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The HfP chat thread – Thursday 8th April

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We are running this daily chat thread on Head for Points during the coronavirus outbreak.

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Comments (384)

  • Mr. AC says:

    Sorry if this has already been discussed at length – domestic leisure travel. Can’t parse the guidance. Is it or is it not allowed in England starting from 12 April? Hotels seem to think it’s not – e.g. Kimpton Clocktower in Manchester is displaying “Mark your calendar, we are re-opening for business travel on 12 April and welcoming leisure stays as of 17 May”

    • ChrisC says:

      I understand the rule for leisure travel is self contained accommodation that doesn’t share common facilities

    • John says:

      Leisure travel in England has been allowed since 29 March.

      Hotels can only accept leisure stays from 17 May, as mentioned.

    • Anna says:

      Self-catering accommodation in England only from April 12, so holiday cottages, caravans etc. Hotels can accept leisure stays from May 17th (Wales and Scotland are accepting leisure bookings earlier in line with their own rules).

      • meta says:

        What are the rules for Scotland? I thought hotels are open for leisure stays from 26 April.

        • Sandgrounder says:

          Hotels are on course to reopen in Scotland from 26 April, but no date yet for permitting travel from the rest of the UK.

          • Anna says:

            How likely is it we’ll be allowed at that point? I’ve booked the Kimpton Charlotte Square for the early May bank holiday but now I’m wondering whether to book a Welsh alternative! Problem is we have 2 Ambassador 2nd night free certificate to use soon and UK options are distinctly limited at the moment!

      • Peggerz says:

        Hi @Anna.
        My reading of the situation in Scotland (open to change of course) is that hotels etc will open for leisure travellers from within Scotland from 26th April.
        It’s not absolutely clear, but it looks like visitors from the rest of the UK will be able to visit from 17th May. I suspect this is not what you want to hear.

        • meta says:

          The article in Scotsman yesterday mentions the possibility of opening up for travel to the rest of UK on 26 April and that it will all he fully decided by mid-April depending on the cases and vaccination rollout.

          • Anna says:

            Yes – so far it seems to be that travel throughout the UK will be possible from April 26th unless they decide otherwise. Honestly, I wish the Scots all the best if they eventually get to chose independence but it’s all been so polarised recently I can see the English being banned for some time longer to make a political point!
            Anyway, as a seasoned HFP-er now of course I’ve got a Plan B and C for early May – 2 bookings in Wales (one north, one south) and we’ll see what happens between now and then 😂. Bizarrely, it looks as though it will, in theory, be possible to sleep in a hotel on the Welsh side of the border but carry out all one’s activities on the English side from next week!

    • YC says:

      Certain business travel has always been allowed so Kimpton’s wording is probably accurate

      • kitten says:

        also hotels can take you if your travel falls under exemptions. I put a comment as to the nature of the exemption on the booking upfront – no harm in reassuring them

    • Blair says:

      Residence Inns in London have chosen to interpret it as work/essential guests for now, everyone welcome from 12 April because they are ‘Self-contained.’ I ain’t complaining!

      • Anna says:

        Interesting. I asked Staybridge Suites about this but they said they didn’t qualify because they have shared entrances, reception area etc. I would have thought Residence Inns were similar.

        • Blair says:

          Well yes, I was surprised too by the certainty of their declaration. But who are we to complain.

  • Tarmohamed says:

    Anyone on here have there own Trading 212 pie which they share?

  • Michael C says:

    BA Holiday virgin question!!
    When you choose the hotel, how do you know what exact room we’ll get?
    As there’s a child, we don’t really want a “children welcome/no extra beds possible” scenario!!

    • Andrew says:

      You select the room type you want as part of the booking process.

      • Michael C says:

        Uff thanks Andrew, and sorry: I was looking for that precise option before clicking on to the next page…reading “Now choose your room” in massive letters ;o)

  • Gtellez says:

    Is there currently any promotion to upgrade the personal Amex Gold card to Platinum? I downgraded it last year, but now I am thinking to apply for it again before I have to pay for the gold card that doesn’t have many benefits.

    • lumma says:

      I think you could only upgrade the Gold Charge card to Platinum, not the new Gold Credit.

    • Andrew says:

      Best to get someone to refer you for the current 50k promotion for taking out Platinum.

      • gareth says:

        You wouldn’t qualify for the 50k so ignore the above

        • Andrew says:

          I didn’t think a gap was required for Platinum sign up bonus to apply?

          • Harry T says:

            Holding a membership rewards card (Gold card) blocks them from the Plat sign up bonus.

            Only a Gold or Green charge card can be upgraded to Platinum for the upgrade bonus, and this now needs to be applied for over the phone (probably because the usual potatoes on this website kept churning the upgrade bonus once a month).

          • fivebobbill says:

            😂😂

  • Tom says:

    Costa are no longer accepting Amex cards after May 12th!

    Another door shuts for Amex use….

    • kitten says:

      I wonder why.
      Margin on coffee is huge even if they attribute all overheads. So it seems not clever to turn away a relatively wealthy segment of customers for the sake of a few % difference

    • the_real_a says:

      I’m not sure it was universal acceptance across franchises i often had issues with the card not being recognised in the machines in certain locations. Of course you can purchase gift cards from a retailer accepting AMEX or direct from Costa who have offered decent discounts recently.

      • Yuff says:

        Costa franchises where I am have never accepted Amex in any of their franchises.
        However it has always been cheaper to use gift cards as I go there pretty much everyday for breakfast when they are a) open and b) I’m in the uk

        • Gormlesstraveller says:

          Costa franchises also don’t accept Student Choice gift cards, despite Student Choice gift cards having Costa printed on the front.

  • YC says:

    Is there any limit/issues with applying for multiple new Amex cards in a short space of time?

    • Steve says:

      Yes. As with all credit applications multiple applications in a short space of time would flag with the companies being applied with. This is not Amex specific.

    • Wally1976 says:

      Yes but you’ll get away with a certain amount!

    • Rhys says:

      Your credit score will take a hit for a few months but it should recover eventually. I applied for something like 4 cards within quick succession (one a month or so) back in 2019. My credit score plummeted for several months following but is now higher than ever.

  • Steve says:

    @TGLoyalty interested in your late evening comments on LISAs and Workplace pensions. IF a person has the disposable income, why do you recommend against them? Genuine question.

    • Jonathan says:

      LISA is a great product if you have the disposable cash. I agree a pension is probably you’re best starting point (assuming you’ve done all the simple stuff like paying off expensive debt) especially if there is matched employer contributions available but if you plan on being a higher earner/maxing out pension LTA then LISA would be my next investment.

      I don’t have a problem locking up £4K/year till I’m 60 as my LISA is my bridging plan to allow me to retire at 62 rather than 68 which is the retirement age for my NHS defined benefit pension (note, it’s not final salary anymore).

      If I take pension early at 62 then it gets reduced by 33%. I’d like the flexibility to be able to delay this a few years.

      I also foresee the end of higher rate relief on pension contributions which will make the 14% contribution rate I pay for NHS pension look increasingly unappealing.

      Remember you need to get on LISA bandwagon before age 40 as well or the opportunity is gone so worth at least opening one with a small sum to keep options open.

      • KBuffett says:

        Once you start drawdown, can you take your whole pension pot as and when required with NHS pensions, like you can with a SIPP?

      • Lady London says:

        Thank you for your very interesting comment Jonathan. Thanks also for your previous explanation of Astra Zeneca and different clotting mechanisms.

        Plus when you explained difference in vaccine types and your explanation as to why the vaccine testing cycles hadn’t really been shortened just the finance and approval cycles.

        Thank you.

        • Steve says:

          I’d be interested in reading that, which thread is that on?

          • kitten says:

            This one IIRC 3 and 5-6? weeks back

          • kitten says:

            if you do an external google search on the site for “platelets” that was in @Jonathan’s explanation and I think that’s the only occurrence, ever, of that word on the site

    • Rhys says:

      A LISA doesn’t really make sense for retirement, though. You only need to get an interest rate of 1.1+% for the interest rate to beat the LISA in 7 years. The maths don’t change much if you have an underlying interest rate on the LISA either.

      I recently withdrew my LISA because the maximum property values aren’t helpful. They don’t scale with the number of applicants. Ie. if in 5 years I’m married and we want to buy a property, we’re still stuck with the 250k/450k limits, even though we are two people. There’s also no indication that the max property values will increase over time – so far, they haven’t.

      And what’s the point in bothering if you can get an easy 5% on a stocks ISA? Obviosuly, a LISA is a lot more secure but in the long term your stocks and shares will beat it massively.

      • TGLoyalty says:

        🙂 agree.

        Basically all the rules around having a LISA make it a terrible decision. Early withdrawal costs you 25% so 6.25% of your original investment.

      • Stanley says:

        A stocks and shares LISA is an option though ?

        • Steve says:

          Yes, stocks and shares LISA is the only one I would recommend. Cash LISA is pointless.

          • Waddle says:

            This is the problem. Many people think a LISA is only available as a cash saving giving poor rates currently. A S&S LISA is always my recommendation for every person under 40. You get the same 25% annual bonus on £4K paid in every year and can choose your investments with the right platform. I have mine with AJ Bell YouInvest.

        • Anuj says:

          Yeah that’s the one I’ve got. With the free cash you get it makes much more sense. You get the bonus as you pay instead of only when you purchase your house like a help to buy.

      • Harry T says:

        Great comment from Rhys. A S&S ISA also allows you to draw down at any point, which facilitates an early retirement more effectively than a LISA.

      • Jonathan says:

        I wouldn’t bother with a cash ISA or LISA. The interest rates don’t mitigate the rubbish rates on offer (remember you get £500/1000 tax free allowance for interest every year).

        You can get S&S LISA through all the big platforms though. If you were already investing in an ISA it’s a no brainer to get a free 25% top up from the government. Yes it’s locked up till property purchase or age 60 but a S&S ISA should be used for long term savings not next years holiday/car fund.

        • Rob says:

          It is short termist to be driven by the tax-free interest cap.

          If interest rates spike, you will hit £500 or £1000 of bank interest quicker than you think. It is also very easy for a Government to scrap the allowance.

          If you don’t want a Stocks & Shares ISA (and you can argue, fairly, that your pension is primarily in stocks and shares so your savings may as well be in cash) then you might as well use your ISA allowance. In 15 years you’d have £300,000 and if interest rates were back to 3% you’d be in tax-saving territory vs the interest allowance, assuming it still exists.

          History shows you should bag these allowances whilst you can. In retrospect, my wife should have put more into her pension because she isn’t at the £1m lifetime cap and will probably quit work next year. Luckily we can get around this by putting her on the HfP payroll and paying her just enough so that she can maximise her annual pension allowance but others don’t have this option.

          • Genghis says:

            For most people, using an ISA for cash is a complete waste.

            If you’re in a position to need £300k in cash, you’re more than likely to also have lots of other investments. Sheltering those, which earn much more than a percentage point or two, or even 3% if interest rates go up, is much better planning.

          • Rob says:

            Potentially, but as I am likely to remain a higher rate taxpayer until I die there is still some logic in it (for me). If we are back at 7% interest rates in 15 years then the tax saving on what would be over £1m by that point between the two of us is substantial.

          • The real John says:

            Well, it took me 5 years to take the plunge into S&S (I didn’t know about index funds at all, so I thought I would have to learn to value individual companies).

            But when I was ready, I had £70k in my cash ISAs to transfer over, instead of starting with £15k.

    • TGLoyalty says:

      The question you have to ask yourself is what’s the benefit of sticking more than your employer will match in their scheme?

      Can you do better with other investments such as S&S ISA.

      The advice/reasoning for someone in their early 30’s is different than to someone in their 50’s ofcourse. Personally I want flexibility right now I may decide to do something different in 15 years time.

      • Steve says:

        Paying more than employer is due to being able to do so via salary sacrifice from gross salary. Whereas putting into a S&S ISA is after tax from net salary, granted this is readily accessible. But if you’re saving for retirement then sal sacrifice wins imho.

        • TGLoyalty says:

          Yes It’s a question of deferred taxation vs flexibility. Do you have a crystal ball into the tax regime in 30-40 years times, your future medical circumstances or your own expiry date?

          Why I said my decisions now are different to what they might be when I’m 50-60. But I would always match what my employer is willing to add additional contributions for as the lack of flexibility is outweighed by the the additional contribution.

          • AJA says:

            I’m with you TGLoyalty. I think the ideal is to have both pension and Stocks & Shares ISAs, the latter being tax free on withdrawal versus pensions which are tax free on entry (apart from the 25% taxfree lump sum). LISA’s are also limiting in that the amount you can save is small at £4k per annum despite the bonus that you get and also restrict how much you can save in an ordinary S&S ISA to £16k as the LISA is deducted from the overall limit. I also like the flexibility of access to ordinary ISAs which is a minus of a LISA. Effectively you can use a S&S ISA to do mini drawdown by selling funds or if you invest in income units then you can take the natural yield as income. I also prefer income units to accumulation units as you can use the income to pay fees and charges without selling units which is also beneficial in the case of a falling stock market. You can also reinvest the income meaning you still get growth.

    • Genghis says:

      I posted this on Sunday.

      “– On a gross basis (to keep no’s easy) LISA has a 20% benefit. If a HRTP now and BRTP in drawdown (likely given less than 4% SWR) pension has a 42% – 15% = 27% benefit. I get relief at more than 42% so difference even more. Even if 25% goes, this becomes 22% for HRTP. Yes, there is the LTA. Pensions are outside of estate (currently) for IHT.
      – I want to retire way before 60 when could access LISA. The more in ISAs to pay for early retirement, travel, for children’s university / house, the better. The LISA £4K comes off the £20k ISA total.
      – LISA not on the cheapest of platforms and therefore have another set of dealing fees etc.”

      I’m of the opinion to:
      1) pay into pensions to maximise employer match and / or to amend taxable income
      2) maximise ISAs (x 2 if a couple)
      3) put any remainder into a general investment account.

      I don’t bother with property (not passive enough for my liking) but can be v profitable as leveraged.

      • Steve says:

        @Genghis, that’s exactly how I think, agree with the 1-3 step plan.

        With step 2, I see value in putting 4/20k into a LISA (I value the 25% top up > than the lost flexibility).

        • Genghis says:

          Indeed. Different strokes for different folks. I won’t need more money when I’m 60 and can access pensions. I’ll need it in my late 40s, early 50s, hopefully – hence ISA rather than LISA.

  • BuildBackBetter says:

    It was discussed just a few days back. If you haven’t used up the pension allowance, try to use it first.
    Pension can be taken at 55 / 57. LISA at 60.
    Pension falls outside the scope of inheritance tax.
    LISA will be included while means testing for benefits as theoretically you can withdraw anytime paying a penalty.
    Most importantly if you part a higher tax rate now than what you expect in retirement, pension easily beats LISA

    • BuildBackBetter says:

      Oops, that was for Steve

    • Steve says:

      Thanks, agree pension first then LISA, IMHO I felt should/could probably do both if disposable income allows.

      • Red Flyer says:

        PIPSI is the wisdom drummed into financial advisers from day 1 of training – PENSION, INCOME REPLACEMENT, PROTECTION (Life & CI) SAVINGS, INVESTMENTS in that order of priority.

        • Stanley says:

          Youve got the Ps the wrong way round – Protection, Income protection, Pension, Savings, Investment…… Life and CI cover intuitively more impt than pension for people starting out as financially independent.

          • Jonathan says:

            Ha ha. Isn’t that order related to the juiciness of commission rather than benefit to client though?

            Baffles me the number of my single <35 colleagues asking for advise on life/CI cover. Obviously with dependants involved the bar shifts but remember all insurance is essentially priced on risk of event x cost of payout with a decent safety margin then a profit for every link in the underwriter to customer chain. Most people over insure themselves much to the joy of the insurance industry.

          • Stanley says:

            haha maybe. though commission is much more transparent now, and fixed fees are the way forward….. “do you want to die, and not leave anything for your wife and new born kid to live on?” is quite an easy sell though. “imagine the gossip at your funeral, if your partner has to sell the house” is the clincher though…….

    • Nigel W says:

      Following up this topic, better to put into workplace pension or SIPP?

      • KBuffett says:

        If the workplace is making ‘free’ or matched contributions then go for that.

      • Sam says:

        As KBuffet says, if your firm is contributing, you would be mad to not take advantage of that. However, if your workplace provider doesn’t have a good range of funds/investments, you may want to do partial transfers into a SIPP.

        In my case, our pensions provide access to a limited range of funds which whilst cheap, don’t match my risk profile (ie crazy/tech heavy). So every year, I transfer 90% out into a SIPP where I can invest in equities and many many more funds.

      • Steve says:

        This I haven’t even considered! Is SIPP via salary sacrifice, or are you saying sal sac into employer scheme, then transfer out into SIPP?

        • Stanley says:

          The latter. get all the benefit from employee contributions etc, then sweep over once a year in to your own SIPP to invest in funds as you wish. Also, if you move jobs, it keeps your main personal pot consistently in same place.

      • Genghis says:

        I find it’s better to put money into workplace pension first rather than SIPP, for those contributions over and above any matching contributions.

        Reasons:

        – if via salary sacrifice, you’ll save Employee’s national insurance at your marginal rate, 12%, 2% etc.

        – if via salary sacrifice, the firm may place some / all Employer’s national insurance saved as extra contributions, so maybe up to 13.8% extra.

        If costs are high / funds not ideal in workplace pension, just do a partial transfer out every so often to SIPP.

        • Patrick C says:

          3 Notes on this from a finance perspective:

          (1) Tax deduction today will win against tax deduction in the future (even if rates change) as you start with a higher capital base, and thus achieve higher gains from interest (or appreciation of the portfolio). I.e. £100 in your SIPP / employer pension is the equivalent of 58 in your LISA (for higher rate payers at least) The benefit is even greater if you earn from 100-150k per annum.
          (2) Employer schemes usually have lower fees, as they invest in institutional share classes and platform fees are usually (partially) born by the employer. The bigger the employer. the better the scheme. For example, my bank employer paid all the platform fees and passive fund fees are c. 0.05%, active ones vary between 0.25-0.5%, which is less than half of the retail pricing.
          (3) LISA’s make potentially sense for lower incomes, as they can keep the housing optionality and benefit a lot less from SIPP, though employer matched contributions always win given the instant minimum return of 122%. For higher earners they make sense if after matching contributions and exhausting your pension limits (£1mm and/or 10k a year if you earn too much) you still have left over cash you won’t need until 60. Then it’s basically a bit of additional free money…

          • Patrick C says:

            I did forget the employer scheme NI contributions portion, which makes it better than SIPP in almost all cases especially if you are on the lower tax bracket (12%) vs higher brackets (2%)

          • Genghis says:

            “Tax deduction today will win against tax deduction in the future (even if rates change) as you start with a higher capital base, and thus achieve higher gains from interest (or appreciation of the portfolio)”

            But what if your marginal tax rate in accumulation is the same as your marginal tax rate in drawdown? Ignore NI saving if salary sacrifice to a workplace, so say directly into a SIPP:

            Eg. Assume 10% growth over one year for a 40% tax payer.

            £100 gross contribution into pension costs £60. The £100 grows at 10% in one year to £110. You can then withdraw but you’re taxed at 40% to make a net of £66

            Or the £60 gets invested in an ISA and grows by 10% to have £66 at the end.

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