Is The P M About To Betray The Nation?
News0 min ago
Can I add 20k to an isa every year and the interest be tax free? Therefore if I maxed out my annual allowance for 10years, I could earn interest on 200k tax free?
I've no pension at 45, thinking of other options instead
No best answer has yet been selected by Mike25. Once a best answer has been selected, it will be shown here.
For more on marking an answer as the "Best Answer", please visit our FAQ.True, if you'd be happy to draw down and live off maybe £20000pa (less tax) until state pension age (likely to be nearer age 70 by then) and then take an even lower income ( state pension) from state pension age.
Is contributing to a pension definitely not an option so you can benefit from tax relief?
"The limit is most unlikely to stay at 20k throughout the next 10 years."
Probably not. It hasn't changed since 2017. If it's going to change it will probably be reduced under the current government.
"As long as it's the only ISA you pay into."
You can open any number of ISAs now, nma (so long as you do no exceed your annual allowance of £20k).
If youre the sort of person that can save £20000pa you may well be a higher rate taxpayer so would get 40% relief on your contributions. For a £20000 annual contribution you would only have to pay in £12000 from your net salary; the other £8000 would be paid in by HMRC. And if youremployers contributes something too, maybe even matches it, you'd be even better off.
I suggest doing both tbh.
You gain on the tax back with a pension and invested wisely it with grow well over 10 to 15 years. Plus if you are employed your employer has to contribute too. I wonder if future governments will change the age at which you can access it? It was 50, it's now 55 with talk of it being changed to 57. Could be 60 by the time you retire and state pension at 70.
An ISA has the tax free interest but rates go up and down. However it has the advantage of being accessible should you need it or some of it before your pension. But I recommend using a financial adviser who can help you to invest it in stocks and shares as it will grow better there than in cash.
I retired 4 years ago, I don't get my state pension for another few years yet but I'm drawing down on my personal pension which remains invested. Last year it grew more than the total amount I withdrew to live off for the year!
I haven't touched the ISA but I'm pleased I have it as no government policy can stop me accessing it whenever I wish.