Ok. Next plan then. Does your wife work? If not, (or even if she does but earns bu99er all), she can pay up to £2880 p/a into a private pension and the govt will gross it up by 25% to £3600. Since she is 60+ she can then "cash it all in" again and take the whole lot out tax free, assuming her income is less than £9900 this tax year.
You can do the same providing you are 55 or older, and you earn £9900 or less.
So that's potentially 25% 'interest' on £5760 with a cast iron Govt guarantee, and you won't get anywhere close to that anywhere else. Rinse and repeat next year and the year after and the taxpayer will have given you and the mrs £4320 "interest"
I'm now joining the few people here investing, as Sky sale has now fully completed for me.
This spiked my interest, my wife does not work I support her and our 2 children with my salary. I "pay" her a sum each month for day to day stuff she needs to buy for the family, is this classed as an income?
No. Income has a fairly narrow definition, and basically means money you receive from an employer that you pay tax and national insurance on. For instance, income from a BTL does not count, and nor does pension income. If your wife has no relevant income, then she (you) can (should IMHO) pay in £2880 per year, and the govt will top this up to £3600.
How do these private pensions work, do you just contact them directly? I would be concerned about them going bust over 50 year life time to ensure money is protected?
You pick a pension/SIPP provider - HL, III, Fidelity etc. They provide the SIPP/Pension account, often called the "wrapper" or "pot". You then pay cash into the pot, and the pension provider reclaims the tax from HMRC for you. For every £80 you pay in they reclaim £20 from HMRC. So you end up with £100 cash in you're pot. You then choose what shares/funds/bonds you want to buy with that £100. If you want advice on what shares/bonds/funds to buy, then you either read up yourself, or pay someone (an
Independent Financial Adviser
IFA) to manage the account for you.
Once you've paid the money in, there is NO LEGAL WAY to withdraw it until you reach minimum retirement age - currently 55 but may rise to 57/58 in the near future. So don;'t put any money in that you may need before then. The money in the pension cannot be used as security for a loan, or a house deposit, or anything till you're 55.
If your pension/SIPP provider goes bust, then you still own the funds/shares/bonds that are in the 'wrapper'. It'll be a mess for a while whilst it's all sorted out, but your investments will be safe. They are held in trust for you - they aren't part of the assets of the pension/SIPP provider.
However, if you buy some shares in a dodgy company (Poly Peck, Carrillion, Northern Rock, Sky
) and that company goes bust, then you will loose your money. That's why it's important to invest across a wide range of companies in a wide range of industries around the world.
Mate of mine lives up Norf near Darlington, I could easily get a buy-to-let out there, that would give a much better return.
Unlikely.