#PensionPlanning #TaxSaving #RetirementGoals
Hey everyone! 💬
I recently came into some money and I’m considering putting a big chunk of it into my workplace pension to save on taxes. But I’m wondering, how much of my salary can I actually put into my pension? 🤔
Here’s the scenario:
– Inheriting £100k
– Want to pay off mortgage
– Savings account paying 5% interest
– Concerned about moving into a higher tax band
I’m thinking of maximizing my pension contributions to save on taxes, but I’m not sure if it’s a wise move. Would love to hear your thoughts on this! 💭
Possible solution:
– Evaluate your current pension contributions
– Speak to a financial advisor about tax implications
– Consider spreading out pension contributions to maximize benefits
Let’s discuss! 🌟
See here – https://www.gov.uk/tax-on-your-private-pension/annual-allowance
Simple answer is £60k per tax year. More complicated answer – read the link
If you don’t need the money and you’ve maxed your ISA (and partners) then put enough in to bring you out of 40% tax is what I would do.
Great idea go for it
you only get tax relief up to 100% of your salary, so thats your limiting factor, as well as the 60K somebody else mentioned. [https://www.gov.uk/tax-on-your-private-pension/pension-tax-relief](https://www.gov.uk/tax-on-your-private-pension/pension-tax-relief)
Depends when you need the money.
You could take the inheritance money you have and top-up your pension with a lump sum now (up to 60k contributions per year). There are various tax breaks for doing this too.
It’s alway seems to be more cost effective to invest rather than pay off your mortgage but that’s your call.
If it was me I’d max ISA and Pension contributions for the year, and next few years, before looking at reducing my mortgage.
Not an IFA but I have one. Putting the money into your pension is a good idea, but how much to put and when depends on your salary. If you can get so you are in a lower salary band for several years it might be better than putting all the money in one go. Also remember that the money won’t be accessible at all untill you are 55 and if you do take some money at that age it will limit the contributions you can make after.
So it may be best to put some rainy day money into an ISA, and spread the pension payments.
I had a financial review with an IFA and it saved me £10k in tax last year and will do the same this year. You may want to get some professional advice.
I mean paying off your mortgage isn’t the best option financially.
Just to add to my post. I’ve already maxed out the ISA (as has my wife) and we’ve earmarked some money to do the same again next year.
And I accept that investing typically pays better than paying off the mortgage. However, paying off your mortgage provides stability.
Basically, mortgage is 200k and I inherited £250k. Plan is to reduce mortgage to £100k, £100k in my and wife’s ISA’s and not sure about the other £50k. That’s why I’m wondering about the pension.
Open a SIPP. Put in what you can afford. Invest it in a global Index fund.
Salary sacrifice cannot bring you below minimum wage so that’s a limiting factor depending how much you earn
I’m not sure what you are tryng to achieve here. How much do you earn? What are the tax savings from moving the money into pensions?
Are you happy to max pensions but not to have access to the money for 15 years?
There are two distinct calculations, an annual allowance of £60k, and up to 100% of tour pensionable earnings.
What is your likely pensionable earnings for 24/25?