A wider (and quicker) look back on the 2017/2018 Tax Year

So you may have read my post on last tax years performance, this post is more about reflecting on how it was overall.

So first of all, the numbers and where this puts me. So overall a very good year and a large increase in my total retirement pots – with growth and contribution, it went up more than my net income (but not gross). This really does give me hope and should not be sniffed at.

The increase and forecast in my ISA pots also make me start to think quite positively about where I am getting towards. Whilst this won’t be enough for me to stop working in 2025 without selling down some of the pots, it is still going to be a good healthy balance. Given when I started this blog I thought this was completely impossible, it shows what the regular saving and investing can do for you.

The mortgage continues to go down, but never as fast as I would like. We have just remortgaged – a new 5 year fix at 1.74% – a fair rate, and a lot lower than our last fix. We are going to leave our payments as they were which means if everything were to remain constant then we will have knocked almost 4 years off the mortgage – I won’t complain at that!

The amount of tax I paid last year was, whilst still obscene (in my opinion of course!), lower than the year before, a reflection of my tax rebate for putting my bonus into my pension.

So, from a financial point of view I am pretty happy.

What about outside of just the ££?

So, first up work. A real rollercoaster of a year if I am honest. I took on about 4 different roles over the course of the year culminating in the one I am still in now which is keeping me very busy (as an example, one Friday I was already on conference calls before 7am), but I am enjoying it. From the potential and career it is one I couldn’t say no to so I will continue to plug away at it.

I got a pay rise, which was good – although never as much as I would like or want, it was better than I had feared given the company targets. The bonus was lower than ideal, but we failed to meet our key target, so I can understand that.

Needless to say the whole bonus went into my pension so it didn’t feel real, but means my pension continues to head upwards.

And finally, the personal side. Overall yet another tough year (for reasons I will not be sharing on here). I don’t expect this to change over the next few years, although it is starting to highlight just how run down I am getting and the need for some quiet time out. To help this we have started a direct debit into a holiday fund for the first time – not a lot but it means we should be able to cover a break once a year!

I had Christmas off but was unwell, before then it was October. I definitely need a break!

 

Author: fireinlondon

Fighting the high cost of living in London

10 thoughts on “A wider (and quicker) look back on the 2017/2018 Tax Year”

  1. Hey Fil.

    Yes health is just as ( if not more) important than wealth. Look after yourself

    Id stopped overpaying on the mortgage as i wanted to rebalance my property equity, pension and more flexible investments.

    With. My unexpected inheritance i am wondering whether to start overpaying again. I’ll have 100k in non pension savings and am going to fill my isa this year. I’ll continue my monthly subscription but put in about 10k lump sum. This will leave about 35000. Ill probably change my partners car which will be about 15k as hers is ten years old so feels like the right time to do it. I’ll keep the other 20k and will be doing the same with mine once my silly lease is up next year. This will save 700 a month in repayments between us which we can invest which will be great.

    So I’m debating whether to do a bit of overpaying too

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    1. Hi FBA,

      Yes – health has to come first, there is only one of that!

      Sounds sensible on your approach depending on what it is – for me the mortgage is my single most expensive bill each month, so the more I can reduce it the better – I am in the lucky position to be able to still sock away a significant amount into ISAs and pensions, so thats the next best tax efficient manner!

      Overpaying vs. investing is a difficult one – as you get further up the tax bracket, the overpaying for me is more efficient – if you are in the position where you lose 40%, or worse lose tax free allowance, or even worse 45% and lose pension contribution as well, the return isnt quite as juicy.
      But if you are in that stage you can look at other options (EIS etc.)

      Also there is the mental aspect – I am overpaying as I dont like the level of debt (even if I would get better post tax returns investing) – reducing what I owe makes it more comfortable for me!
      Cheers,
      FiL

      Like

      1. Yes not in that bracket income is about 85k plus i rent a room for, 350 a month which is tax free to a friend
        I put about 1200 a month including employers contribution in my pension and will have over 250k in there by 2020 with my retention bonus assuming the markets behave themselves. Ill be be 39 then so am conscious of the lifetime allowance to put any more in now. Also tying any more money up for 20 years. I’ll back fill later i think

        So concentrating on the isas. I’ll be back able to fill my isa probably this year and next as i normally manage about 10 or 11k and one we’ve got rid of the cars well have more monthly income to play with. I don’t want to put that much in my partners name yet as we aren’t married though i do trust her and am not planning on leaving so at some point I’ll bite the bullet

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        1. Hi Firein!

          Thank you for all your posts over the months!

          Quick question if not cheeky, what provider have you used to source your 5 year fixed at 1.74%?

          Thanks!

          Like

        2. Hi FBA,
          Never under-estimate where you will end up! But yes it is a tricky one – at the end it comes down to a very personal choice, in your position I would hammer the ISA as much as possible. If it helps, I put some in my other half’s ISA and use it to pay out income (tax free to me) which I overpay the mortgage with… a good way to compromise 🙂
          Cheers!
          FiL

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  2. Sounds like a good year overall. And epic that your investments made more than your gross income -very impressive – I don’t think I’ll ever achieve that (although that’s for good reasons of decent income).

    And I’ll also have to drawdown my non-pension assets in FIRE – I’ll have sizeable taxable & ISA accounts at FIRE. Plan is to Bed & ISA each year and run down taxable. Then when that’s empty run down the ISA. And then onto pensions when I hit 58.

    When I did my tax return I got the pleasant surprise that my tax was overestimated and was less than last year; always good to have some good news. Besides, it’s going to go back up in the next few years.

    Like

    1. Hi Ms Zi You,
      A very good year indeed, both with the amount put away and also the returns! As I said – its net not gross it went up more than, but not too far off gross – if I can do that in the next few years I will be very happy indeed!
      Never say never that you can’t do it – even if you pull in over 100k, at some point you will hit the tipping point!
      I can see the taxable investments is going to be tough – one of the reason I have been focusing on pension and ISAs (I get two allowances with my other halfs!). I so don’t want to run my ISAs down given the tax free levels, I would rather work another year or two!
      Congratulations on the positive news from the taxman – something I never seem to get from them!
      Cheers,
      FiL

      Liked by 1 person

      1. I shall be quitting well before getting to that tipping point unless we suddenly get over 20% returns (never say never, the pound could easily tank another 20% and give me them!)

        And yes I did struggle with the idea of running the ISA down – but then I decided life is for living and tax-sheltered money is no use to me when I am dead. And no essential when I have such a small income and will only pay basic rate.

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        1. Fair play if you can do it! And never say never, I have had years of over 20% growth so it is possible, but rare 🙂
          Well true if you know you will be living on a basic rate income then the tax advantages aren’t as good in that sense, however I still have a problem with actually selling stuff 🙂
          As you say life is for living – I am continuing to do that now as much as I can with the job, and accept working a few more years to avoid selling down, but that is my choice 🙂
          Cheers,
          FiL

          Like

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