Random musing from a brown envelope

So, as I am sitting here with a nice glass (maybe a bottle over the course of the afternoon?!) of wine, enjoying a break from the rain, I am able to take stock of life in general. Needless to say this is another random post of inane gibberish!

Right now I have a lot going through my mind as I look towards my target retirement date – in particular as I look at it I still do not think it is possible. I’ve been playing around with Networthify to see how things look. I really can’t see how it will happen, however if you had asked me 5 years ago if I would be getting the income I am now from my investments I would have laughed, so who knows!

For anyone thinking of FIRE – the biggest and most important thing you can do, is start.

As it stands, according to my average expenses and savings into ISAs, it is telling me that I have probably 16 or 17 years still to go. Well, I won’t as I will be able to get at my pension savings before then which will (pretty much… nothing is certain!) guarantee my retirement. Not early, certainly not as young as RIT or some of the others out there, but still before the state pension age.

Granted we could sell up our London pad and move out to the country to free up some cash to build up some income before then. If we did this I am fairly certain we could retire by 2025 if not sooner, but the question is do we want to? That’s a chat for another day 🙂

Today’s randomness comes thanks to the wonderful people at HMRC. Whilst I accept that my tax affairs are not the most straight forward, they really aren’t that complex. Last year I received I think it was 6 different tax codes over the course of the year. We really do need to find a more efficient tax approach, but I will save that for another post as well!

I thought this year that things would settle down with HMRC. I pad my tax bill back at the beginning of the year and then threw my bonus into my pension. I got my new tax code. Seriously? I completed my tax return in June, and received my refund from my pensions contributions. All seemed straight forward, I knew what my new monthly income was and I could start hammering the savings.

Yesterday I had another letter from them. My heart always drops when I see the brown envelope with HMRC on the back, so with some trepidation I opened it. Low and behold, I have been given yet another tax code. I am certainly not going to complain at this one as it increases my tax free allowance (most likely from putting my bonus into my pension). Surely when I submitted my tax return and they sent me my refund that should have balanced things out?

I have to admit I am perplexed. If I add up the bonus, the tax refund and the tax bonus when the money went into the pension I thought I should have had a bigger refund than I did, but I have long since ceased to try and calculate the exact amount, it seemed close enough with NI contributions.

I won’t know what difference this new tax code will make on my monthly take home, although I did use a salary calculator to try and work out the difference. I should get more cash at the end of each month that’s for certain. Needless to say, I will see what the difference is in my August pay cheque, and from September the extra cash will go into my other half’s ISA.

The result? I have absolutely no idea! All I do know is that it means that the combined ISA savings will be growing faster than I had planned, and so maybe that will knock a few months off the savings journey.

Whilst I try and play around with calculations, I know in effect it is all pretty meaningless and what will be will be. That doesn’t stop me wondering – over the last couple of years the savings have gone up faster than I thought.

Will I be able to stop work in 2025? Will I need to work beyond then, I have no idea. For now, I will continue to chuck as much as I can into tax efficient vehicles as I can, and rely on the savings to get me there….


Author: fireinlondon

Fighting the high cost of living in London

4 thoughts on “Random musing from a brown envelope”

  1. Tax efficiency is one of my obsessions, last year at the end of the year I sold at a loss a bunch of investments to compensate capital gain taxes on others (I did find out later that my calculations were wrong, but….). In the end I had to hire an accountant to sort out the mess and a bit like you, I am not going to break my head too much on things like these, especially if there are little differences between my calculations and the ones of the accountants. Taxes affect us a lot and I feel that I make many investing decisions based on those. You guys in the UK are lucky because you’ve got ISAs, we don’t get anything like that unfortunately.
    ciao ciao


    1. Ciao Stal,

      Absolutely – tax efficiency is really important, it can make a huge difference!
      Yes, the ISAs are absolutely brilliant giving us a tax free area, I am not sure how long they will last (although I suspect they will replace the pension schemes here). Whilst it is available, make the most of them, and take the tax breaks you can!


  2. Sounds like you had a good time musing over your retirement plans, although let’s hope HMRC haven’t made a mess of things for you!

    I find myself musing more and more often about what I’ll do when I stop working, but have to stop myself before my thoughts turn from happy and relaxed to stress over whether I’ll have enough in the pot or not!

    It’s all very well playing around with spreadsheets and seeing what can happen in theory and although I know I could keep a lid on basic living expenses, it’s all the stuff in between which will eat into the pot, when I’m too busy enjoying my free time (this is when I will wish I too had a Go T’Pub ISA!). I also haven’t figured out how to make the most of the pots tax-wise yet but that’s another spreadsheet for another day! In fact, I think one of my ‘hobbies’ when I retire will be tinkering about seeing how and where I’ll be moving funds from and what to sell etc!

    Networthify tells me that I can retire in just under 11 years but like you, I think I’d like to be ready by 2025. I think it’s still too soon to tell if I’m really on track yet though and of course, anything can happen market-wise between now and then!

    Liked by 1 person

    1. Hi Weenie,

      I have to be honest, they are going round in my mind a huge amount as its a lot going on – to be honest HMRC always make a mess of things!

      For me I want to wait until my income overtakes my expenses then I can worry about what to do (although I have a bunch of posts about what to do in retirement still!)

      I am with you – you can play around with spreadsheets for hours (believe me I do!), but it takes a shift to find out how it will work and take your time to get to know that!

      I think networthify is good to give an idea but I think you are like me and are conservative (the right thing IMO!) so hopefully we will be able to enjoy a FIRE drink by 2025 🙂 Thats one thing to do with the time (although it comes with a cost!)


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