Skip to content
  • Categories
  • Recent
  • Tags
  • Popular
  • Users
  • Groups
Skins
  • Light
  • Cerulean
  • Cosmo
  • Flatly
  • Journal
  • Litera
  • Lumen
  • Lux
  • Materia
  • Minty
  • Morph
  • Pulse
  • Sandstone
  • Simplex
  • Sketchy
  • Spacelab
  • United
  • Yeti
  • Zephyr
  • Dark
  • Cyborg
  • Darkly
  • Quartz
  • Slate
  • Solar
  • Superhero
  • Vapor

  • Default (Simplex)
  • No Skin
Collapse
Cobens Direct
  1. Home
  2. Tax Planning
  3. Pensions tax, CGT tax. And stuff

Pensions tax, CGT tax. And stuff

Scheduled Pinned Locked Moved Tax Planning
22 Posts 5 Posters 309 Views
  • Oldest to Newest
  • Newest to Oldest
  • Most Votes
Reply
  • Reply as topic
Log in to reply
This topic has been deleted. Only users with topic management privileges can see it.
  • 2 Offline
    2 Offline
    2BToo
    wrote on last edited by
    #13

    Nik,

    Thanks. I've sent you an eMail to your Cobens Direct eMail address.

    1 Reply Last reply
    0
    • 2 Offline
      2 Offline
      2BToo
      wrote on last edited by
      #14

      Guys,

      Following on from a very helpful telephone call with Nik (thanks again Nik) I think I've got to the bottom of what I would be sensible to do. In my case, with my having no income and my wife having income up to nearly the limit of Basic Rate tax, I'll take out as much from my GIA as she is paid in post-tax income, we'll pay that amount into her pension and the tax we pay on the crystallisation of the GIA gain will be balanced by the refund of income tax paid into her pension.

      However as I have thought about it I think I have two further questions, as follows;

      A. Mrs 2BToo has paid 20% tax on her income, but the money that I take out of my GIA will be taxed at 10%. Does this mean that we get back more in tax relief (from refunded income tax) than we pay in CGT?

      B. If Mrs 2BToo receives tax relief on all of the money she has paid into her pension then does she not receive more tax relief than she has paid, given that she has only paid tax on the income above the personal allowance (£12750) ? This relates to Question 2 and Answer 2 in the above posts.

      IF I understand things correctly then these two points will mean that we end up quite some way ahead on tax, non? (Note the 'IF' in this sentence - it's doing a lot of work.)

      Thanks again.

      N 1 Reply Last reply
      0
      • ? Offline
        ? Offline
        A Former User
        wrote on last edited by
        #15

        if it is of any help to your thoughts, 'er indoors current sole income is 'er
        state pension. She has not, yet, started to draw from 'er SIPP, in fact she is paying in a nominal £100pm and this gains 'er a free £25 from Rachel Thieves!

        Winner winner chicken dinner!

        1 Reply Last reply
        1
        • 2 2BToo

          Guys,

          Following on from a very helpful telephone call with Nik (thanks again Nik) I think I've got to the bottom of what I would be sensible to do. In my case, with my having no income and my wife having income up to nearly the limit of Basic Rate tax, I'll take out as much from my GIA as she is paid in post-tax income, we'll pay that amount into her pension and the tax we pay on the crystallisation of the GIA gain will be balanced by the refund of income tax paid into her pension.

          However as I have thought about it I think I have two further questions, as follows;

          A. Mrs 2BToo has paid 20% tax on her income, but the money that I take out of my GIA will be taxed at 10%. Does this mean that we get back more in tax relief (from refunded income tax) than we pay in CGT?

          B. If Mrs 2BToo receives tax relief on all of the money she has paid into her pension then does she not receive more tax relief than she has paid, given that she has only paid tax on the income above the personal allowance (£12750) ? This relates to Question 2 and Answer 2 in the above posts.

          IF I understand things correctly then these two points will mean that we end up quite some way ahead on tax, non? (Note the 'IF' in this sentence - it's doing a lot of work.)

          Thanks again.

          N Offline
          N Offline
          Nik Burrows
          Global Moderator
          wrote on last edited by
          #16

          @2BToo

          Good to catch up and glad that you found it useful

          A) Yes you get more tax relief on pension contributions than you pay CGT. In this case as a basic rate tax payer it is, as you say, 10% CGT and 20% tax relief on contributions. So a £10,000 capital gain (after allowances) costs you £1,000 in CGT while a £10,000 pension contribution actually gains you £2,500 in tax relief (the 20% relief is calculated on the gross contribution)
          B) Again yes she does, you are gaining tax relief on the £12,570 of income that no tax has been paid on, so as you say getting tax back that hasn't actually been paid.

          Cheers

          Nik

          1 Reply Last reply
          1
          • 2 Offline
            2 Offline
            2BToo
            wrote on last edited by
            #17

            Nik,

            Thanks. In that case then that small exercise sounds like it's a good way of saving a goodly chunk of tax. Why didn't I do it in years gone by?!?

            (And I hope that a certain Mrs Reeves doesn't read this, for reasons that don't need to be explained.)

            Thanks again.

            R 1 Reply Last reply
            1
            • 2 2BToo

              Nik,

              Thanks. In that case then that small exercise sounds like it's a good way of saving a goodly chunk of tax. Why didn't I do it in years gone by?!?

              (And I hope that a certain Mrs Reeves doesn't read this, for reasons that don't need to be explained.)

              Thanks again.

              R Offline
              R Offline
              Ronski
              wrote on last edited by
              #18

              @2BToo said in Pensions tax, CGT tax. And stuff:

              And I hope that a certain Mrs Reeves doesn't read this

              Best get it in before the end of the month 😉

              1 Reply Last reply
              0
              • 2 Offline
                2 Offline
                2BToo
                wrote on last edited by
                #19

                That'll happen, for sure. It's what happens next year and beyond that is in question ....

                ? 1 Reply Last reply
                0
                • 2 2BToo

                  That'll happen, for sure. It's what happens next year and beyond that is in question ....

                  ? Offline
                  ? Offline
                  A Former User
                  wrote on last edited by
                  #20

                  @2BToo For that, we have to rely on Nik to fully grasp Rachel Thieves intentions and find the loopholes!

                  But a Chancellor who takes pensioner's WFA without regard to Age Concern's comments is probably capable of devising a scheme of attacking SIPP's and ISA's as well.

                  1 Reply Last reply
                  1
                  • N Nik Burrows

                    @Ronski

                    Apologies Ronski. i used PM but e-mail is the option.

                    Cheers

                    Nik

                    R Offline
                    R Offline
                    Ronski
                    wrote on last edited by
                    #21

                    @Nik-Burrows Thank you for the speedy reply to the email, much appreciated.

                    1 Reply Last reply
                    0
                    • 2 Offline
                      2 Offline
                      2BToo
                      wrote on last edited by
                      #22

                      Quick update: with thanks to Nik, I've effected all the movements suggested and am hoping that the new investments in IM will grow as bountifully as the last ones have done!

                      Thanks chaps.

                      1 Reply Last reply
                      0
                      Reply
                      • Reply as topic
                      Log in to reply
                      • Oldest to Newest
                      • Newest to Oldest
                      • Most Votes


                      The value of your investments can go down as well as up, and you may get back less than you invested.

                      Cobens a trading name of Astute Financial Management UK Limited is authorised and regulated by the Financial Conduct Authority. Registered Address: 4th Floor Peek House, 20 Eastcheap, London, EC3M 1EB. Registered in England and Wales No. 5850981.

                      • Login

                      • Don't have an account? Register

                      • Login or register to search.
                      • First post
                        Last post
                      0
                      • Categories
                      • Recent
                      • Tags
                      • Popular
                      • Users
                      • Groups