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Listener Questions, Episode 21

Listener Questions, Episode 21

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 This week, we’re covering redundancy sacrifice into a pension, cash ISA allowance reductions, evening up finances between spouses and much more - it’s another MM Q&A! Shownotes: https://meaningfulmoney.tv/QA21 00:55 Question 1 Dear Pete & Roger, My question regards Redundancy Sacrifice into a personal pension (SIPP). In tax year 2024/25, I had "relevant UK earnings" of £44,000. I contributed the full amount (inclusive of tax relief) to my SIPP; as a Personal Contribution this used up 100% of my Annual Allowance. In addition, I received a £20,000 tax-free lump sum Redundancy Payment. Because it was below £30,000, it did not constitute "relevant UK earnings", as such, I requested it be paid directly into my SIPP via "Redundancy Sacrifice". (My understanding is that it would be treated as an Employer Contribution, not benefit from tax relief and, therefore, not limited by my Annual Allowance - please correct me if wrong). However, due to an administrative error, it was paid to me. Subsequently, I transferred it to my pension provider, together with the necessary paperwork (completed Employer Contribution form and Settlement Agreement detailing the source of funds). My pension provider has rejected the transfer designating it as a Personal Contribution because it was made from my personal bank account. Q. Does HMRC require Redundancy Payments be paid from business bank accounts? My understanding is that the rules are different from normal Salary / Bonus Sacrifice. (Disclaimer: I understand that in answering my question you are not providing financial advice). Kind regards, Ross 07:00 Question 2 Hi, There’s increasing headlines that Rachel Reeves might be planning reforms to reduce cash ISA allowances from 20k to 4k. My understanding is that this will only affect new ISA’s so for me and my wife we can continue to invest 20k per year maximum. Is this assumption correct? My main question though is planning for my kids. If they don’t yet have any ISA open - what is the best way to start them off to hold onto the 20k annual allowance for potentially accessing cash <5 yrs away i.e. for a car etc (so not S&S ISA)? They both have money put away for when they’re 18 but our plan was to encourage them use some of this for a LISA then put some away in the best cash ISA available for short term requirements. Eldest son will be 18 in 1year whilst youngest is 18 in just over 3yrs. Thanks for considering my question. Stuart 11:43 Question 3 Hi Pete, I found you from the podcast you did with Damien on Making Money. I really enjoyed listing to your view on money. My question is: I’m a stay at home Mum (age 42) to my children (12 & 14). I have 20 years NI contributions but have no plans to restart work. I aim to pay volunteer contributions to help build up to a full state pension. I do not have any pension myself. My husband is a 40% tax payer and has been paying into his pension for the past 20 years. We want to start saving extra to either have my own pension pot (perhaps save in a S&S isa for the next 20-25yrs) or would we be better off putting more money into my husbands pension? We’re happy to share the pot as it were. Or is there another option I haven’t thought about? Many thanks, Louise 15:13 Question 4 Hi both, Loving the podcast, only recently came across it but have been an avid watcher of Pete’s YouTube videos for years now. I am 33 and a higher rate tax payer. I have spent the last 3 years getting my house in order with my finances and wanted to get your thoughts on what else you think I could be doing to maximise my tax efficient savings. I contribute £1600 to my stocks and shares ISA each month, which I have fortunately been able to max out for the past two years (currently valued at £47k). I have £40k tied up in premium bonds, this is mainly to avoid going over my PSA allowance and also where I am keeping money for a house deposit that I am planning to use in the next 2/3 years. I have combined my workplace pensions and contribute 5% through salary sacrifice, with my employer paying in 7%. The pot currently sits at £31k (roughly adding £750 per month), but I feel I could be adding to this more aggressively whilst I don’t have commitments of a mortgage or children. Also if I wanted to consider retiring at 55, realistically how much more do you think I will have to contribute to my pension each month? Cheers Ryan 19:10 Question 5 Hi Pete & Roger, Firstly, thank you for all of your fantastic work over the years. It has completely transformed my financial life. I’ve been investigating trusts and have discovered what a wonderful mind-boggling world they are. I have a number of questions in relation to discretionary trusts and hope that this doesn’t cause other listeners to glaze over. Question 1: let’s assume you make an initial transfer into a trust, for say £325k. If you then survive 7 years, is the full nil-rate band available to your beneficiaries ...
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