Author Topic: UK Budget  (Read 10375 times)

Rightflyer

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UK Budget
« on: March 16, 2016, 09:41:22 AM »
A question for UK based folks.

Is it possible for a couple to live well* on 23,000 GBP?
This is assuming you have shelter paid for. Also assuming this is outside of London.

The question is driven by the new personal allowance of 11,500 pounds and the raised ISA limits. This may make the UK a contender on our list of countries to retire to.

If it's feasible, how does a thumbnail budget look (similar to the below ...Note: this is a WAG budget for illustrative purposes!)

Monthly Amounts for a middle aged couple.

Utilities (Gas/Electric):      100
Food:                              250
Auto (economy vehicle):   250
Comms (internet/phone):   50
Booze/Pubs/Meals out        100
Medical (Prescriptions etc): 50
Council Taxes:                  200
Holidays (local/drive to EU:300               
Other:(Sundries/Pets etc): 200

*Defined here as having the basics covered with an occasional night out and a small vacation fund.

mohawkbrah

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Yes
« Reply #1 on: March 16, 2016, 09:55:46 AM »
UK is a good place to retire to if you buy a house in the cheaper places (south wales, the north etc) housing is the major expense for most UK households (can be up to 70% of someone's expenses)

if i had a house paid for i could live comfortably on £5k a year tbh (im single, no kids)

oh and our ISA's are the best. really helps our middle class and upper lower calss with some sense get out of the rat race if they know what they're doing. dat tax free gains 4 l1f3!

food wise your'e looking at £60 per month per person (this is with no restaurants or fine dining)

our water and sewarge rates in west midlands are around £50/m

Elec is low for us (£40) because we have solar panels from a government scheme

Gas will vary on your liberal use of heating :P

Council tax is the bane of my existence and doesn't vary greatly unless you're looking at buying a fancy house, expect around £100/m on average on mid tier houses


In all honesty i would suggest to people that are looking for a country to FIRE to i would suggest USA, cheap housing out in the sticks, lower cost of living compared to UK. But UK has the advantage of the ISA which is great for people building up their FIRE portfolio. (note: ISA portfolio rules are none existent if you leave the UK and sell assets in the ISA and withdraw in foreign country. the foreign country will still want to tax it.
« Last Edit: March 16, 2016, 10:07:48 AM by mohawkbrah »

cerat0n1a

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Re: UK Budget
« Reply #2 on: March 16, 2016, 10:58:06 AM »
If you look at median wages, household incomes, pensions/benefits etc. I'd say that £23k after tax for a couple would put you comfortably above average outside the South East of England.

As mohawkbrah says, it's the cost of housing that is the killer. A million dollars doesn't get you much in the nicer parts of southern England.

Squirrel away

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Re: UK Budget
« Reply #3 on: March 16, 2016, 11:33:40 AM »
I totally agree with the others above that it is housing that is the huge issue. There are some cheap and nice areas (usually outside London and the south east) and you could easily and happily live on that amount.:)

Rightflyer

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Re: UK Budget
« Reply #4 on: March 16, 2016, 11:37:43 AM »
@mohawkbrah Thanks for the detailed answer. Much appreciated.

In regards to withdrawing from your ISA. We looked into that. Due to the UK-Canada tax bilateral agreement we would not be taxed on ISA withdrawals if we moved back to Canada.

@ceratonia Thanks. We would most likely go the self-build route. Finding a piece of land seems to be the issue. Our first choice would be the South West (more specifically anywhere from Herefordshire, down through Gloucestershire, even as far Cornwall). Second choice would be Yorkshire with Norfolk a distant third.
Any suggestions on better areas (English countryside, pub culture, affordable land...) are welcomed.

@Londoner38 Hello. Thanks. Living easily is the goal (although I assume the happily part is what we make it!) We noticed the huge disparity between London/South East prices and the rest of England on our last trip. Any suggestions on other areas to focus our search on?
« Last Edit: March 16, 2016, 11:39:34 AM by Rightflyer »

cerat0n1a

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Re: UK Budget
« Reply #5 on: March 16, 2016, 11:52:33 AM »
Self-build plots are reasonably hard to come by. Presumably you're signed up to places like rightmove to keep track of what's coming up? Round here (expensive location), a lot of small plots tend to be either buy a bungalow with a decent garden and knock it down to build a house, or buy part of someone's garden. Bit easier in less crowded areas though.

I'd say any of the places you mentioned are pretty nice, although all of them will have pockets that are less pleasant. I probably wouldn't want to live in say Doncaster in Yorkshire, Great Yarmouth in Norfolk). Zoopla's heat map is pretty good for exploring which location & price.

Rightflyer

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Re: UK Budget
« Reply #6 on: March 16, 2016, 12:11:29 PM »
I do check Rightmove every weekend for property and rentals (the rental is for the interim).

Also, I have been signed up to Plotsearch (on Buildstore) for about 5 months. Those properties all seem to be on the pricey side. Most are >100K.

Thanks for the Zoopla suggestion. I'll give it a go.

cerat0n1a

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Re: UK Budget
« Reply #7 on: March 16, 2016, 12:47:36 PM »
Also, I have been signed up to Plotsearch (on Buildstore) for about 5 months. Those properties all seem to be on the pricey side. Most are >100K.
£100k does not seem particularly expensive for a plot with planning permission for a house. Agricultural land round here might go for £10k+ per acre, whereas a 0.2 acre building plot might be over £200k in a village 10-15 miles out of Cambridge.

former player

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Re: UK Budget
« Reply #8 on: March 16, 2016, 01:36:06 PM »
Your sample budget looks OK to me.  As others have said, once a reasonably fuel efficient and well-insulated house is paid for, most of the rest of a quiet life can be done pretty cheaply.  Transport, events and accommodation can add up, though, if you wanted to do much travelling, theatre, concerts, etc.

For cheaper housing in pretty countryside, as well as the areas mentioned so far I would strongly suggest Lincolnshire (particularly the Wolds, eg Louth to Alford - think Cotswolds countryside with house prices less than half).  Rural, agricultural, pubs, walking, beaches near by.  Alternatively, take a look at the Isle of Wight.

Rightflyer

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Re: UK Budget
« Reply #9 on: March 16, 2016, 02:07:59 PM »
Also, I have been signed up to Plotsearch (on Buildstore) for about 5 months. Those properties all seem to be on the pricey side. Most are >100K.
£100k does not seem particularly expensive for a plot with planning permission for a house. Agricultural land round here might go for £10k+ per acre, whereas a 0.2 acre building plot might be over £200k in a village 10-15 miles out of Cambridge.

A small agricultural property may be more suitable for us anyway. If I could get 10-20 acres at 10K/acre out in the country I'd be much happier than being a townie.
We currently live on 50 acres about 15 minutes from the nearest village and minimum 45 minutes from the nearest small city...so it wouldn't be a stretch to live in country.
Thanks for the new train of thought Ceratonia.

cerat0n1a

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Re: UK Budget
« Reply #10 on: March 16, 2016, 02:20:14 PM »

A small agricultural property may be more suitable for us anyway. If I could get 10-20 acres at 10K/acre out in the country I'd be much happier than being a townie.
We currently live on 50 acres about 15 minutes from the nearest village and minimum 45 minutes from the nearest small city...so it wouldn't be a stretch to live in country.
Thanks for the new train of thought Ceratonia.

Steady there. Agricultural land means you have to farm it. You can't just put up a building on it - not even a shed. The farmhouse to go with your 10-20 acres would be at least another million or so round here.

A paddock (i.e. land you can keep a horse on) would be upwards of £30k per acre. There is a certain amount of money being made in Surrey with people slowly slicing off bits of farms and converting the land to paddocks, but the planners take a dim view of it. You can't just take a couple of hundred acres of farmland and do what you want with it.

If you want to live on a smallholding ( house + a few acres in the countryside) that's certainly possible away from the SE - Herefordshire is a good bet, but historically many English people have moved to rural Wales for that kind of thing.

Rightflyer

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Re: UK Budget
« Reply #11 on: March 16, 2016, 02:25:01 PM »
Your sample budget looks OK to me.  As others have said, once a reasonably fuel efficient and well-insulated house is paid for, most of the rest of a quiet life can be done pretty cheaply.  Transport, events and accommodation can add up, though, if you wanted to do much travelling, theatre, concerts, etc.

For cheaper housing in pretty countryside, as well as the areas mentioned so far I would strongly suggest Lincolnshire (particularly the Wolds, eg Louth to Alford - think Cotswolds countryside with house prices less than half).  Rural, agricultural, pubs, walking, beaches near by.  Alternatively, take a look at the Isle of Wight.

Thanks for the good suggestion @former player. We've never been there. You make it sound perfect for us. It is now on the list to research and explore.

Did you/do you live in Lincolnshire?

BTW: Just did a quick Google Maps walkabout around Louth. Looks like a nice town!

Rightflyer

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Re: UK Budget
« Reply #12 on: March 16, 2016, 02:32:49 PM »

A small agricultural property may be more suitable for us anyway. If I could get 10-20 acres at 10K/acre out in the country I'd be much happier than being a townie.
We currently live on 50 acres about 15 minutes from the nearest village and minimum 45 minutes from the nearest small city...so it wouldn't be a stretch to live in country.
Thanks for the new train of thought Ceratonia.

Steady there. Agricultural land means you have to farm it. You can't just put up a building on it - not even a shed. The farmhouse to go with your 10-20 acres would be at least another million or so round here.

A paddock (i.e. land you can keep a horse on) would be upwards of £30k per acre. There is a certain amount of money being made in Surrey with people slowly slicing off bits of farms and converting the land to paddocks, but the planners take a dim view of it. You can't just take a couple of hundred acres of farmland and do what you want with it.

If you want to live on a smallholding ( house + a few acres in the countryside) that's certainly possible away from the SE - Herefordshire is a good bet, but historically many English people have moved to rural Wales for that kind of thing.

Are you saying that if one purchases agricultural land, they can't build a house to live in on it? Hmmm. Seems odd.

The concept of not being able to buy chunks of agricultural land and sell it off piecemeal seems to be common in many countries. We have the same thing here and for good reason.
It does seem to be counter-intuitive though, to allow a severance of farmland and then not allow the new farmer to build a home there.

We do farm our 50 acres now and truth be told a smaller holding would be what we want.

As for a million for a farmhouse...really???




cerat0n1a

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Re: UK Budget
« Reply #13 on: March 16, 2016, 02:43:50 PM »
Are you saying that if one purchases agricultural land, they can't build a house to live in on it? Hmmm. Seems odd.

Yes, exactly this. It has to be farmed. This is why there is a huge disparity between the cost of farmland and the cost of land on which one can build.

Quote

It does seem to be counter-intuitive though, to allow a severance of farmland and then not allow the new farmer to build a home there.

Usually agricultural land would be sold as a field of so many acres and might be sold to other farmers nearby, or as an investment to someone who would then rent the field out to someone else to farm.

Quote
As for a million for a farmhouse...really???
Really depends on location. In practice, I can't think of any of the farmhouses within a few miles of where I live that would go for as little as that.

In mid-wales, for example, you can get a lot more farm for your money
http://www.uklandandfarms.co.uk/rural-properties-for-sale/wales/mid-wales/

Rightflyer

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Re: UK Budget
« Reply #14 on: March 16, 2016, 03:03:47 PM »
Are you saying that if one purchases agricultural land, they can't build a house to live in on it? Hmmm. Seems odd.

Yes, exactly this. It has to be farmed. This is why there is a huge disparity between the cost of farmland and the cost of land on which one can build.

Quote

It does seem to be counter-intuitive though, to allow a severance of farmland and then not allow the new farmer to build a home there.

Usually agricultural land would be sold as a field of so many acres and might be sold to other farmers nearby, or as an investment to someone who would then rent the field out to someone else to farm.

Got it. I'm with you now. That policy does protect valuable farmland. Doesn't do much to help alleviate the UK's shortage of build-able land. Be nice if there was a middle way. I suppose that would get abused though.


Quote
As for a million for a farmhouse...really???
Really depends on location. In practice, I can't think of any of the farmhouses within a few miles of where I live that would go for as little as that.

Oh, okay. I thought you meant 1,000,000 to build a farmhouse.

In mid-wales, for example, you can get a lot more farm for your money
http://www.uklandandfarms.co.uk/rural-properties-for-sale/wales/mid-wales/

Doubleh

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Re: UK Budget
« Reply #15 on: March 16, 2016, 04:33:08 PM »
As others have said, the budget is certainly doable - it is after all approximately the median household income, depending on whose figures you take, so excluding housing leaves you plenty to go round.

Even if you did have bigger budget tastes the UK is getting increasingly a good place to be FIRE. On top of your £11,500 personal allowance you can each get:

 - £5,000 dividends tax free - above this the tax rate is only 7% if your total taxable income as an individual is below £45,000
 - £1,000 bank interest tax free
 - £11,000 of capital gains tax free - above this the tax rate is only 10% if your total taxable income as an individual is below £45,000
 - £7,500 from renting a room in your house completely tax free

All of this is ignoring your ISAs where you will now be able to save £20,000 per year each, which is then completely sheltered from any taxes on interest, dividends or capital gains. You can withdraw as much as you like with no penalty and no tax to pay.

On top of all this we have a free healthcare service that while by no means perfect does a pretty damn good job and has repeatedly amazed my US born wife.

Again, the difficulty - assuming you have a plan figured out for how to get immigration status sorted - will be buying land to build. Part of the reason property prices are so high is that the ability to build is so restricted and self building is very unlikely to be a cheap option. People who are determined to self build often end up having to buy an existing property and demolish it. One option you could look into is a non permanent structure along the lines of a tiny home or trailer / park home. This is more of a grey area but if it is movable you may be able to place it on rural land without planning permission.

worms

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Re: UK Budget
« Reply #16 on: March 17, 2016, 01:38:11 AM »
Agree that the budget is do-able.

I'm a bit surprised by the love-fest for ISAs shown above, interest rates on cash ISAs are lower than some bank interest rates and with the new tax-free interest allowances, much of the ISA advantage has gone.  Stocks and shares ISAs are a different matter, but sometimes come with higher annual charges than other ways of holding long-term investments.

With regard to building on agricultural land, in some areas it is possible to get permission on the basis of agricultural need - where actual presence on the farm is essential to the running of the farm business.  Not always an easy case to make and Planning committees vary in their willingness to accept these.

I appreciate that you are mainly considering locations in the south, but plenty of UK early retirers move north and property prices for houses are much lower in Scotland.  In your shoes, I would look for a small farm in Aberdeenshire or possibly a croft on the west coast.  Budget here would change a bit - you would spend more on utilities but less on medical (free prescriptions).

Playing with Fire UK

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Re: UK Budget
« Reply #17 on: March 17, 2016, 02:39:43 AM »
On a forum like this I assume that someone talking about an ISA is talking about a S&S ISA. Cash ISAs are crap, although IF/P2P ISAs look interesting.

My S&S ISA is free to hold and free to buy funds.

A £23,000/y budget is massive - easy with a paid off house and do-able with a mortgage (assuming you are location independent). I see the challenge for the OP as reconciling the cost of obtaining a mortgage free house compared to their homeland.

Oh, and immigration status; and also you may need to earn £35,000 (?) per year going forward to get a right to stay in the UK (their is a different limit if your spouse has a UK passport).

cerat0n1a

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Re: UK Budget
« Reply #18 on: March 17, 2016, 02:40:59 AM »
I'm a bit surprised by the love-fest for ISAs shown above, interest rates on cash ISAs are lower than some bank interest rates and with the new tax-free interest allowances, much of the ISA advantage has gone.  Stocks and shares ISAs are a different matter, but sometimes come with higher annual charges than other ways of holding long-term investments.

Agree with you on Cash ISAs, but for shares, you only need to get somewhere between £100-150k before you're likely to be paying tax on dividends, an amount which I suspect would be below many people's target for retirement. I've also ended up paying CGT on shares where I was forced to sell (due to a takeover), where my original investment was only £2000. It's also quite painful filling out CGT tax forms once you start dealing with companies that have split/consolidated/had rights issues, split into two, or where you've bought them multiple times. Not having to deal with that is worth a few quid a year to me. I suppose more passive investing in ETFs would remove some of these issues.

Possibly not that helpful to the OP though, as it could take years to shelter existing investments inside an ISA.

Quote
I appreciate that you are mainly considering locations in the south, but plenty of UK early retirers move north and property prices for houses are much lower in Scotland.  In your shoes, I would look for a small farm in Aberdeenshire or possibly a croft on the west coast.  Budget here would change a bit - you would spend more on utilities but less on medical (free prescriptions).

Croft on the west coast seems pretty idyllic to me, one of the most beautiful places in Europe. I've heard (and read) a few horror stories about the Scots being unpleasant to incomers from England. People I know who've early retired to Wales, Ireland, France, Spain have all reported locals being friendly & helpful. Do you think that's a real problem? (Certainly on Skye, there seems to be quite a high percentage of English people, which suggests it can't be that big a deal.)

worms

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Re: UK Budget
« Reply #19 on: March 17, 2016, 03:28:29 AM »
I've heard (and read) a few horror stories about the Scots being unpleasant to incomers from England. People I know who've early retired to Wales, Ireland, France, Spain have all reported locals being friendly & helpful. Do you think that's a real problem? (Certainly on Skye, there seems to be quite a high percentage of English people, which suggests it can't be that big a deal.)

I could probably find you as many horror stories of incomers from England being unpleasant to locals! Or the same for both sides of the question of incomers to and from any other location in the world. Nice people are nice people wherever they live and there are good and bad folks everywhere. Census data shows many west coast data zones with roughly a third giving place of birth as "other UK", a third "other Scotland" and a third local.  Attitude and sensitivity to local culture and practices are what matter in my view.

cerat0n1a

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Re: UK Budget
« Reply #20 on: March 17, 2016, 04:29:06 AM »
Good answer!

You'll be telling me next that the weather is lovely, right? :-)

One factor that the OP might want to consider (as trips to Europe were mentioned) is airports / ferry ports. People who don't live in Europe often don't appreciate the extent to which Ryanair/Easyjet and others have changed the economics of travel. It's usually significantly cheaper to fly to nearby European cities from the UK than to travel long distances by road or rail within the UK, (whatever you might think of the CO2 emission implications). Living within striking distance of a regional airport served by low-cost airlines might be worth taking into account. Driving from Aberdeenshire to Dover as an example is pretty hard work - it's very different to driving a similar distance in N. America or Australia as you have to be constantly alert, overtaking, changing lanes etc etc. 

Rightflyer

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Re: UK Budget
« Reply #21 on: March 17, 2016, 07:22:28 AM »
You guys are great...lots of good input here. I'm having an overwhelming desire for a pint, a cup of tea AND fish and chips...all at the same time!

As more background I am a UK citizen and my wife would meet the financial requirements for a 'family of a settled person’ visa so we are all good on that front, I think.

For clarity, the thumbnail budget I posted was just a placeholder. We could afford that for the first year or 3 to get ourselves sorted but the sustainable, long-term "basic" budget would be closer to 1200-1400 GBP per month. That would just be for the necessities not including travel or housing etc.

@Doubleh Thanks for the info. If those allowances are absolutely cumulative (absolutely - as in no clawbacks based on other income) then that is a truly a good deal.
Can you point me to a good resource/calculator online?
FYI: To date - I have wikipediaed the UK Tax system starting at the Napoleonic Wars, got caught in the loop at gov.uk, and sold tax-planning services at taxback.com.
Something like the calculators at www.taxtips.ca would be ideal.

@worms We had not looked seriously at Scotland due to several reasons, not least of which are the nationalist ambitions of some. As Canadians we have been through the seemingly never ending cycle of separation referendums. Not making a political point here, just stating preferences. We have travelled through Scotland and loved it. I still have friends in Inverness that I first met in 1986!
The reception people deserve in new places should be a whole new thread. We never fail to be amazed how great people are just about everywhere we travel. Except for that a$$hole in the Transit van who flipped us the bird in Reading...well, I guess I did cut him off...twice. (Yes, it is possible on a double roundabout!).

We may have to reconsider at some point if it is more doable.

@Playing with Fire UK
Yeah, I wish our long term budget was 23K/yr. With state pensions it would be...alas that's not for another 15 years. That's not to say we wouldn't mind working at things that we enjoyed. Just want to make sure we would stay FI.

@ceratonia Good points re: the paperwork aspect. As for getting our assets into ISA's. We have maxed out our TFSA's in Canada so that wouldn't need to come over. At 40,000 GBP per year (combined) it wouldn't take too many years to move over our non-sheltered investments into ISA's.
Being within striking distance of an airport is definitely a consideration for us. Not a deal-breaker though. And at this point taking the pup* with us on driving trips would trump any flights to France/Holland/Belgium.
*Yes, Mrs. Rightflyer has already done the doggie passport thing. She's been shot, microchipped, tagged, prodded and poked and now has her own passport. The dog that is. 


Nickyd£g

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Re: UK Budget
« Reply #22 on: March 17, 2016, 07:43:28 AM »
If I was emigrating to the UK I would either go towards Kent - which can be expensive but is lovely, and has good weather for a large chunk of the year - or the West coast of Scotland, specifically Loch Lomond area and surrounds.  The advantages of Scotland are - Council tax includes water rates, free prescriptions, cheaper housing, lots of land/stunning scenery, and free public transport for pensioners. Outstanding healthcare and good education system (very different to England/Wales). The weather is rainy and cool most of the year though.  People are on, the whole, friendly - I live in Glasgow and we are known for our friendliness - though you will get the occasional knobhead who is anti English.  The Loch Lomond area is also relatively close to Glasgow and Stirling, though a car would be recommended. £23K with no mortgage is extremely do-able.

Doubleh

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Re: UK Budget
« Reply #23 on: March 17, 2016, 08:14:09 AM »
As far as I am aware yes, those myriad of allowances are all cumulative and not subject to any clawback. The government is going nuts with specific allowances at the moment which does complicate matters rather and should make plenty of work for accountants!

The dividend and savings allowances are brand new, they come into effect from next month so nobody is exactly sure how they will work. I just found out this morning that I've missed two more allowances announced at yesterdays budget of £1,000 for side income and £1,000 for renting out your stuff eg airbnb, parking rental. As those are completely new the details are even more vague.

Not sure where you would find a good comprehensive calculator as most of these issues are new, and historically the vast majority of people have not needed to file any tax return. Good resources though to start with are Monevator.com and moneysavingexpert.co.uk.

Good luck!

Rightflyer

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Re: UK Budget
« Reply #24 on: March 17, 2016, 10:59:24 AM »
If I was emigrating to the UK I would either go towards Kent - which can be expensive but is lovely, and has good weather for a large chunk of the year - or the West coast of Scotland, specifically Loch Lomond area and surrounds.  The advantages of Scotland are - Council tax includes water rates, free prescriptions, cheaper housing, lots of land/stunning scenery, and free public transport for pensioners. Outstanding healthcare and good education system (very different to England/Wales). The weather is rainy and cool most of the year though.  People are on, the whole, friendly - I live in Glasgow and we are known for our friendliness - though you will get the occasional knobhead who is anti English.  The Loch Lomond area is also relatively close to Glasgow and Stirling, though a car would be recommended. £23K with no mortgage is extremely do-able.

Thanks Nicky£g

The excellent response here has us reconsidering all options. The advantages you list make Scotland a compelling choice of places. We know we have a pile of research to do.

Our original plan was to pick an area that we know we like* and plop down there for 6-12 months and use that time to explore options. It looks like we'll be doing more travelling than we originally thought. 

*We've been to the Cotswolds several times. Never fails to satisfy. Bisley felt like home immediately. If we stayed any longer I feared we might get adopted by the good folks there.

Rightflyer

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Re: UK Budget
« Reply #25 on: March 17, 2016, 12:07:10 PM »
Wow.

Okay. So, if I have this right.

A hypothetical FI couple of entrepreneurial Canadian expats could, for example:

Work on contract = £375/day X 30 days/year = £11250 x 2 = £23000
Earn savings interest in bank accounts (£20k @ 2.5%)         = £500 (could be up to £2000 tax free but not realistic)
Earn dividends from taxable account   = £7000 x 2              =£14000 (with £22k of cap gains room to cover sales of underlying assets!)
Rent a storage space on their property (£80/mth)                = £960
Rent a room (assume 4 weeks high season) £35/nt x 28 nts = £980
Side gigs (e-books/dog treats/veggie garden) =£1000 x 2    = £2000
                                                                                        ________
                                                                                        £41440 minus National Insurance

Thus generating circa £40000 (after NIC) per annum between 2 people Tax Free.
All while keeping busy with what interests them AND paying into the government pension scheme WHILE NOT having to withdraw anything from their ISAs.

It seems to good to be true. Am I making some fundamental error based on my ignorance?




As far as I am aware yes, those myriad of allowances are all cumulative and not subject to any clawback. The government is going nuts with specific allowances at the moment which does complicate matters rather and should make plenty of work for accountants!

The dividend and savings allowances are brand new, they come into effect from next month so nobody is exactly sure how they will work. I just found out this morning that I've missed two more allowances announced at yesterdays budget of £1,000 for side income and £1,000 for renting out your stuff eg airbnb, parking rental. As those are completely new the details are even more vague.

Not sure where you would find a good comprehensive calculator as most of these issues are new, and historically the vast majority of people have not needed to file any tax return. Good resources though to start with are Monevator.com and moneysavingexpert.co.uk.

Good luck!

Doubleh

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Re: UK Budget
« Reply #26 on: March 17, 2016, 01:13:54 PM »
Couple of slight tweaks to your numbers, and assuming 2017 rates:

- Ordinary income can be 11,500 each = 23,000 combined before tax
- Dividends can be 5,000 each = 10,000 combined before tax

Remember that 22,000 of capital gains allowance is the amount of the gain that is untaxed, so would allow you to sell eg 44,000 of shares which have doubled in value since you bought them

But yes, that's pretty much what it means. Usual caveats that I'm not a tax expert, this is genersl information and not advice - plus many of the items mentioned are new so subject to change.

Not only that but:

- If your 23,000 of ordinary income was pension income or rental property income rather than earnings from employment you wouldn't pay any NI. (NB this does highlight that income from a pension is taxable, not sure of the treatment of tfsa income but I believe 401k withdrawals are treated the same as pension income so it's likely to be similar).

- you mention airbnb renting your spare room, the 1,000 limit would be correct for eg a holiday home but if it's a room in your main residence you may be able to benefit from the more generous 7,500 tax free rent instead - although bear in mind you only get one lot of allowance for the house so share the 7,500 between you.

So yes, if you're FIRE and able to be flexible with your sources of income and gains, the UK is looking pretty favourable these days
« Last Edit: March 17, 2016, 01:40:34 PM by Doubleh »

worms

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Re: UK Budget
« Reply #27 on: March 17, 2016, 02:23:53 PM »
You'll be telling me next that the weather is lovely, right? :-)

Well, it was today!  Gorgeous in Wester Ross and 19C in Braemar Aberdeenshire (warmest place in UK today).

Driving from Aberdeenshire to Dover as an example is pretty hard work - it's very different to driving a similar distance in N. America or Australia as you have to be constantly alert, overtaking, changing lanes etc etc.

Agreed! On my usual summer trip, driving to Nice, I find that the Channel Tunnel is about half-way! And the U.K. half of the drive is far more stressful (well from Perth south - but then driving in the Highlands rather than the SE of England is another plus point for living in the North.)

cerat0n1a

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Re: UK Budget
« Reply #28 on: March 17, 2016, 02:38:53 PM »
but then driving in the Highlands rather than the SE of England is another plus point for living in the North.)

Very true, although those rare occasions when the A9 or more often the smaller A roads get closed due to snow or high wind can lead to frustatingly long detours.

Nice is a frequent day trip for me, on business. One of the few places in mainland europe with traffic & house prices to match SE of England.

dreams_and_discoveries

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Re: UK Budget
« Reply #29 on: March 19, 2016, 06:18:21 AM »
I'd say £23k would be reasonably comfortable for a couple, your long term £12k is doable, but could be a spartan existence.

However if you plan to work a little, with the tax free allowances would bring your standard of living up. And if you are willing and able to jump back on the Full time work treadmill if something really bad happens to the markets, you don't really have anything to lose.

Yes, those tax numbers look roughly right - there are a lot of allowances, but I've yet to come across anyone that would have income structured to use them all (and no doubt claiming them would mean you'd have a complex tax return to fill in).

I would say self-build is still a novelty here, and you'd likely pay a premium unless you were professionally an architect/surveyor/builder familiar with all the many regulations, permits and red tape.

Rightflyer

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Re: UK Budget
« Reply #30 on: March 19, 2016, 06:53:37 AM »
Hi dreams_and_discoveries

Thanks for the input (and encouragement).

We've got a lot more research to do regarding self-build. The first thing we need to ascertain is what, exactly, people define as self-build.

From the various websites we've found it seems that some people define self-build as hiring an architect, writing cheques to the builders and picking out the tiles themselves. That type of build happens here (and in the US AFAIK) but is not what I am thinking of as "self-build".

From personal experience, you can save a bundle of $$$ by truly doing the building yourself. I am hoping that translates across the pond.

« Last Edit: March 19, 2016, 07:00:17 AM by Rightflyer »

cerat0n1a

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Re: UK Budget
« Reply #31 on: March 19, 2016, 07:16:57 AM »
From personal experience, you can save a bundle of $$$ by truly doing the building yourself. I am hoping that translates across the pond.

It certainly does, although in some parts of the country the actual materials and labour costs to construct the property will be less than the cost of a piece of land with planning permission to build.

There are certain things you cannot do yourself without having the appropriate certificates - gas (which makes sense) and electricity (ludicrous - even fairly trivial electrical work supposedly requires a professional.) You also have to have the local council building inspector out at key stages to ensure that building regulations have been followed (sensible IMO) - so becoming familiar with what those rules are is obviously important (depth of foundations, depth & type of insulation, all kinds of stuff.)

Rightflyer

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Re: UK Budget
« Reply #32 on: March 19, 2016, 01:37:45 PM »
From personal experience, you can save a bundle of $$$ by truly doing the building yourself. I am hoping that translates across the pond.

It certainly does, although in some parts of the country the actual materials and labour costs to construct the property will be less than the cost of a piece of land with planning permission to build.

There are certain things you cannot do yourself without having the appropriate certificates - gas (which makes sense) and electricity (ludicrous - even fairly trivial electrical work supposedly requires a professional.) You also have to have the local council building inspector out at key stages to ensure that building regulations have been followed (sensible IMO) - so becoming familiar with what those rules are is obviously important (depth of foundations, depth & type of insulation, all kinds of stuff.)

I've been looking into building regulations recently. Haven't got to hydro and gas fitting yet. I was hoping that they (UK authorities) did not require licenced installers for electrical. I have literally saved $1000s over the years by doing my own wiring and hook-in to the panel. It has to be inspected here as well and they can be very picky but by following the Electrical Code to the letter and exceeding requirements where possible I've never had an install fail (fingers crossed... I have ESA coming out next week to inspect the wiring on the floor I just wired. Hope I didn't just jinx it)

I'm not sure about gas fitting here though. Like you alluded to...I wouldn't do that myself anyway. Electrical work is not dangerous...gas is!

Having the building inspected at stages is pretty standard here as well. Same philosophy as the electrical. Buy the code, follow it religiously and exceed where possible.

The big question is: Do I need a licenced designer/architect's house plans or can I submit my own for approval? Hmmm.


Rightflyer

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Re: UK Budget
« Reply #33 on: March 19, 2016, 01:47:08 PM »
Interesting.

First hit on Google...

From planningportal.gov.uk:

"If an installer is not registered, then certain riskier jobs (identified as ‘notifiable’ in the Building Regulations) will need to be inspected, approved and certificated by:

    a building control body (your local authority or a private approved inspector), or
    in England only, an electrician registered with a third-party certification scheme (a ‘registered third-party certifier’)."

Notifiable jobs include:

    the installation of a new consumer unit or fuse box
    the installation of a complete new circuit


"The Building Regulations do not restrict who may carry out electrical installation work. If you want to do the work yourself you should make sure that you know what you need to do before starting any works. There are a number of reputable guides that you can use to help you."



Seems similar to what we have here in Ontario. Am I reading this right?
« Last Edit: March 19, 2016, 01:48:58 PM by Rightflyer »

dreams_and_discoveries

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Re: UK Budget
« Reply #34 on: March 19, 2016, 02:00:49 PM »
Yep, you can do your own electrics, but need to get them inspected and signed off.

Similarly I believe you can do your own plans, as long as you use their agreed formats etc.

I think the biggest stumbling block to self build here is planning permission - planners are notoriously fussy, and neighbours/interested parties can object for all sort of reasons. Builds have to be very in keeping with the local area, and meet all sorts of weird rules.

cerat0n1a

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Re: UK Budget
« Reply #35 on: March 19, 2016, 04:21:33 PM »
http://www.electricalcompetentperson.co.uk/Regulations-Explained

Actually, it looks like it's actually possible to do most of the work yourself when you're building (because you have to have the building inspector out anyway), but once your house is built, trivial things like replacing a light socket will (in theory) need you either to use a qualified person, or pay for the building inspector to come and check what you did. In practice, this is one of the many EU regulations that got zealously over-applied by officialdom in the UK and then is often ignored.

You definitely don't need an architect for plans; many professional builders draw up their own plans - and in my experience do a rather better job too.

Playing with Fire UK

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Re: UK Budget
« Reply #36 on: March 21, 2016, 01:21:12 AM »
Careful with doing the electrical work yourself. A (registered) Competent Person needs to design/check the design of the system before you start any work. You can run into trouble (it depends on the area) if you just install it and ask for the final system to be checked over by the local authority; even if the design is fine.


Rightflyer

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Re: UK Budget
« Reply #37 on: March 21, 2016, 04:54:54 AM »
Understood. I'm very much a "by the book" kinda guy when it comes to things like this (permits, licencing, inspections etc etc). Through experience I have found it is a low percentage return to buck the system so I usually do what I can to make things right the first time around.
In regards to the electrical plan, even if it wasn't required to get a plan approved (as it isn't here for example) I would still consult them on what I intended to do. A little to-ing and fro-ing on paper sure beats having to strip out 300m of wire!
 

shelivesthedream

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Re: UK Budget
« Reply #38 on: March 21, 2016, 05:41:59 AM »
Getting planning permission will, I think, be your biggest self-build hurdle. However, if you do your research into what has been approved recently, apply for something in keeping with the local area, and have your future neighbours on your side, you stand a decent chance. Your biggest barrier will be complaints from local residents, but if you rent in the area beforehand, get to know people, and are just a nice person, you shouldn't do too badly.

Rightflyer

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Re: UK Budget
« Reply #39 on: March 21, 2016, 06:55:15 AM »
Hello shelivesthedream.

Yes, I agree that planning permission could be a hurdle. Whenever you are relying on others' subjective judgements it is sometimes akin to the lottery. I think you're bang on when it comes to putting people in the best position to say yes. I've been through a similar process several times in business. It never fails to amaze me what can be accomplished by just talking to people about their concerns. I've also found that you don't need to convince everyone, just the de facto leaders. Group dynamics then takes over and the majority will usually follow.

As for nice...not really...more stolid I'd say (insert winking emoticon thingy here).


Getting planning permission will, I think, be your biggest self-build hurdle. However, if you do your research into what has been approved recently, apply for something in keeping with the local area, and have your future neighbours on your side, you stand a decent chance. Your biggest barrier will be complaints from local residents, but if you rent in the area beforehand, get to know people, and are just a nice person, you shouldn't do too badly.

cerat0n1a

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Re: UK Budget
« Reply #40 on: March 21, 2016, 08:00:47 AM »
A lot also depends on the local context. On the road where we live, several people have succesfully converted their large gardens into small housing developments - the garden of one house is having 9 houses built on it currently.  This is because each council in this area has fairly high targets for new house building and will give building permission for pretty much any brownfield site (and in the absence of much industry here historically), that means any spare bit of land within the village envelope. Objections from the neighbours would definitely be ignored in such cases. We had some fairly extensive changes to our house approved in spite of 2 objections (we have quite a lot of properties neighbouring ours.)
Literally a couple of hundred yards away, friends of ours have to have planning consent for any tiny modification, including knocking down a fairly tatty 1970s lean-to and replacing it with something in keeping with the rest of the 17th century house. They are in a conservation area, where all of the houses are Grade 2 Listed, and nothing is allowed to be changed without council say-so. That includes using traditional lime cement, traditional paint colours, no double glazing etc etc. Here, support from neighbours would make no difference at all.
A few hundred yards in the other direction would put you onto farmland - and absolutely zero prospect of any housing development - or at least not without protests, public enquiries, developers putting funding towards school/ medical/ road/ drainage provision etc etc.
Typically, if you buy/sell a "self-build" plot, it already has planning permission to build a house on it. Most buyers won't speculatively buy land without such permission (or without a strong indication from local planning officer than it will be granted, or some evidence that permission was granted previously and been allowed to lapse.)

Rightflyer

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Re: UK Budget
« Reply #41 on: March 21, 2016, 10:19:10 AM »
I'm hoping the government comes through with their stated commitments to free up more land. I see that one of the main points of resistance is the NIMBY phenomenon (we've claimed our bit green...now piss off and leave us alone) which is human nature. Combine that with the perception that England is being concreted over* and it adds up to public resistance.

*If the numbers I found are to be believed, currently 7% of the UK is developed. Developing an additional 1% would meet the UK's housing needs. (Caveat: this is as reported on a self-build site...might be self-serving)

cerat0n1a

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Re: UK Budget
« Reply #42 on: March 21, 2016, 10:40:10 AM »
If the numbers I found are to be believed, currently 7% of the UK is developed.

Sounds about right. It is a high number compared to most other places though. England's population density is slightly ahead of places like the Netherlands or India and double that of say Germany or Italy (and more than 4 times as much as France, or 6 times that of Scotland.) Higher than all US states obviously (New Jersey is not too far behind though.)

Also we tend not to go for high density housing compared to elsewhere in Europe - people like their house with a garden rather than a city centre apartment. So it's very easy in some parts of the country to feel like you're in a ribbon of development. Take the M62 from Liverpool to Leeds, for example. The only time you're ever out of a town or city is the section crossing the pennines.

Rightflyer

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Re: UK Budget
« Reply #43 on: March 22, 2016, 06:12:35 AM »
Happy Birthday ceratonia.