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Critique my British Budget!

Critique my British Budget!

Old Jul 14th 2020, 9:00 am
  #16  
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Default Re: Critique my British Budget!

Originally Posted by scot47 View Post
It might be prudent to use a circumlocution in Britain. "IRA Money" sounds like you are receiving money from Gerry Adams.
Ha yes, thanks for the reminder!
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Old Jul 14th 2020, 9:07 am
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Default Re: Critique my British Budget!

Originally Posted by spouse of scouse View Post
I did think of that after I'd posted. The OP said he's planning to live in England or Wales, prescriptions are free in Wales and the charges for the three dental bands are a little less than in England.
Good to know each of the home countries is a little different, but the main take away is that my health budget number is very overstated, so that is good news.

Scotland has not been looked at as a destination, yet, but I'm more than open to it. More time to be spent on evaluating future living destinations at a later date.

Thanks for the reply!
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Old Jul 14th 2020, 11:05 am
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Default Re: Critique my British Budget!

Originally Posted by GOALFIRE View Post
Are married couples taxed as individuals in the UK, or is there some other logic to moving assets into her name (only?) when living in the UK? Neither my wife or I have a pension but we'll both have IRA/Roth IRA and our projected SS will be very similar. The only difference is my wife is 5 years younger than I so (at the moment) there will be a 5 year gap between me drawing SS and then her drawing her SS at 70.

Not sure if there is any benefit in us moving assets around in the future but certainly worth looking at if it saves us a bit in taxes in the UK. I don't think it would make a difference in the US being as we file married filed jointly.

Thanks in advance for your help.
Yes, no such thing as filing married, everyone files as individuals. To minimize taxes it is better to spread your income appropriately between each person then you'll each have the full personal £12,500 tax free allowance and each have the £12,300 tax free cap gains allowance and £2,000 tax free dividend allowance. That is potentially £53,600 in tax free income. It has saved us a lot in taxes.

If you have mutual funds then it is worth converting them to ETFs that are HMRC Reporting Funds, because mutual income from cap gains and qualified dividends are treated as regular income.

https://www.gov.uk/government/public...eporting-funds






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Old Jul 14th 2020, 6:43 pm
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Default Re: Critique my British Budget!

Originally Posted by GOALFIRE View Post
Thanks, not sure if it matters but we won't be working at all (or at least that is the plan) so we won't have any income from a job. All our spending will come from savings and investments and eventually drawing from our IRA/ROTH IRA/SS. I'd earmarked 25% on top of our budget for taxes but was thinking it would be much lower as we can control capital gains, at least until we start drawing SS and have RMD's (but I have a plan to minimize them by doing Roth conversions too).
As well as the Capital Gains tax allowance of £12,300 as stated by Durham lad, you can each invest £20k a year in an ISA which is a tax-free savings wrapper with no tax liabilities.

Also, you have allowed around £100 per month for utilities. Do you use any heating?
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Old Jul 14th 2020, 6:56 pm
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Default Re: Critique my British Budget!

Originally Posted by cyrian View Post
As well as the Capital Gains tax allowance of £12,300 as stated by Durham lad, you can each invest £20k a year in an ISA which is a tax-free savings wrapper with no tax liabilities.

Also, you have allowed around £100 per month for utilities. Do you use any heating?
Note that the IRS does not recognize the ISA wrapper so if you invest in stock and bond funds they will be treated as PFICs and taxed punitively. Cash ISAs are okay but since the first £1,000 of interest is tax free these days then cash ISAs struggle to compete against other interest bearing products.
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Old Jul 16th 2020, 10:01 am
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Default Re: Critique my British Budget!

Originally Posted by durham_lad View Post
Note that the IRS does not recognize the ISA wrapper so if you invest in stock and bond funds they will be treated as PFICs and taxed punitively. Cash ISAs are okay but since the first £1,000 of interest is tax free these days then cash ISAs struggle to compete against other interest bearing products.
Yes, thanks. My plan was not to have any 'savings or investments' vehicles in the UK, just keep everything as it is in the US when (and if) we move over, then transfer spending money as needed over to the UK.
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Old Jul 16th 2020, 10:08 am
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Default Re: Critique my British Budget!

Originally Posted by cyrian View Post

Also, you have allowed around £100 per month for utilities. Do you use any heating?
I'm surprised it would be that high in the UK, my budget number was based on what I'm spending here in Chicagoland (it gets cold and hot here!) for heat, electric, water (that includes trash disposal too) - we live in a detached house of about ~2000sqft but it is well insulated. I was assuming being as the UK is not quite as cold, does not have AC and I'd be downsizing I'd not spend as much. Maybe the 'cost per unit of utility' is a lot higher?

Thanks for the observation, it looks like I will have plenty of padding in my healthcare bucket to cover turning up the heating in the winter if it gets a bit nippy!
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Old Jul 16th 2020, 10:19 am
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Default Re: Critique my British Budget!

Originally Posted by GOALFIRE View Post
I'm surprised it would be that high in the UK, my budget number was based on what I'm spending here in Chicagoland (it gets cold and hot here!) for heat, electric, water (that includes trash disposal too) - we live in a detached house of about ~2000sqft but it is well insulated. I was assuming being as the UK is not quite as cold, does not have AC and I'd be downsizing I'd not spend as much. Maybe the 'cost per unit of utility' is a lot higher?

Thanks for the observation, it looks like I will have plenty of padding in my healthcare bucket to cover turning up the heating in the winter if it gets a bit nippy!
We live in a 4 bed detached house "up north" in Yorkshire and the average monthly bill for our GAS+ELECTRICITY this last 3 full years (2017 -'19) has been £87/month so your budget of £100/month won't be far off.
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Old Jul 16th 2020, 3:05 pm
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Default Re: Critique my British Budget!

Originally Posted by durham_lad View Post
We live in a 4 bed detached house "up north" in Yorkshire and the average monthly bill for our GAS+ELECTRICITY this last 3 full years (2017 -'19) has been £87/month so your budget of £100/month won't be far off.
That is consistent with my experience, all be it more than 20 years ago. The cost of gas to heat, and provide hot water for in, a small 2-bed terrace house in London was about £10/mth, really a tiny amount. The electricity bill was about the same, so total for both, averaged around the year, was less than £25/mth.

In the US we are paying, aggregated and averaged around the year, about $250/mth for heating and AC-driven utilities (gas in the winter, electricity in the summer), though for a much larger, detached house. We always hope for a long mild spring and autumn, when we use neither heat nor AC, as those are the cheap months. But some times we go from heating to AC, or vice versa, in only a couple of weeks.
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Old Jul 16th 2020, 9:44 pm
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Default Re: Critique my British Budget!

Originally Posted by durham_lad View Post
Yes, no such thing as filing married, everyone files as individuals. To minimize taxes it is better to spread your income appropriately between each person then you'll each have the full personal £12,500 tax free allowance and each have the £12,300 tax free cap gains allowance and £2,000 tax free dividend allowance. That is potentially £53,600 in tax free income. It has saved us a lot in taxes.
So how would our savings accounts or taxable brokerage account work, it is in both our names. I assume it's not as simple as splitting up the interest/dividends from the joint account between us both? Savings wouldn't be a problem (just close the joint and open up separate accounts - easy) but our brokerage would trigger off a tax event if we sold and that would not be desirable? Now if we get a dip in the market I could sell and do some tax loss harvesting but buy in one of the individual accounts I'd have to set up.

Once we get to SS and RMD it won't matter so much but bridging to that point will require some planning it looks like.

Thanks in advance for the help!
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Old Jul 16th 2020, 9:50 pm
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Default Re: Critique my British Budget!

Originally Posted by GOALFIRE View Post
So how would our savings accounts or taxable brokerage account work, it is in both our names. I assume it's not as simple as splitting up the interest/dividends from the joint account between us both? Savings wouldn't be a problem (just close the joint and open up separate accounts - easy) but our brokerage would trigger off a tax event if we sold and that would not be desirable? Now if we get a dip in the market I could sell and do some tax loss harvesting but buy in one of the individual accounts I'd have to set up. .....
No, it is that simple - the default for a joint (2 person) bank or brokerage account is split 50:50 between the owners.
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Old Jul 16th 2020, 10:05 pm
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Default Re: Critique my British Budget!

Originally Posted by Pulaski View Post
No, it is that simple - the default for a joint (2 person) bank or brokerage account is split 50:50 between the owners.
Ha! Great! Thank you.
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Old Jul 16th 2020, 10:10 pm
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Default Re: Critique my British Budget!

Originally Posted by GOALFIRE View Post
Ha! Great! Thank you.
You're welcome. ..... And you can elect for a different split at your option.
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Old Jul 17th 2020, 7:10 am
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Default Re: Critique my British Budget!

Originally Posted by Pulaski View Post
No, it is that simple - the default for a joint (2 person) bank or brokerage account is split 50:50 between the owners.
Exactly.

Because our income is so lopsided we put all savings accounts USA and UK into my wife’s name, but that is a personal choice.
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Old Jul 17th 2020, 10:45 pm
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Default Re: Critique my British Budget!

Originally Posted by GOALFIRE View Post
Good to know each of the home countries is a little different, but the main take away is that my health budget number is very overstated, so that is good news.

Scotland has not been looked at as a destination, yet, but I'm more than open to it. More time to be spent on evaluating future living destinations at a later date.

Thanks for the reply!
Scotland is amazing and definitely worth considering (although the weather leaves a lot to be desired). If you do consider Scotland, I did find that the weather seemed a bit better on the east coast than the west. Also, and with regard to your health budget, you may also want to consider adding private health insurance. I was hospitalized in the UK in an NHS hospital with a near death experience and then had several months to recover. I wished at the time that I had private health insurance as staying on a ward and seeing the lady next to me get blood transfusions and the one across from me crying several times a day because she was going to the loo in her bed and could not get anyone to help was very unsettling! I had BUPA for years after and stayed in a private hospital in Edinburgh for a surgery and it was a great experience (they even brought a menu to my husband to order off of while he waited with me). Best of luck to you
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