Guide to using pension contributions to mitigate LC19

[Loan Ranger]

Say someone had a loan value of £600K over 6 years, had a private pension for that period set up and hadn't contributed for say 4 of those years, what would the scenario be for that situation in terms of LC19 regards pension contribution offset?

It also depends how much else they earn this year.

If they earn nothing else this year, and there is just the £600k loan charge, the tax would be £255,600.

If they contributed the maximum £130k to the pension, the tax would be £197,100. A saving of £58,500.

The person would have to be able to come up with the following sum of money to do this.

Net pension contribution: £104,000 +
Self-assessment: £223,100
TOTAL: £327,100

[Loan Ranger]

If you've got really big loans + earnings this year (2018/19) which exceed £300k, the most you can contribute to a pension is £130k ie. 3 * £40k carry forward + £10k (full taper).

The most you can save in tax in this case is £58,500. (45% tax rate * £130k)

[CanPayButWouldRatherNot]

If you've got really big loans + earnings this year (2018/19) which exceed £300k, the most you can contribute to a pension is £130k ie. 3 * £40k carry forward + £10k (full taper).

The most you can save in tax in this case is £58,500. (45% tax rate * £130k)

guess then you could look at EIS schemes on top .. if you were still brave ?

[Runster]

guess then you could look at EIS schemes on top .. if you were still brave ?

What are EIS schemes?

[CanPayButWouldRatherNot]

What are EIS schemes?

https://www.gov.uk/guidance/venture-...estment-scheme

[Runster]

It also depends how much else they earn this year.

If they earn nothing else this year, and there is just the £600k loan charge, the tax would be £255,600.

If they contributed the maximum £130k to the pension, the tax would be £197,100. A saving of £58,500.

The person would have to be able to come up with the following sum of money to do this.

Net pension contribution: £104,000 +
Self-assessment: £223,100
TOTAL: £327,100

Ruinous.

[Runster]

Is anyone here still in a loan scheme. Presumably its time to get out. My agent (SP management) has asked me to sign an agreement to do business electronically. I'm worried about signing it as I don't know what implications it will have for disclosure to HMRC, but they are telling me they can't pay me until I do. Anyone else had this?

[webberg]

Is anyone here still in a loan scheme. Presumably its time to get out. My agent (SP management) has asked me to sign an agreement to do business electronically. I'm worried about signing it as I don't know what implications it will have for disclosure to HMRC, but they are telling me they can't pay me until I do. Anyone else had this?

The firm you mention is in the UK or the IOM?

There are firms of that name registered in both jurisdictions.

The UK outfit I've never come across before.

The IOM firm shares an address with the Knox Group which in turn is (or was) connected with AML and SmartPay. So perhaps the SP is Smart pay?

Unless you have signed a loan agreement, having a loan is unlikely.

[Runster]

The firm you mention is in the UK or the IOM?

There are firms of that name registered in both jurisdictions.

The UK outfit I've never come across before.

The IOM firm shares an address with the Knox Group which in turn is (or was) connected with AML and SmartPay. So perhaps the SP is Smart pay?

Unless you have signed a loan agreement, having a loan is unlikely.

I worked through Principal Contractors (Iom) first, and they then moved me to SP Management (I think IoM also) and SPM are saying I am not caught by the legislation while I've been with them (from Septish 2016. No doubt I will be at some point if there is any truth in this.

[OzBased]

Non Residents

Ruinous.

Does anyone know if non residents in excess of 5 years can still access the 130k pension as a possible means to mitigate the 2019 loan charge?