Pension advice

[T4tomo]

I have a private pension but to date have only used drawdown to the tax threshold and have no plans to change that. I don't take an income. I'm familiar with the tax method as my wife has SP and NHS pensions and is taxed on a portion of the NHS pension.

I've no objection to paying but suggest this will become very costly for HMRC. I'll be £77 over the threshold. +/- £20 tax bill. How much will it cost to administer that?

its doesn't cost HMRC at all, who ever pays you the pension collects the tax via their payroll software and your tax code and sends it HMRC and it matter not a jot whether you pay no tax, £20 tax or £20,000 tax.

 

[Alex321]

Put that question to HMRC and see if they let you off.

Please let me know if it works.

Also, the total tax take with your drawdown & SP will be well over £77 surely?

They do actually "let you off" small amounts.

I used to do self assessment when I worked as a freelance, and one year their calculations showed I had underpaid by something silly like £1.20. They sent out a letter stating this, with a payment slip, but a note that they would not pursue me for the amount if I chose not to pay it - so I did of course pay it

I also loved the response I got from them when they investigated me for IR35 (Officially called the intermediaries legislation), and after several months of checking came back with the response "We have decided the intermediaries legislation does not apply to you. If you wish to appeal this decision ....". I had been very careful to make sure my contracts were going to be outside IR35, HMRC confirmed that they were, then asked if I wanted to appeal the decision (unsurprisingly I didn't)

 

[PaulSB]

Put that question to HMRC and see if they let you off.

Please let me know if it works.

Also, the total tax take with your drawdown & SP will be well over £77 surely?

I will!!

Sorry, possibly I wasn't clear. When I say drawdown to the tax threshold I mean this. My current SP is £11487 so this year I will drawdown £1050 from my private pension to stay just below the tax threshold of £12570.

As I'm unlikely to need my private pension for 10-15 years, if ever, taking the odd £££ gives a little income and avoids some tax.

This year it will pay for the, not budgeted for, new cooker!

 

[SpokeyDokey]

They do actually "let you off" small amounts.

I used to do self assessment when I worked as a freelance, and one year their calculations showed I had underpaid by something silly like £1.20. They sent out a letter stating this, with a payment slip, but a note that they would not pursue me for the amount if I chose not to pay it - so I did of course pay it

I also loved the response I got from them when they investigated me for IR35 (Officially called the intermediaries legislation), and after several months of checking came back with the response "We have decided the intermediaries legislation does not apply to you. If you wish to appeal this decision ....". I had been very careful to make sure my contracts were going to be outside IR35, HMRC confirmed that they were, then asked if I wanted to appeal the decision (unsurprisingly I didn't)

Mrs SD has an (ignored) request for 63p some years back.

Just assumed it automatically rolled into next year.

 

[SpokeyDokey]

I will!!

Sorry, possibly I wasn't clear. When I say drawdown to the tax threshold I mean this. My current SP is £11487 so this year I will drawdown £1050 from my private pension to stay just below the tax threshold of £12570.

As I'm unlikely to need my private pension for 10-15 years, if ever, taking the odd £££ gives a little income and avoids some tax.

This year it will pay for the, not budgeted for, new cooker!

One of the infuriating things about the SP is the SSP/S2P additional payment calculation.

Like you I get more the the Basic SP.

They added around £4600 on and then lopped £3500 off leaving a net £1100 additional.

I had no idea what to expect tbh apart from I would get something.

Try as you might HMRC will not release the contracted in/out calculations they use to derive the aforementioned amount.

Happy new cooker when it arrives.

 

[PaulSB]

its doesn't cost HMRC at all, who ever pays you the pension collects the tax via their payroll software and your tax code and sends it HMRC and it matter not a jot whether you pay no tax, £20 tax or £20,000 tax.

I'm not sure I agree with you. DWP pay my pension, HMRC collect tax. One way or another a government/state funded body is going to administer collection of +/- £20. While the system will be fully automated it still costs money to run.

 

[simongt]

But something to check with your finance advisor.

With respect, I steer clear of financial advisors as they can only inform you of the 'likelihood of probabilities' and charge around £500+ for the privelige. It only takes a dip in the investment rates, or a stupid Govt. decision to make that advice virtually worthless. It is as stated, 'advice', albeit based on experience and knowledge of the money market.
Try the 'My Pension Expert' site and arrange a 'phone' or face-to-face interview. It offers knowledge of what's available in what can be a very confusing area, but the final decision is up to you.

 

[kingrollo]

Pensions really frustrate me - I have 2 public sections and the bloody numpties running them...

"How much is my pension going to be"

"Can't tell you that "

When I tell them is my money that I have invested for well over 40 years and I want to know how much it's worth -
"We can do you an estimate - which takes six weeks"

When it comes

"This is estimate it isn't based on your actual pensionable pay"

Feckin ridiculous!

 

[Alex321]

Pensions really frustrate me - I have 2 public sections and the bloody numpties running them...

"How much is my pension going to be"

"Can't tell you that "

When I tell them is my money that I have invested for well over 40 years and I want to know how much it's worth -
"We can do you an estimate - which takes six weeks"

When it comes

"This is estimate it isn't based on your actual pensionable pay"

Feckin ridiculous!

Those are probably mostly down to legal requirements. Unless you are in a final salary pension (very rare nowadays), they are not allowed to give more than very generic estimates.

I sort of understand why, but it makes it very difficult for planning.

 

[kingrollo]

Those are probably mostly down to legal requirements. Unless you are in a final salary pension (very rare nowadays), they are not allowed to give more than very generic estimates.

I sort of understand why, but it makes it very difficult for planning.

Any other investment - you can log on and see how much its worth.

Not allowed by who ? - is there a law saying the customer mustn't be told the value of his pension ?

 

[midlife]

NHS pensions can’t give you a definite pension until you actually retire. Wild stab in the dark is the nearest they usually give before that.

 

[Alex321]

Any other investment - you can log on and see how much its worth.

You can see how much it is currently worth.

I can see that with my pensions as well.

Not allowed by who ? - is there a law saying the customer mustn't be told the value of his pension ?

It isn't that they can't give the current value, they can.

But with any investment based on stocks & shares, they are not allowed to give anything but very generic estimates of future value, normally with three different values depending on "likely" future growth rates, but which will be the same for any generically similar products.

 

[kingrollo]

You can see how much it is currently worth.

I can see that with my pensions as well.



It isn't that they can't give the current value, they can.

But with any investment based on stocks & shares, they are not allowed to give anything but very generic estimates of future value, normally with three different values depending on "likely" future growth rates, but which will be the same for any generically similar products.

One misconception.

It's a defined benefit scheme so isn't based on stocks and shares.

 

[kingrollo]

NHS pensions can’t give you a definite pension until you actually retire. Wild stab in the dark is the nearest they usually give before that.

It's more they won't than they can't.

 

[Alex321]

One misconception.

It's a defined benefit scheme so isn't based on stocks and shares.

That is why I did say above "Unless you are in a final salary pension (very rare nowadays)".

There is absolutely no reason with those that they cannot tell you what you will be entitled to (at today's rates if they are inflation linked).