Thanks a TON, jg12345, TedSwippet, and Valuethinker (for the PM) for the excellent analysis and responses. Thanks for spending your valuable time helping me out.
So, in short, its difficult to model future projections I guess. Anyway, let me find a job first. No guarantees I will land anything. But if do, highly unlikely salary will exceed 80K and most likely I will not get employER NI. So, at the [50-80k] bracket, further pension contributions don't look ideal. But then paying 40% tax doesn't feel great either.
Maybe do contracting and pay into limited company. Sorry I am now getting into professional tax territory, beyond the scope of this thread.
regarding point 1 (estate tax) and 2 (recycling) : I will seek professional advice.
And on a different note (on whether to take out the lumpsum or not) :
So, damned if you do, damned if you dont.
maybe take the 250K lumpsum out and use it as downpayment on a good semi detached. That would be my first property in UK. Just cant go wrong with a place like Ascot. Even if I am not in UK there are estate agents to let it out. Everyone I know is doing this in Berkshire and making out like bandits. Again beyond the scope of this thread.
Thanks for engaging with me on this thread. Best regards.
So, in short, its difficult to model future projections I guess. Anyway, let me find a job first. No guarantees I will land anything. But if do, highly unlikely salary will exceed 80K and most likely I will not get employER NI. So, at the [50-80k] bracket, further pension contributions don't look ideal. But then paying 40% tax doesn't feel great either.
Maybe do contracting and pay into limited company. Sorry I am now getting into professional tax territory, beyond the scope of this thread.
regarding point 1 (estate tax) and 2 (recycling) : I will seek professional advice.
And on a different note (on whether to take out the lumpsum or not) :
Provided I am a basic rate tax payer. If I find a job that puts me into 40% tax bracket, then taking out the 250K and placing it in taxable will attract 33% dividend tax and not 8%. So, better to take it out when I truly retire or relocate. But then if I leave it to grow inside the pension pot, it will keep growing and that also makes it more challenging in future to keep withdrawals below 40% rate as TedSwippet eloquently articulated above.And income tax rates are higher than both dividend tax rates and capital gains tax rates, so that in practice, once you hit this £268,275 you are currently motivated(*)(**) to take this as PCLS, and simply reinvest it outside the pension but in the exact same stuff.
So, damned if you do, damned if you dont.
maybe take the 250K lumpsum out and use it as downpayment on a good semi detached. That would be my first property in UK. Just cant go wrong with a place like Ascot. Even if I am not in UK there are estate agents to let it out. Everyone I know is doing this in Berkshire and making out like bandits. Again beyond the scope of this thread.
Thanks for engaging with me on this thread. Best regards.
Statistics: Posted by bluejeansman — Thu Jul 25, 2024 1:37 pm — Replies 28 — Views 4469