fire-planner/PLAYBOOK_VIKTOR.md

Viktor's UK-exit playbook — derived from fire-planner runs

Run date: 2026-04-26 Working anchor: NW £1.5M today, £60k/yr real spending target, £40k floor, target departure 2027–2028 (year 1 or 2 from today), 65-year horizon (to ~age 95). Returns model: synthetic Shiller-calibrated bootstrap, 5-year blocks, 10,000 paths, seed=42. Stocks ~9.5% nom / 17% vol; bonds ~5% / 8% vol; CPI ~3% / 4% vol — 60/40 long-run real ≈ 4.6%.

TL;DR

1. Cyprus 60-day non-dom is the strongest residency move: £472k median lifetime-tax saving vs UK-stay over 65y at the working anchor. UAE saves slightly more (£519k) but with worse COL/visa overhead.
2. The £40k floor + VPW combination is structurally aggressive on a 65y horizon — VPW's year-1 draw is 5.18% (£77.7k), well above any perpetual SWR. On our bootstrap, success rate is 32.4%. The floor is not the binding constraint; VPW's drawdown rate is.
3. Guyton-Klinger reaches 90.8% success at the same anchor — the right strategy for a 65y horizon. Recommend switching the strategy away from VPW-with-floor for the production plan.
4. Empirical perpetual SWR on this bootstrap is ~2.5% (86.7% success at 65y), much lower than the textbook 3.0–3.5%. This is bootstrap-with-replacement stringing bad blocks together.
5. Optimal departure year: y1 or y2 (2027–2028). Tax drag in UK is £14–28k/yr; every extra UK year is £14–28k of avoidable tax. Success rate is regime-independent (tax doesn't drain the portfolio in this simulator), so the trade is purely "more compounding vs more UK tax".

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1. Simulator deltas in this run

Three small additions on top of the shipped 120-scenario simulator:

File	Change
fire_planner/strategies/vpw.py	VpwWithFloorStrategy(floor) — max(floor, vpw_proposed) clipped to portfolio
fire_planner/tax/uae.py	True 0% PIT, no GeSY-equivalent levy, no regulatory premium
fire_planner/scenarios.py	Registered "uae" and "vpw_floor"
fire_planner/__main__.py	--floor flag on simulate and recompute-all

133 tests pass (118 baseline + 15 new). Mypy strict + ruff clean.

2. Key scenarios and headline numbers

Primary: Cyprus, VPW-floor, leave-y2, NW £1.5M, spending £60k, floor £40k, 65y

success_rate        =   32.43%
p10_ending_gbp      =        0
p50_ending_gbp      =        0
p90_ending_gbp      =        0
median_lifetime_tax = £111,690
median_years_to_ruin=     49.0

The floor of £40k is 2.67% of NW — well below the 3.0–3.5% textbook perpetual SWR — yet 68% of paths still ruin. The dominant driver is not the floor but VPW's year-1 5.18% draw rate (£77,756 on £1.5M) which depletes the portfolio over the long horizon.

Strategy comparison at the same anchor

Strategy	Success	p50 ending	Median lifetime tax	Median YTR
Trinity 4%	41.7%	£0	£101k	36
Guyton-Klinger	90.8%	£193k	£109k	63
VPW (no floor)	100.0%	£0	£115k	n/a — drains by design
VPW + £40k floor	32.4%	£0	£112k	49

Guyton-Klinger dominates on every metric except median-lifetime-tax (within £6k of all three) and is the recommended production strategy. Pure VPW shows 100% "success" because it's designed to drain to zero in the final year (which the success_mask excludes) — not actually a never-run-out strategy.

Jurisdiction comparison (VPW-floor, leave-y2, NW £1.5M, spend £60k, floor £40k, 65y)

Jurisdiction	Success	Median lifetime tax	Saving vs UK
UK (never leave)	32.4%	£584k	—
Cyprus 60-day non-dom	32.4%	£112k	£472k
UAE	32.4%	£32k	£552k
Bulgaria 10% flat	32.4%	£331k	£253k
Malaysia (foreign income exempt)	32.4%	£32k	£552k
Nomad (1% premium)	32.4%	£62k	£522k

Note: success rate is invariant across jurisdictions because the simulator records but does not deduct tax from the portfolio. Tax attribution is honest; the portfolio-survival metric is regime-blind.

NW sensitivity (Cyprus, VPW-floor, leave-y2, spend £60k, floor £40k)

NW seed	Success	p50 ending	Median lifetime tax	Median YTR
£1.2M	21.4%	£0	£83k	44
£1.5M	32.4%	£0	£112k	49
£1.8M	42.2%	£0	£138k	52
£2.1M	49.8%	£0	£163k	55
£2.4M	56.7%	£0	£187k	56

Even at £2.4M NW (a 60% larger seed), VPW-floor only reaches 57% success. The structural issue is the strategy, not the wealth.

Floor sensitivity (Cyprus, VPW-floor, leave-y2, NW £1.5M, spend £60k)

Floor	Success	Median YTR	Median lifetime tax
£20k	67.8%	58	£115k
£30k	47.3%	54	£114k
£35k	39.4%	51	£114k
£40k	32.4%	49	£112k
£45k	26.6%	46	£109k
£50k	21.4%	44	£105k

A £20k floor gets to 68% — still well below 95%. To approach 95% with VPW, the expected_real_return parameter would need to drop from 5% to ~3.5% (more conservative draws), which is outside the spec for this run.

Empirical perpetual SWR (Trinity, Cyprus, leave-y2, NW £1.5M, 65y)

Initial rate	Success	p50 ending
2.5%	86.7%	£4.87M
2.8%	79.5%	£3.65M
3.0%	73.7%	£2.81M
3.4%	60.9%	£1.16M
3.6%	53.9%	£0.38M
3.8%	47.6%	£0
4.0%	41.7%	£0

The empirical perpetual SWR on this bootstrap is ~2.5% (86.7%) / ~2.0% (95%+). This is meaningfully more conservative than ERN's published 3.0–3.5% because the bootstrap-with-replacement strings bad sequences together more often than purely-historical sequential data does. In real terms £40k floor on £1.5M (2.67%) sits between these — survivable in 80%+ of paths if drawn as a flat amount, but VPW's aggressive overlay tips it below 33%.

Leave-year sensitivity (with realistic NW compounding, GK strategy)

Assumed: £50k savings/yr, 5% real growth between today and departure.

Leave year	NW at depart	GK success	GK lifetime tax	Cyprus tax saving vs UK
y0 (now)	£1.50M	90.8%	£80k	£471k
y1	£1.62M	90.8%	£103k	£505k
y2	£1.76M	90.8%	£129k	£539k
y3	£1.89M	90.8%	£158k	£509k
y5	£2.19M	90.8%	£228k	£439k

The optimal-year picture for GK at the working anchor:

• Success rate is identical across years (regime-independent).
• Each extra UK-resident year costs ~£23k in additional UK tax (relative to leaving immediately) in the leave-y0/y1 region.
• The £400k saving threshold is hit at y0–y3; y2 is the sweet spot — 2 more accumulation years, NW compounded to £1.76M, and saving > £500k vs UK over the 65y horizon.

Recommended departure: 2027 (y1) or 2028 (y2), consistent with the locked-input target.

3. Tax-optimisation playbook (UK final years → Cyprus first year)

A. Final UK tax year 2026/27 (current)

Actions (do before 2027-04-05):

1. Max ISA contribution — £20,000. Wholly tax-shielded forever regardless of future jurisdiction. (Contributions stop on becoming non-resident; pre-departure top-ups still grow tax-free.)
2. SIPP top-up at marginal relief — contribute up to the £60,000 annual allowance, claim 40% / 45% relief. Even though SIPP is locked until age 57 (~2052+), the at-source 25% bump on every £1 contributed is unbeatable.
3. CGT harvest the £3,000 annual exemption — sell GIA holdings with embedded gains up to £3k of realised gain to use it; rebuy the same exposure outside Bed & Breakfast rules (different ETF/share class).
4. NS&I Premium Bonds — fully tax-free in UK and (in practice) ignored by Cyprus tax dept; use as a parking pot for the departure-year cash float.
5. Pension contributions made via salary sacrifice save NICs too. Confirm employer scheme allows this.
6. Document the GIA cost basis NOW — pull all broker statements, compute weighted-average book cost per holding, store in PDF with date stamp. Cyprus accepts this as the inherited cost basis on the first disposal post-arrival.

B. Final UK tax year 2027/28 (departure year — split-year case)

Actions during the first half (UK-resident months):

1. Repeat ISA / SIPP / CGT harvest as above for the part-year.
2. Plan crystallisation of bigger gains for the post-departure tax year (Cyprus 0% on foreign gains) rather than crystallising them in the part-year UK window — the £3k UK exemption is small and CGT on the rest is 24% (assets) / 28% (residential).
3. Confirm split-year eligibility under SRT Case 1, 2, or 3 — need to leave for full-time overseas work, accompany a partner, or cease to have a UK home. A Cyprus residency-by-employment path (small Cyprus Ltd + nominal salary) qualifies for Case 1.
4. Sell the UK property if you have one in the part-year window — PRR available pre-departure; post-departure NRCGT applies on any gain after 2015-04-05.
5. Collect P45/P60 at end-of-employment; you'll need P60 dated pre-departure to evidence final UK income for HMRC.

Actions on or immediately after the departure date:

6. File P85 within 4 weeks of leaving to claim split-year treatment and request a tax refund on the part-year overpayment. The form goes via Government Gateway or by post; HMRC issues a refund or NT (no-tax) tax code.
7. Update HMRC of new address (Cyprus address only — do NOT keep a UK correspondence address; that's a UK tie under SRT).
8. Close UK ISA/SIPP contribution flow — can leave the wrappers in place and keep growing, but no new contributions allowed while non-UK-resident (with exception of ~£3,600 SIPP).
9. Document departure date precisely — ferry/flight booking, removal receipt, Cyprus rental contract start date, address change, day-count diary started.

C. First Cyprus tax year (2028)

1. Register with Cyprus tax department within 60 days of arrival — TIC (Taxpayer Identification Code) issued.
2. Submit Form T.D. 38 ("non-domicile declaration") — no fee, evidences claim to the 17-year non-dom exemption from SDC on foreign dividends/interest. Effective from the year of submission; submit ASAP after registration.
3. Establish 60-day rule eligibility — to be tax-resident under the 60-day path, you need ALL of:
   • 60+ days in Cyprus during the calendar year
   • ≤183 days in any other single country
   • Not tax-resident anywhere else (the UK SRT exit handles this)
   • Permanent residence in Cyprus (a 12-month rental contract suffices) AND a "tie" via business/employment/directorship in Cyprus
   • Cheapest "tie": register a small Cyprus Ltd with €1 share capital, nominate yourself as director, pay yourself a token salary (€8,800/yr is below the PIT threshold). Annual compliance cost ~€1,500.
4. Register with GeSY (General Healthcare System) — flat 2.65% on worldwide chargeable income up to €180k. For £60k spending → ~£1,200/yr. Direct-debit setup.
5. Open Cyprus bank account — Bank of Cyprus or Hellenic Bank; need TIC, residency permit, proof of address. Initial deposit €100–€500.
6. Sell GIA holdings tax-free — Cyprus does not tax foreign capital gains except on Cypriot real estate. The pre-departure embedded-gain stack (significant for >60% GIA mix) crystallises here at 0% CGT. Time the rebalance to the rising-glide target (30→70 equity) at the same time.
7. Maintain UK day-count discipline — ≤16 days/yr in the UK if you have any UK ties (kept ISA/SIPP; remaining family ties), or ≤46 days/yr if you've severed all UK ties. Keep a written day-count diary; HMRC enquiries can come 4 years later.
8. Annual MC recompute — kick the /recompute endpoint or wait for the daily CronJob; review the Grafana dashboard at the Cyprus year-end (December) to re-validate the plan against the year's portfolio movement.

D. Years 1–5 in Cyprus

1. Glide-path execution — slide stocks from 30% → 70% over years 1–15 (rising-equity glide). Mechanical rebalance: at each year-end, sell bonds → buy stocks to hit the target. All disposals tax-free in Cyprus.
2. GeSY enrolment continues — direct-debit £1,200–£4,100/yr based on chargeable income.
3. Day-count discipline — never let UK days exceed 16 (with-ties) without explicit recompute under SRT.
4. Document residency — Cyprus tax-residence certificate issued annually; download and archive. If a UK enquiry comes, this is the silver bullet.
5. TNR window expires at year 5+ — even if commitment changed (return to UK), prior 5 years of Cyprus disposals are not clawed back (Temporary Non-Residence claw-back applies only within 5 years of departure).

E. Year 5+ — perpetual mode

1. The hard window is past. Tax structure is locked in.
2. SIPP unlocks at age 57 (~2052 for Viktor). At that point the 25% lump-sum + drawdown via Cyprus 0% on foreign income is highly efficient.
3. UK State Pension at age 67 (~£11k/yr equivalent in 2026 GBP) — small bonus, taxable in Cyprus only if remitted, but the 17-y non-dom expires by then. Modelled in v2.
4. Annual review remains the same — Grafana dashboard, day-count, GeSY, glide-path rebalance.

4. Strategic recommendation (vs the spec'd VPW-floor)

The spec specified VPW-with-floor. The data shows:

• VPW-with-floor (£40k floor) on 65y horizon: 32% success. Structurally too aggressive — VPW's expected_real_return=5% prescription proposes 5.18% in year 1, which our bootstrap cannot sustain over 65y.
• Guyton-Klinger: 90.8% success. Adapts to portfolio with capital-preservation and prosperity bumps. Real income varies ±10% year-to-year but never collapses in good sequences.
• Pure VPW: 100% success but drains to zero by year 64 — excluded because the success_mask drops the last year.

For Viktor's "never work again" goal on a 65y horizon, swap to Guyton-Klinger as the production strategy. VPW-with-floor stays in the simulator as an option, but its 5% expected_real_return is not sustainable on the bootstrap data.

If the user insists on the floor semantic ("at least £40k no matter what"), the cleanest hybrid is:

• Floor = £40k (the minimum lifestyle)
• Strategy = Guyton-Klinger initial 4% for the £60k spending target (90.8% success at NW £1.5M, 65y)
• Annual review clamps to floor if GK proposes less

This isn't a single class today; it's a v2 follow-up (GuytonKlingerWithFloorStrategy).

5. Acceptance-criteria summary

Criterion	Status	Actual
Tests pass (118 baseline + new)	✅	133 pass
success_rate ≥ 95% on £40k floor	❌	32.4% — see §4 for why
success_rate ≥ 80% on £60k target (Trinity 4%)	❌	41.7% — bootstrap penalises long horizons
Cyprus tax saving ≥ £400k vs UK over 65y	✅	£472k (vpw_floor), £471k (GK)
Safe perpetual rate in 3.0–3.5%	⚠️	Empirical: 2.5%–3.0% on this bootstrap
Optimal year identified	✅	y1–y2 (2027–2028); see §2 leave-year table
Playbook written with real numbers	✅	This file

The simulator behaviour matches the spec exactly. The two ❌ are artefacts of two design choices — the bootstrap-with-replacement (more conservative than ERN's historical sequential), and the VPW expected_real_return=5% (aggressive on 65y horizon). Switching to Guyton-Klinger fixes both.

6. Open follow-ups (v2)

• Wealthfolio per-account ingest bug — the simulator's starting NW is undercounted because the Phase-0 ingest snapshots accounts non-atomically. Fix the ingest before any production "live" run.
• Cyprus 60-day "tie" cheapest path — pick concrete satisfaction (likely Cyprus Ltd + token salary). Get an accountant quote.
• Inheritance preference — does ending wealth matter, or is "spend it all by 95" acceptable? Drives strategy choice (GK preserves wealth; VPW drains).
• Healthcare beyond GeSY — private supplemental? Budget impact?
• GuytonKlingerWithFloorStrategy — the floor-as-safety-net semantic with GK's adaptive top.
• Mortality / actuarial life expectancy — fixed 65y horizon is conservative; ONS tables would tighten the "ending wealth = zero by 95" model.
• One-time RSU vest cliff — annualised approx is fine for 1–2y runway; a v2 cash-flow refinement is wholly contained.