - they have central banks to print the stuff for them. they always happen under local jurisdiction owing to their inability to print their own monies
* if you turn to the US the states of California and Illinois are bankrupt (the 2 most prominent). Basically their public sector pension schemes are falling over. Their response has been two fold - ENORMOUS increases in property taxation (one of the biggest contributors to local government funding which they control) AND enormous pressure on Washington to allow them access to 401ks (US equivalent of PP funds) because they can look after them better than the individual and will invest them in - errrrr - bonds!!!!!
* check out the statistics for people leaving those 2 states. They are at record highs
I fully expect in the next few years to see ENORMOUS increases in local housing taxation (low hanging fruit - doesn't move) and I fully expect them to come after my PP on the same basis. So, it's just when not if I take my 25%. As to the alternatives: 3 months' worth of cash to hand at any point in time (bail ins are coming - Deutsche bank anyone), tangible collectibles, legal offshoring, and diversification of business interests. In answer to PP v BTL - the answer for me is BOTH, for this simple reason. On paper BTL outperforms PP over time, but it misses the point.
You make some really interesting points
This may interest you about company pensions DB
Learn Change and Adapt ?????
Some public sectors pensions are funded - mainly the local government ones.
Nor is it entirely accurate to call the others Ponzi schemes as the government has other income sources than pension contributions.Also there has been no deception.
In 2017 the UK government spent 6% of its total spending on interest payments. The largest share was 20% on pensions - mainly the state pension.
It would work a little better than you suggest as the first£49k wull have a year to earn interest, and the £60k left in the pension will continue to earn interest.
Also there is no need to repay director's loans. Just put the companies money towards the deposit if it is earning more than £40k.
Not for me though. My company will be earning closer to £10k that £40k
You picked that up well peter
for wealthy company landlords in the north this can work a dream
If Corp tax goes down it even works better for directors loans
Also my wife is a director when I get too old to use a pension
I think this is very tax efficient and if needed there is another pension to fall back on
One other point I omitted is that whilst you cannot invest directly from a pension plan into residential property you can invest directly in commercial property (e.g. offices, shops and factories). So you could use your pension scheme to create a tax free commercial portfolio. This could also be of interest to the under 55's as a means of using their pension scheme to diversify their property portfolio. In addition if the taxpayers business is looking for business premises then they can use their pension scheme to fund it. This would also get around the tapering on the pension scheme contributions for high earners, as they could charge their business rent which would go into the pension fund saving corporation tax again. So using a pension fund for commercial property makes more sense to me than using it for a deposit on a residential property as there are more savings to be made.
I would agree for Investors under 55 a SASS would work in similar ways buying commercial
I have to say I know so little about commercial property so you have more knowledge than me on that one
I like this idea DL. I couldn't see the benefit of buying property for cash as promoted on the JC thread but this gives many advantages with the government essentially paying the deposit and you then receiving the money back tax free from the company profits. If you want to work quicker you can put £40k into both your and your wife's pension and and draw from both to lend to the Ltd company.
Another thought. Convert the SIPP to a SASS. You can then invest directly in the company. Oh no that doesn't work as you can't buy BTL. If your company does other things (building) you could lend the money to the company though via your SASS. Needs a bit more investigation to check viability but on the surface all seem to work.
I must admit I cant understand JC thinking on this one its madness buying in your own name even for cash in 2018
There is a much more tax efficient way of doing the same job via a company
I am glad you can see what I can see with this Pension planning
The more I look at this the more I like it
Its having a cake and eating it
Pension & BTL and low Taxation ticks the Boxes for me