Tax-deferral vehicles other than ISA's

[Nowler]

Hey folks!

I'm looking for another type of tax-deferral vehicle, other than the ISA I currently have.
My work is running a share purchase scheme that I am considering, but I obviously don't want to pay any tax that I dont have to ( can I get an amen?).

Anyone got any suggestions on the most tax efficient way I can do this?
Can I put these into my ISA?

Thanks in advance.

 

[malaguti]

You should be able to have them transferred to your ISA, depending on your limit for the year of course (20k this year)
most brokers will have a transfer mechanism
alternatively, you could look at a SIPP (Self Invested Pension Plan). These are much longer term, as in you cant withdraw prior to your retirement without penalty

they are the two main tax efficient ways of holding shares...that i'm aware of. unless you had children in which case they also have their own allowance,
and of course bearing in mind you have an annual allowance which is also tax free (i think 12k this year)

 

[Nowler]

You should be able to have them transferred to your ISA, depending on your limit for the year of course (20k this year)
most brokers will have a transfer mechanism
alternatively, you could look at a SIPP (Self Invested Pension Plan). These are much longer term, as in you cant withdraw prior to your retirement without penalty

they are the two main tax efficient ways of holding shares...that i'm aware of. unless you had children in which case they also have their own allowance,
and of course bearing in mind you have an annual allowance which is also tax free (i think 12k this year)

Wow...
How didn't I think of that?
I recently started processing SIPP's in work too, lol
I hadn't realized yet that SIPP's were not tied to a persons workplace... I guess I thought they were a type of workplace pension, but you just had more options on how it's invested...

I'll have to sit down and think more about this.
I currently have my workplace pension and my ISA, both of which are tax-free until I take it out (though the money that I put into my ISA would have been taxed from my pay packet before I deposited it).

Ideally I could transfer my shares into my Stocks & Shares ISA (or a trading account should I ever get back into the black so I can start depositing).
At least with that, I have access to it whenever I like.
I'll inquire about it.

Thanks for the input

 

[malaguti]

Wow...
How didn't I think of that?
I recently started processing SIPP's in work too, lol
I hadn't realized yet that SIPP's were not tied to a persons workplace... I guess I thought they were a type of workplace pension, but you just had more options on how it's invested...

I'll have to sit down and think more about this.
I currently have my workplace pension and my ISA, both of which are tax-free until I take it out (though the money that I put into my ISA would have been taxed from my pay packet before I deposited it).

Ideally I could transfer my shares into my Stocks & Shares ISA (or a trading account should I ever get back into the black so I can start depositing).
At least with that, I have access to it whenever I like.
I'll inquire about it.

Thanks for the input

Another thing with the SIPP, is that you also get tax relief on your pension contributions AND the government contributes also. worth thinking about.
A pension provided by an employer is great, but what happens when you leave? the pension doesn't remain is often liquidated and any cash given back to you. it becomes a pointless "benefit" that's never realised
anyway, give it a thought, despite its longevity. perhaps a bit into both for a young man such as yourself Nowler

 

[Nowler]

Another thing with the SIPP, is that you also get tax relief on your pension contributions AND the government contributes also. worth thinking about.
A pension provided by an employer is great, but what happens when you leave? the pension doesn't remain is often liquidated and any cash given back to you. it becomes a pointless "benefit" that's never realised
anyway, give it a thought, despite its longevity. perhaps a bit into both for a young man such as yourself Nowler

What!?!
That almost makes up for not being able to withdraw until 55.
When does the government contribute? Each year or when I crystalise my SIPP? I just had a quick look, but couldn't find the answer.

If I leave work, I just transfer the funds in that pension to that of my new employer (I have 2 currently being transferred in). Though there is a fee from the fund im transferring from... not sure how much, but I am looking forward to finding out.

I really didnt know the taxman throws in a contribution to the SIPP! 20% from what I can see.
My employer only puts in 10% into my workplace pension. I have a decent amount of control over where the work pension is invested too , which is nice.

If money wasnt an object, I'd have some going into my work pension, my ISA, a SIPP and my trading account. But unfortunately, it is an object at the moment. So I'm going to have to choose.

Obviously the work pension and SIPP bring free money in the form of employer/government contributions, but they are inaccessible until I'm 55. My ISA and trading account are accessible instantly, with the ISA being a tax deferral vehicle.

So can I enjoy the benefit of the SIPP contribution AND the deposits into my work pension being pre-tax?

I'd be lying if I said I wasnt excited thinking about this 🙂 I need to get laid...

 

[Nowler]

I made an error of understanding by assuming that the 20% for a SIPP was an actual payment into a SIPP by the government.
From my understanding now, it's simply just the same 20% tax relief that I get on my current employers pensions (GPP).

So as far as I see, there is no benefit to having a SIPP than having the current GPP.
The naive me thought for a while that I could get the 10% bonus from my employer, and another 20% from the government.
I was a bit foolish 🙂

The 20% for the SIPPs is just a way of balancing the playing field of pensions

 

[malaguti]

I made an error of understanding by assuming that the 20% for a SIPP was an actual payment into a SIPP by the government.
From my understanding now, it's simply just the same 20% tax relief that I get on my current employers pensions (GPP).

So as far as I see, there is no benefit to having a SIPP than having the current GPP.
The naive me thought for a while that I could get the 10% bonus from my employer, and another 20% from the government.
I was a bit foolish 🙂

The 20% for the SIPPs is just a way of balancing the playing field of pensions

That was probably my poor communication, apologies Nowler
However, if you don't see a benefit than having a GPP, I'm rather shocked.
you can't put investment in property into a workplace pension.
You have no control whatsoever over a workplace pension...as in what funds it looks to invest in
You can add individual shares or ETFs
you can't use a workplace pension as collateral over a mortgage say, whereas a SIPP can

in effect, why would you trust your pension in the meagre hands of the government for a return of next to nothing?
you are on this site for a reason, its to make money from your investments
now tell me you see the benefit of a SIPP?

 

[Nowler]

Sorry, there was miscommunication on my end too.
I should have said there was no massive difference between my current one, and a SIPP.

With my current one, I have the option to take more control over where my money is invested. I have not looked in depth to each, but I do see property in there.

Does a SIPP offer much more than this?

 

[malaguti]

where is your "pension" currently maintained as its clearly not a general workplace pension?
who is the provider

 

[Nowler]

Its held with Aviva.
It's a Group Personal Pension apparently.
Though I was quite surprised at my options.

How does that stack up to a SIPP, in your opinion?

 

[malaguti]

Its held with Aviva.
It's a Group Personal Pension apparently.
Though I was quite surprised at my options.

How does that stack up to a SIPP, in your opinion?

firstly, let me just start by saying the purpose of my posts were not to disparage your current pension arrangements
it was just to highlight "alternatives" as a means of tax avoidance
however that you ask about aviva..and how that stacks up against a SIPP

the aviva pension seems to have a list of "funds". you can mix and match these funds, however it doesn't look as though you can mix and match your own shares. even the self select, is a self select of available funds
I also don't see a way of putting property in this pension. if you are referring to a property fund, this again is not your own property
I don't see how this stacks up against a SIPP at all.
now, having a pension is a great idea, and you have one, so thats important. but go back again to the premise of why you are here. once you get round to having a robust strategy, adequately backtested and ready to let loose on the markets.
where are you going to put your money as a means of tax avoidance?
you can transfer the value of your aviva pension into a SIPP...thats what i'd be looking to do.

 

[Nowler]

firstly, let me just start by saying the purpose of my posts were not to disparage your current pension arrangements
it was just to highlight "alternatives" as a means of tax avoidance
however that you ask about aviva..and how that stacks up against a SIPP

the aviva pension seems to have a list of "funds". you can mix and match these funds, however it doesn't look as though you can mix and match your own shares. even the self select, is a self select of available funds
I also don't see a way of putting property in this pension. if you are referring to a property fund, this again is not your own property
I don't see how this stacks up against a SIPP at all.
now, having a pension is a great idea, and you have one, so thats important. but go back again to the premise of why you are here. once you get round to having a robust strategy, adequately backtested and ready to let loose on the markets.
where are you going to put your money as a means of tax avoidance?
you can transfer the value of your aviva pension into a SIPP...thats what i'd be looking to do.

I understand your intentions, don't worry.
Your input has been very helpful!

For now, my current pension is adequate. But when my circumstances change, I now have an idea of what my next step might be.