Busting open your pension fund.....
Discussion
I have been approached by a firm that say they can do this - but i don't really have a big enough fund in order to do it - needs to be over £150k - essentially what they are saying that by clever use of trust law and setting up a trust you can have your pension pot in cash with no tax liability so you can spend it all, spend some and reinvest some, use the cash to put in to a business, buy a car, anything really. Just wondered if anyone else had done this or hear about it. I would imagine its very attractive for people who may be pension fund rich but cash poor. Apparantly it does not matter if you have taken your tax free cash and/or your benefits either. It takes around 3 months to complete and the 'cost' to you is around 15% of the fund. All sounds too good to be true to me!!
F458 said:
I have been approached by a firm that say they can do this - but i don't really have a big enough fund in order to do it - needs to be over £150k - essentially what they are saying that by clever use of trust law and setting up a trust you can have your pension pot in cash with no tax liability so you can spend it all, spend some and reinvest some, use the cash to put in to a business, buy a car, anything really. Just wondered if anyone else had done this or hear about it. I would imagine its very attractive for people who may be pension fund rich but cash poor. Apparantly it does not matter if you have taken your tax free cash and/or your benefits either. It takes around 3 months to complete and the 'cost' to you is around 15% of the fund. All sounds too good to be true to me!!
Sounds very dodgy to me... All it costs is 15% of your pot? So your 150k becomes less than 130k, doesn't sound like a brilliant deal to me.I have arranged a meeting to find out more as the same setup can reduce income and corporation tax to minimal amounts if you earnover £150k a year and are self employed - retired - share or property speculator etc etc. Sounds very interesting to be honest - has been in operation for 14 years and never successfully been tested by HMRC!!! I know you lose 15% of your pension pot but at least you can get your hands on the money if you have better use for it or desperatley need it. The income tax interests me more tbh as from what i understand you end up paying 15% tax in the 1st year and 10% in year 2 onwards instead of 40/50%!!!!
There's been many firms selling "pension busting" deals over the 40 or so years I've been in the pensions business. A few were OK but many were fraudulent and so the perps ended up where they deserved, with the investors weeping, unfortunately.
This deal may be legit. However, I'd want to check ALL the downsides before I became attracted to the apparent upsides such as indicated tax breaks etc. Also, ask: what's in it for them, and what do I get?
You could ask the FSA and the FoS whether they are investigating any issues relating specifically to the firm involved.
The bottom line is: can you afford to lose the amount you plan to invest? Yes? Go ahead. No? be very careful out there.
And, has anyone else heard of this seemingly good looking deal? Has it been in the financial press? No? Why is that?
R.
This deal may be legit. However, I'd want to check ALL the downsides before I became attracted to the apparent upsides such as indicated tax breaks etc. Also, ask: what's in it for them, and what do I get?
You could ask the FSA and the FoS whether they are investigating any issues relating specifically to the firm involved.
The bottom line is: can you afford to lose the amount you plan to invest? Yes? Go ahead. No? be very careful out there.
And, has anyone else heard of this seemingly good looking deal? Has it been in the financial press? No? Why is that?
R.
I had a quick look on a website regarding this...
It made the comment that "This is a very delicate subject and many IFAs are concerned about giving advice which may contravene the rules. We have expert knowledge of this field and feel confident that we will give you valid and useful advice."
Run like the wind.
It made the comment that "This is a very delicate subject and many IFAs are concerned about giving advice which may contravene the rules. We have expert knowledge of this field and feel confident that we will give you valid and useful advice."
Run like the wind.
Heard about this or a similar scheme a few weeks back.
The part that i didnt like was that you had to move your whole pension pot to the new company, you had to let them invest the balance of what you dont take into their pension scheme.
Wasn't that happy with that part of it, other than that i think it sounded pretty good as you could access money now tax free etc
Let us know how your meeting goes.
The part that i didnt like was that you had to move your whole pension pot to the new company, you had to let them invest the balance of what you dont take into their pension scheme.
Wasn't that happy with that part of it, other than that i think it sounded pretty good as you could access money now tax free etc
Let us know how your meeting goes.
F458 said:
I have been approached by a firm that say they can do this - but i don't really have a big enough fund in order to do it - needs to be over £150k - essentially what they are saying that by clever use of trust law and setting up a trust you can have your pension pot in cash with no tax liability so you can spend it all, spend some and reinvest some, use the cash to put in to a business, buy a car, anything really. Just wondered if anyone else had done this or hear about it. I would imagine its very attractive for people who may be pension fund rich but cash poor. Apparantly it does not matter if you have taken your tax free cash and/or your benefits either. It takes around 3 months to complete and the 'cost' to you is around 15% of the fund. All sounds too good to be true to me!!
The manner in which they approached you will tell you if it is a scam.Where they are based will tell you if it is a scam.
Who they are regulated under will tell you if it is a scam.
The fact that they are promoting such a model at this time indicates that it is a scam.
I would still be very wary if everyone/every firm was regulated by the FSA or whoever it is - as I have seen plenty of 'regulated' people/firms that should never have been regulated in the 1st place!!!! I actually think it is very complex trust law and not necessarily tax avoidence as far as the HMRC are concerned. Its a slightly different take on Renumeration Trusts I think. I think the biggest thing for me will be whether the HMRC can change the rules and apply it retropectively, if thats the case then I don't want a tax bill I can't pay in 5-10 years time!!! If its a case of it working for a few/10/20 years and then the rules being changed so that you are only liable for tax in that particular year they change it then I may be tempted. But then I guess you will be under close scrunity by the HMRC for years to come!!! I will report back when I have more info. In the mean time if anyone has any experience of/in Renumeration Trusts then it would be good to hear from you....
I don't think you would have to worry about HMRC changing any rules on this.
They are all ready in place and, frankly, these scams will leave you in hock to HMRC in the future. It is simply a matter of time until they are caught out.
I deal with offshore pension transfers daily and have watched in awe as people continually fall for the pension busting stories that abound. (waits to see if the IoM scheme promising 70% lump sums remains open for long)
Has the scheme been running 14 years, or has the company and has just seen this opportunity?
I can only comment on QROPS/QNUPS directly, which has seen a huge amount of opportunists come to the party resulting in whole jurisdictions being black listed and scheme members receiving notices of incorrect pension transfers from HMRC with the resulting pain that follows.
Bear in mind that yes you may 'break open' your pension but ultimately it will be you and your pension that pays for doing this and it will cost a lot more than 15%.
If you do it and the scheme does not get caught up with by HMRC all well and good. I doubt this will happen.
They are all ready in place and, frankly, these scams will leave you in hock to HMRC in the future. It is simply a matter of time until they are caught out.
I deal with offshore pension transfers daily and have watched in awe as people continually fall for the pension busting stories that abound. (waits to see if the IoM scheme promising 70% lump sums remains open for long)
Has the scheme been running 14 years, or has the company and has just seen this opportunity?
I can only comment on QROPS/QNUPS directly, which has seen a huge amount of opportunists come to the party resulting in whole jurisdictions being black listed and scheme members receiving notices of incorrect pension transfers from HMRC with the resulting pain that follows.
Bear in mind that yes you may 'break open' your pension but ultimately it will be you and your pension that pays for doing this and it will cost a lot more than 15%.
If you do it and the scheme does not get caught up with by HMRC all well and good. I doubt this will happen.
You can't borrow 100% of the money in a pension fund to do what you please with!!!!
Yes I had the meeting, and yes I am going ahead with this kind of Renumeration Trust setup, I have done my due dilligence and am happy with the setup. I am not going to say anymore about it on here and I obviously can't mention the name of the company I am dealing with. However if you are self employed and earn over £150k a year and or have a pension fund worth over £150k that you want to get your hands on, and/or are a property developer and have GCT issues and/or you have share/bond investments that you are taking an income from and want protecting from tax then I suggest that you look very closely at this type of Tax Planning. The biggest thing about this particular tax planning is that it cannot be enforced retrospectively as in effect you are fully disclosing what you are doing to the revenue every year and you are not hiding anything. If the revenue change the rules so that they will not allow this type of tax planning then you will just be liable for the tax in that particular year and the revenue cannot go back and say that you owe for the previous years. I have set the wheels in motion however it takes a while to set up the structure, I would encourage anyone who is faced with one of the above problems to throughly investigate Renumeration Trusts.
Yes I had the meeting, and yes I am going ahead with this kind of Renumeration Trust setup, I have done my due dilligence and am happy with the setup. I am not going to say anymore about it on here and I obviously can't mention the name of the company I am dealing with. However if you are self employed and earn over £150k a year and or have a pension fund worth over £150k that you want to get your hands on, and/or are a property developer and have GCT issues and/or you have share/bond investments that you are taking an income from and want protecting from tax then I suggest that you look very closely at this type of Tax Planning. The biggest thing about this particular tax planning is that it cannot be enforced retrospectively as in effect you are fully disclosing what you are doing to the revenue every year and you are not hiding anything. If the revenue change the rules so that they will not allow this type of tax planning then you will just be liable for the tax in that particular year and the revenue cannot go back and say that you owe for the previous years. I have set the wheels in motion however it takes a while to set up the structure, I would encourage anyone who is faced with one of the above problems to throughly investigate Renumeration Trusts.
Confused....
If somebody earns 150k and has a pension pot of only 150K
then how can they be cash poor and pension fund rich.
150k in a pension fund is not a lot. Assuming you are to continue in a similar lifestyle after retirement.
Do the maths, 150k in an annuity or a 4% draw down.
Anyway I wish you luck, just buy the right car
(and consider refunding you pension)
If somebody earns 150k and has a pension pot of only 150K
then how can they be cash poor and pension fund rich.
150k in a pension fund is not a lot. Assuming you are to continue in a similar lifestyle after retirement.
Do the maths, 150k in an annuity or a 4% draw down.
Anyway I wish you luck, just buy the right car
(and consider refunding you pension)
they are just the minimum figures you need to have before you can set up this tax planning strategy. Reducing income tax is my priority from 40 and 50% to 10% a year!!! (15% in the 1st year though) Don't have much of a pension personally, was just mentioning that if other people had a load in their pension and was cash poor as it can be applied to them.
F458 said:
they are just the minimum figures you need to have before you can set up this tax planning strategy. Reducing income tax is my priority from 40 and 50% to 10% a year!!! (15% in the 1st year though) Don't have much of a pension personally, was just mentioning that if other people had a load in their pension and was cash poor as it can be applied to them.
Have fun, but I wouldn't spend any of that money and I'd keep extra on top to meet the charges.F458 said:
i hear what you say, the approach I am taking has already been tested at the high court twice and each attempt took 6 years to get it there. I have trawled through many tax schemes over the years and this is the 1st one I am actively partaking in.
The issue is that these schemes operate on the basis of paying your income (up to the max 200 odd k per annum for tax relief) into a pension and then taking it back out via the back door, so you claim relief on the payment and in essence evade income tax. the key here is that you are evading, rather than avoiding income tax.The other key thing to note is that often these schemes are replicated by numerous specialist firms which are rarely regulated and never have ultimate ownership onshore. It is often in the act of replication that the error occurs. It is important to get confirmation that these two court cases relate specifically to their structure and not, say, the original structure which they have tried to copy.
The very nature of these schemes is that they are full of charletans and copycats who don't set them up correctly, as many people using the classic IoM scheme have been learning the hard way for the last few years.
As for not being retrospective, you want that in writing and backed by the deeds to their wholly owned property in the UK
.Let's put it this way, if the scemes were genuinely good then no one would be paying higher rate tax in the UK.
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