Using pension tax-free cash and personal allowance

If you're a UK beginner and you're not sure where to start investing in 2026, Pete and Roger talk you through a calm, step-by-step investing order to follow. They cover when to build a buffer, tackle expensive debt and use employer pension matching, plus how to choose between a Stocks and Shares ISA and a pension. You'll also hear the key beginner mistakes to avoid so you can invest with confidence and stay the course.

Shownotes: https://meaningfulmoney.tv/QA43

02:00 Question 1

Hi Pete and Roger

I'm late to investing but thanks to your informative and entertaining podcasts and books - I feel on track to at least a decent retirement.

I'm on a £60K salary and currently manage to contribute around £25K annually via salary sacrifice - which keeps me happily and comfortably within the 20% Income Tax bracket.

However, with the Salary Sacrifice Cap coming in April 2029, I will end up in the higher-rate tax bracket.

I was thinking about using my employer's Car Benefit Salary Sacrifice Scheme to help bring down my taxable income – whilst still maintaining the maximum salary sacrifice and utilising Relief at Source my AVC.

I'm fully aware of the saying "don't let the tax tail wag the investment dog" but I was planning on getting a car in 2029 – when my mortgage is completed – so this might be a good alignment.

My question's are: Can you confirm whether the Salary Sacrifice Cap applies to pensions only — and does using the car salary sacrifice scheme seem like a sensible idea in this context?

Is there anyway that paying into my AVC via Relief at Source and claiming the higher-rate relief via Self-Assessment would result in HMRC issuing me a new tax code for the following tax year.

Keep up the good work – and all the best to you and your families for the festive season. Thanks, Cris

06:43 Question 2

Hi, I recently came across your podcast and have not stopped listening to all the older episodes, and look forward to the new ones each week. Keep up the great work!

I'm a 53 year old business owner looking to exit my business within the next 3 years via a sale and hope to receive around £1.5 - £1.8m from my share of the proceeds after tax.

My wife is 8 yrs younger than me and will probably still be working doing some consultancy work. She has her own pension and savings in ISA's (currently a combined pot of around £250k which will hopefully grow over the next 10+ years) but we wouldn't need to access that till much later as required.

My 2 questions are: 1. What would be the best way to invest the lump sum from the sale of my business to provide an income to support my retirement without having to necessarily eat into the capital or touch too much of my savings / pension early on as it will need to provide for my wife and I for quite a few years if we retire / semi retire in our mid 50's. Having looked at our living costs we would need around £60k p.a - albeit to live comfortably. Any holidays / large purchases etc could be funded through savings.

2. How would you prioritise what pot of funds you use first to make it the most tax efficient, enable growth and ensure that the pots do not run out. Given the new IHT rules on pensions is it now wise to use those first including the 25% tax free lump sum or use the ISA's / savings first leaving the pensions to continue growing in their tax wrapper.

Thanks, Jeremy

Meaningful Academy Retirement Planning: https://meaningfulacademy.com/retirementplanning

14:53 Question 3

Hello Peter and Roger You answered a previous question for me on the podcast so thank you for that, and I hope you don't mind me asking another one!

We're in the very fortunate position of being able to pay the full £60,000 annual allowance into my pension scheme this tax year and are considering making additional contributions using unused allowance from previous years. I understand that the total contribution we could make would still be limited by my annual salary this tax year - my question relates to how that is defined.

The contributions are made using a combination of salary sacrifice into my work scheme and lump sum contributions to my SIPP which is separate from the work scheme. So, would my "salary" that would be the limit for total contributions be the salary before salary sacrifice or after? And is the "salary" further reduced by the contributions to the SIPP, as I believe my adjusted net income for calculating tax bands is?

Perhaps some hypothetical numbers would help. Let's say my gross salary before salary sacrifice is £125,000 and I salary sacrifice £25,000, and my employers' contribution is £5,000. Let's say I also pay £24,000 by bank transfer into my SIPP, so I'd receive £6,000 of tax relief into the SIPP. If I've understood it correctly, my adjusted net income for tax purposes would be £70,000 (which is £100,00 salary after salary sacrifice minus £30,000 gross contribution to SIPP). In total, £60,000 has been paid into my pensions which is the full annual allowance for this year.

If I had £120,000 of unused pension allowance from the previous three tax years, what is the maximum additional amount I could pay into my SIPP this tax year? Is it £65,000 gross (so £52,000 net), to bring the total paid into my pensions up to £125,000, my pre-sacrifice salary? Or £40,000 gross (so £32,000 net), to bring the total paid into my pensions up to £100,000, my post-sacrifice salary? Or some other amount, if the salary that counts for this year is limited to the adjusted net income?

Thanks so much for your help - I know it's a bit technical but I can't seem to find the answer anywhere! All the best, Fran

19:33 Question 4

Dear Pete and Roger,

I've been listening to the podcast for years now, and it always makes my Wednesday commute more enjoyable. Every time I hear your names together, I think of The Who, so thanks for all you do, helping people of My Generation become Finance Wizards and make smarter decisions so we don't get Fooled Again.

I'm 34, and after working in the small charity sector since university, I've accepted a role in a larger organisation which comes with a significant pay increase, taking my income over the Higher Rate threshold.

As I step into this new tax band, what reliefs, allowances, or financial planning considerations should I be thinking about?

In particular, I'm aware there are some reliefs (particularly for Gift Aid donations and pension contributions) that I will be able to claim through self assessment; do they 'compete' with each other in any way, or can I claim the full relief on both?

Thanks for all you do, Tim

23:40 Question 5

Pete & Roger Great podcast - don't ever retire!

I've just started receiving my state pension (now you know how old I am) but I was wondering how I can check that the government are paying me the correct amount.

I have more than a full set of NI class 1 contributions but I've also had some years contracted out and some years working abroad in a country with a reciprocal arrangement with the UK (which I've claimed for). The government just sent me a statement telling me how much I would get paid without any detail behind it.

How can I check that they have made the correct deductions for contracting out and the correct additions for my time abroad? Call me cynical but I don't always trust the government to get these calculations right. Many thanks, Glen

26:58 Question 6

Hi, great show by the way, very informative, it has certainly helped me and I'm sure is great help to many others.

My wife Michelle is planning to retire at the end of March, age 58.5. She is self employed, a relatively low earner and finds the work tiring now. I myself am 56 soon and likely to work another 2 year (max), I am luckily enough to receive a decent salary and have above average pension provision.

Michelle has the following pension savings - £143k in bank savings (not isa), £130k S&S ISA, £118k SIPP - all combined £391k. I realise markets are high at the moment.

Plan to use 4% rule and reduce when State Pension kicks in (have full NI Contributions).

So assuming want £15k pa (and rise annually with inflation), my query (that many others may have) is it best to use the cash or the ISA or the SIPP first or mix it up? Michelle is very unlikely to have to pay income tax, until State Pension triggers at 67.

Any advice much appreciated, Jason