r/FatFIREUK

Most posts here, and in other forums,are based on tax and rules that apply if you retire in UK.

For example tax rate for pension withdrawal, 25% tax free withdrawal etc.

There's zero chance I'll retire in UK, I'm mainly here for the good jobs and salaries available. I'm most likely retiring in a warmer climate, middle income country.

How should that change my thoughts around FIRE. Should I max out SIPP then given immediate tax benefits. I'm assuming withdrawals would be subject to the tax laws of my future country, which is unknown right now.

Anything else to consider? Note - I'm not looking at avoiding tax actively by moving to say Cyprus. I'm happy to pay tax, but rather my decision to live in a place is dictated by where I want to live at that time.

Hi all.

I am in a blessed position but not FatFIRE just yet. I am thinking of playing a risky game to try and get ahead.

Context: ~£220k ISAs, ~£100k SIPPs, £225k GIA. Early 30s, 1 child soon to be 2. HHI ~£110k.

Currently mortgage free which is nice, but sub optimal for long term wealth accumulation (and also motivation in the workplace). I am thinking of:

• Taking out an interest only mortgage of ~£400k
• Dumping the whole thing in 3-4 companies which I feel have the potential to multibag
• Continue working for the next 5-10 years to service the debt and my lifestyle expenses

The reason I'm thinking of doing it this way precisely is because I don't have confidence in current valuations of any major index, but I think some certain stocks (e.g. MSFT) are very attractive buys ATM.

Worst case scenario, it doesn't work out but I'd still have enough to cover the mortgage even if my whole portfolio drops by 50%.

Best case scenario I pick some winners and hit £2m invested by the time I'm 35.

Come on, roast me!

Looking for some impartial advice. I am starting to think leaving the UK is my only option.

I am 45, married, with a 17-year-old son. 3 years ago, I sold my business. My Net worth is now around £20m, with £10m in an OSB and the rest in property and other smaller investments. I have £1m invested in the company that acquired my business.

I have concerns / dilemma

1. The business that acquired my business is looking to sell. I am looking at 10x minimum, possibly 20x (if you believe the PE guys!!). I would prefer not to pay capital gains tax of circa £2.4m or £4.8m. Other than moving abroad, I can't think of any way to avoid it.

2. OSB - I didn't know the growth in an OSB is taxed at the income tax rate when the bond is realised. After compounding for 15 years, this is likely to be several million. I know you can top slice and gift, but eventually the tax will have to be paid.

I am not against paying tax and prefer to stay in the UK. My family and friends are here. I have a lovely house and life. But I just would be paying over £10 million in tax to stay in rainy Manchester. I always wanted to spend the winter in Spain and the summer in the UK but that will not solve my tax issue.

I can only see tax going up in the UK with the current state of the country.

Cyprus seems the best option, but I have never been.

Just wondering what other people would do in this position.

So I’m getting to the stage now where I need to deploy to GIA having maxed other more efficient ways to deploy cash without paying tax.

8 years from FatFIRE target and accumulating decently. Doing some maths and backtesting, I decided like the idea of 120% target exposure in my GIA to a portfolio of diversified global etfs (slightly overweight EM and dare I say it, UK vs FTSE AW). Risk of a forced deleverage is close to zero if you are disciplined. However, I then realised that the cost of borrowing the 20% (from IBKR at Sonia + 1.5%) above what I’ve funded is not deductible from the taxable gain. Which is both bad but got me thinking:

1. is anyone else playing with (gentle) structural term leverage. Idea here is to provide a bit of juice (like 0.5%-1% pa across the cycle), not get rich quick. I figure that in the long run the equity risk premium should see you good so long as you never have to sell in a downturn.

2. isn’t a better way to do this actually holding low coupon gilts and overlaying rolling futures for the equity exposure? Or is it? No etf running fees, no dividends/eri to get taxed punitively on but set off against roll and execution costs and crystallising gains for cgt at each roll. Has anyone got any experience here or done the maths on this?

3. actually taking it to an extreme, the optimum would be to do the above but replace futures with index spread bets as no tax ever. I have precisely zero knowledge of this market and what trading costs look like, but agin interested in the experience of others.

4. any thoughts on family investment companies or other corporate structures for shielding gains until drawn?

I quite like the idea of doing something optimised after making the big decisions around asset allocations, even if it becomes a part time job (at least to begin with whilst I work out what I’m doing and build the tooling to automate). I absolutely do not want to end up on the bad side of hmrc, mind.

Thanks in advance!

Are there any popular or common guidelines for when it is advisable to stop contributing to a sipp?

A colleague was discussing their situation with ChatGPT, and given how much they have, the SIPP contributions are only slightly better than GIA due to the 40/45% income tax they are likely to pay when they start withdrawing.

I also have another colleague who doesn't believe in pensions due to the inflexibility and risk of government rule changes.

How do people here handle budgeting / expense tracking once they’re well past the point of needing a strict budget?

I assume most people in fatFIRE aren’t doing detailed monthly budgeting in the traditional sense. Probably a mix of naturally spending below their means, having a rough annual target, and occasionally checking they’re not drifting into wasteful spending.

But if you still want to optimise spending a bit, not necessarily spend less, but spend better, there has to be some kind of feedback loop.

What does that actually look like for you in practice?

Also interested in how people handle this with spouses/partners. Do you tend to align on an overall spending philosophy, have explicit discussions/limits, separate discretionary budgets, or mostly avoid thinking about it?

Here’s what we’re currently trying:

1. Categorise expenses retroactively.
2. Use that for some light feedback, e.g. we enjoy eating out and fancy groceries but not spending much on those. So try to spend a bit more.
3. Pick some specific categories where we could be more thoughtful, for example holidays. Set a rough annual target. This helps to decide whether an expensive holiday is a good idea or too much this year.
4. All other categories that seem, we just continue as we are without worrying about it.

My partner seems to be happy to have a budget for a very small number of categories.