Tax Systems Share Discussion Threads

[apotheki] 28/3/2024 16:56

Contact HSBC's Investor Relations - contact details should be on the HSBC website

Plus remember that in the U.K. that there is NO CGT payable on death just potentially IHT depending on the size of the estate.

[dope007] 28/3/2024 16:33

On HSBC wouldn't a stock broker be able to get it for you? Hargreaves Lansdown or similar?

[dcarn] 28/3/2024 16:16

Hi,

I'm attempting to work out potential capital gains due on a sale of HSBC shares that were inherited in 1973.

I spoke with HMRC who confirmed the share price on 31st March 1982 should be used as the purchase valuation following the 1982 CGT Rebase.

Does anyone know where I can find the HSBC share price from 31st March 1982 as I'm struggling to find any online systems that go back further than 25 years?

[dope007] 21/3/2024 12:39

I think it matters in that they don't mess your tax up by assuming you will earn that every month and it makes things a little simpler

[mcunliffe1] 21/3/2024 11:47

Dope. When taking the tax-free limp sum (the quarter of your entire pot at that moment in time) it probably doesn't matter which month you do that as it's tax-free.

My belief in taking a draw-down (where, say, I draw just £10k and of that, £2.5 is tax-free - the rest taxable) in March was flawed slightly.

When I was with the Std. Life I drew-down six times. After the first draw HMRC allocated a tax code to S.L. and hence, all future draws used that as a reference. KNowing that code I ensured my draw-down avoided tax completely. To boost the amount I even took the 10% of my wife's £12,570 allowance as she was not in receipt of earning/pension at that time.

Now, having moved to ii mid March 2023 and after having made my 2023 draw-down from S.L. I found myself wanting to draw-down for the very first time with ii this March. Until you have made that FIRST draw, HMRC cannot allocate a tax code to the pension provider (ii).

A better idea, I now appreciate, would have been to draw-down £100 in January 2024. Pay the tax on the £75 (probably nothing) and then let HMRC allocate that tax code. Then, in mid March 2024 I could have draw-down the £10k as I did and paid appreciably less tax because of the code.

You live and learn.

None of that knowledge was obtained from HMRC. How much better would our lives be if HMRC was more communicative.

[dope007] 21/3/2024 10:12

I will be taking my tax free lump sum soon and the main advice I have had is take it in the last month of the tax year. even so I have claimed a couple of small pot pensions and simply filled n a form online and got the refund through quite quickly

[mondex] 21/3/2024 09:59

Thank you all for your excellent replies.

My SIPP is with II so useful hearing their advice.

My intention is to use ISA's + state pensions to fund my wife's & my retirement & to use the 25% to add to the ISA pot & boost tax-free income, leaving the rest of the pension pot to grow for the children.

[al101uk] 20/3/2024 19:01

On the 25% tax free part of the pension, this is highly recomended:

[mcunliffe1] 20/3/2024 17:38

Hi mondex;

I should state at the outset I am a retired programmer with no expertise beyond my own experience in pensions.

I have decided not (at this point) to take the 25% of the ENTIRE pot as a tax-free lump sum. I do however take yearly (once a year) draw-down of a modest £10k (this time) frlom the £200k pot.

To achieve that, Int. Inv. moved the £10,000 from my cash holding (I've purposely left about 45% of the pot in cash) into a secondary 'pot' still in cash and still in my SIPP. They then took £2,500 and paid me directly into my bank account and the other £7,500 went through their PAYE system and the amount after tax (£5547.94) was also paid directly into my bank account - both at the same time and as two transactions.

I believe this is known as Receiving an uncrytstallised funds pension lump sum (UFPLS.

Now, in your case you want the full £25k tax-free element and, presumably, leave the remaining £75,000 in the pension.

This was also possible with Int. Inv. and should equally be possible with your provider. I suspect they crystallise the entire pot (£100k) and pay you the £25k tax-free. the rest may well grow but ANY further draw-down in any manner from that pot will then be subject to the full tax at that time.

With my approach the remaining £190k in the pot may well grow over the next year (it had better do just that) and at any point I can seek a further draw-down in the manner I described I'd followed in early March. Or indeed, I could follow your option also.

Suppose my £190k grew back to £200k by next March, I draw £10k again, £2.5 tax-free etc etc.

In your case, your £75k may grow to £80k. You'd be taxed on all £80k if you then withdrew it.

As I don't know which company has your pension you would be best to talk to them to arrange your 25% lump sum withdrawal.

This is something I may well do myself when I approach 75 as I once believed there were tax implications about pensions being passed to beneficiaries before the gifter reaches 75 and after 75. Such may no longer be the case and it may all change anyway over the next 7-8 years.

Hope this helps somewhat.

[goatherd] 20/3/2024 17:30

That is a definitive answer from HMRC.

It is clear you can withdraw 25% and not pay any tax.

[mondex] 20/3/2024 16:58

Advice Needed

If I am entitled to a 25% tax free lump sum from my pension, how does it work in practice?

e.g. If I have a £100,000 pension pot can I take £25,000 out directly (and pay no tax)? or
is the 25% part of a larger sum where 25% of it is tax-free and 75% is liable for tax?

I ask because I want withdraw only the 25% from my pension & not pay any tax.

[cassini] 14/3/2024 23:52

I did my first SIPP (annual) withdrawal in March 2021 (end of FY) also thinking I wouldn't get taxed as though I'd be withdrawing that amount every month and of course... they taxed me as though it was an annualised monthly withdrawal.

The tax office did refund me the overtaxation amount automatically before six weeks was up, to be fair.

Once the new tax year started, the SIPP was been allocated its own tax code, calculated on what what other sources of pension income I had in play, and a single annual withdrawal no longer triggered an erroneous tax bill.

[mcunliffe1] 14/3/2024 18:55

I'm told my self-assessment submission will trigger a refund within 30 days.
I'm ever hopeful.

[geckotheglorious] 14/3/2024 17:40

MCunliffe

Getting a tax refund out of the farkers is even more difficult.

[mcunliffe1] 14/3/2024 15:49

I learned something today that may be useful to some of you on here - or your friends, relatives etc.

I rang HMRC to query why more tax had been deducted from my recent Pension draw-down lump sum than I expected.

Turns out Month1 was used to tax me. My code 1257L implies I can earn £12,570 a year before I'm taxed. That's £1,047.50 a month. Some weird maths at HMRC caused most of my draw-down to fall in the 20% range and some in the 40% - overall, they taxed me just over 26%.

This logic somewhat negates the benefit of my making a draw-down in the last month of a tax year.

Next, as I am in receipt of my wife's 10% Marriage Tax Allowance transfer I have £1,257 extra tax allowance - she has the same lower allowance. I had thought I should return this back to her after 5th April 2024 to ensure she remains untaxed on her state pension in 2024/2025 tax year.

Wrong!

Had I left this 'return' to April 6th it would have been implemented only in the FOLLOWING tax year of 2025/2026. So, the HMRC agent returned the transfer allowance today as it will then be implemented in 2024/2025 year but still apply for THIS yax years calculation.

Next, I'd assumed that as HMRC has no PAYE system for the state pension each pensioner being paid more than the £12,570 or in the event they are the gifter of the Allowance Transfer, £11,313 - they would be required to submit a self-assessment.

Wrong!

HMRC calculates the total amount they pay in pension, compared to the allowance the receiver has and writes to such people who owe them tax stating the amount due. The person is expected to mail a cheque or pay online. No self-assessment and no penalty letters.

It was worth the 44 minute wait to speak to the very helpful HMRC lady. Thought some of you may also benefit from these findings.

Cheers!

[the chairman elect] 16/4/2023 11:52

With regards to Banco Santander / BNC how does the 19% withholding tax work reference UK tax residents? Do they just have to lump it or can they get a refund?

Quality advice would be much appreciated....

[waldron] 01/4/2023 07:39

Frozen taxes set to raise £25bn by 2027-28, says think tank

1 April 2023, 00:04


High inflation has pushed up the projected revenue take from the Government’s personal tax threshold freeze, the Resolution Foundation said.

High inflation has pushed up the projected revenue take from the Government’s personal tax threshold freeze to £25 billion by 2027-28, according to a think tank.

With the 2023/24 tax year starting on April 6, the Resolution Foundation analysed the personal tax and benefit changes taking effect.

Its report said: “Perhaps the most important piece of personal tax policy in 2023-24, though, is the decision not to raise the starting point for income tax and personal national insurance, nor the higher rate threshold.

“These remain frozen at £12,570 and £50,270 respectively, and are set not to rise before April 2028.

“If the usual CPI (Consumer Prices Index) uprating had happened this April, then those thresholds would be rising by 10.1% to £13,840 and £55,340.

Perhaps the most important piece of personal tax policy in 2023-24, though, is the decision not to raise the starting point for income tax and personal national insurance, nor the higher rate threshold

Resolution Foundation

“For a basic-rate paying employee, that change would have been worth just over £400 (including national insurance, or £250 without), while a higher-rate payer would have gained over £900 overall.”

The report looked at the potential difference to revenue from income tax and national insurance, if the two main tax thresholds went up in line with inflation each year, rather than being frozen.

It said: “The six-year freeze as a whole is now projected to raise £25 billion in 2027-28.”

Many benefits and the state pension are rising by 10.1% in the new tax year.

More than eight million households receiving means-tested benefits will also benefit from enhanced cost-of-living payments in 2023-24, worth £900 over the next year.

Pensioners and those receiving disability benefits will see their additional payments repeated in 2023-24 and many workers will benefit from a 9.7% rise in the National Living Wage from April.

These increases will be crucial for low-income households to cover rising costs, the Foundation said.

It said the average B and D council tax bill in England will rise by 5.1% in April, equivalent to £99, while low-income households that rent remain under pressure from the continued freeze of the local housing allowance.

Higher-income households will bear the brunt of April’s tax changes, according to the Foundation, whose work is focused on improving living standards for those on low to middle incomes.

The starting point for the top rate of income tax will fall from £150,000 to £125,140, while the dividend allowance and capital gains tax annual exempt amount are being cut.

The dividend allowance is falling from £2,000 to £1,000 and then £500 next year and the capital gains tax annual exempt amount is falling from £12,300 to £6,000 and then £3,000 next year.

The reduction in income tax thresholds and dividend allowance will cost the top 5% of the population £2,000 on average, equivalent to an income reduction of around 1%, the Foundation said.

The myriad tax and benefit changes introduced this April highlight the challenges of such a patchwork approach to policy

Adam Corlett, Resolution Foundation

The Foundation said that, taken together, the tax and benefit changes taking place from April will provide significant support for lower-income households during the cost-of-living crisis.

The poorest tenth of the population are set to gain £500 on average next year, compared with a loss of £100 for a typical household, and a loss of £1,500 for the richest tenth.

Adam Corlett, principal economist at the Resolution Foundation, said: “High inflation has pushed up the projected revenue take from the Government’s personal tax threshold freeze to £25 billion a year – almost triple the amount forecast when the freeze was introduced.”

He added: “The myriad tax and benefit changes introduced this April highlight the challenges of such a patchwork approach to policy, which relies on short-term support schemes, stealth tax rises, and an unfair council tax system.

“Difficult decisions on tax and spending policies lie ahead, but policymakers should be honest with voters about the trade-offs of these decisions.”

The Liberal Democrats are calling for the energy price guarantee to be cut to £1,971 and for the warm home discount and winter fuel payments to be doubled.

This would be paid for through a windfall tax on the oil and gas companies and a tax on the bonuses of their senior executives, the party said.

Lib Dem treasury spokesperson Sarah Olney said: “Now more than ever, hard-working people deserve a fair deal.”

A Treasury spokesman said: “After borrowing £400 billion to help the country through the pandemic and (Russian President Vladimir) Putin’s energy price shock, we have had to take some difficult decisions to balance the nation’s books and to halve inflation this year.

“To help families with the cost of living, we are providing £3,300 of support on average per household this year and next – funded through windfall taxes on energy profits.

“For the first time ever, people can now earn £1,000 a month without paying a penny in income tax and national insurance.

“Thanks to a decade of tax reform, we have taken millions out of paying tax altogether.”

By Press Association

[goatherd] 28/1/2023 16:35

I found this article in the Telegraph on how HMRC penalise errors or fraudulent behaviour of taxpayers rather interesting.

[florenceorbis] 19/11/2022 11:23

UK Capital Gains Tax Changes Deal Heavy Blow To Investors

By City A.M - Nov 18, 2022, 2:30 PM CST

The Chancellor has slashed the exemption amount for capital gains tax and cut the dividend allowance in half today in a move that will strike a “heavy blow” to the UK’s entrepreneurs and investors.

In the Autumn statement, Jeremy Hunt said the government would cut the dividend allowance from £2000 to £1000, with a further 50 percent cut due to come from April 2024, meaning that investors will now pay tax on dividends at a rate depending on their wider income.

Entrepreneurs who pay themselves via dividends are also set to be hammered by the measures announced by Hunt today. 

A cut in the Capital Gains Tax threshold from £12,000 to £6,000 meanwhile is set to hit those with their cash outside ISAs and pensions tax wrappers, who will now pay a higher tax rate on their returns.

Analysts say the dividend tax cut would choke off investment and dampen returns at a time when ministers should be encouraging investors to back UK firms. 

“A dividend tax that kicks in at just £500 of earnings by 2024 could disincentivize investing at a time when it is really needed to help the economy grow, and for millions of investors who are looking to do more with their money to stay ahead of the pernicious effects of inflation,” said Sam North, analyst at trading firm eToro.

He added that slashing the allowance could lead to “unexpected outcomes” like people putting more money away from “typical FTSE income paying stocks to other growth focused – and typically riskier – investments elsewhere.”

Analysts at Bowmore Asset Management said that the changes to capital gains tax and dividends were a “double whammy” against investors.

“Whilst high net worth individuals are unlikely to feel much pain from this, for many small investors that increase in tax on dividends and capital gains is going to be significant,” said Charles Incledon, client director.

“Cuts to this income could cause a real squeeze on the finances of many small investors, especially those who are retired and depend on dividend income from their shares. Bad news considering that we have a cost of living crisis at the moment.”

By City AM

[waldron] 18/11/2022 20:02

Frank Prenesti
Sharecast News
18 Nov, 2022 14:52
Britons face decades of high taxes after govt 'own goals' - IFS

People 'just got a lot poorer' after Hunt's budget hikes taxes, cuts spending


Britons will face “several decades” of high taxes as a result of “own goals” on economic policy by successive Conservative governments, an influential think tank said on Friday.


Responding to Finance Minister Jeremy Hunt’s autumn budget containing £55bn of tax rises and public spending cuts, the Institute for Fiscal Studies (IFS) said the UK had “just got a lot poorer”.

Living standards will fall by 7% to their lowest levels since records began – wiping out eight years of growth in the process as wages fall well behind surging inflation and interest rates.

In stark terms, real disposable incomes will be at 2013 levels, according to the independent spending watchdog the Office for Budget Responsibility.

“Our tax burden is going to settle at its highest level in history. Post-election spending plans are actually pretty austere, that’s a pretty nasty place to be, high borrowing, high debt, high tax and public spending under strain,” said IFS director Paul Johnson.

“How are all of those things consistent with one another? Part of the answer to that lies in the fact that we all got just a whole lot poorer.”



He added that the “extraordinary” scale of expected spending on debt interest – forecast to double at £100bn a year by 2027 – would also inhibit growth.

Hunt admitted on Thursday that the UK was already in a recession that is expected to last more than a year and reduce economic output by 2%.

He also gambled on the government’s electoral chances at the next election, due in 2024, by deferring austerity spending cuts for after any expected poll.

Johnson said he would be “most surprised” if the tax burden fell to long-term, pre-Covid averages “any time in the next several decades”.

“Higher taxes, a bigger state look to me to be here to stay. Beyond the next two years, all the spending numbers should be taken with a very large pinch of salt, after all they are pencilled in for after the next election,” he said.

“If they are kept to, they will mean cuts…to most public services. I have to say that it’s unlikely that they will actually be kept to. I would be willing to wager quite a considerable sum that spending will turn out higher than planned. It literally always does.”

Johnson said “slashing̶1; investment spending after the bank-induced financial crash of 2008 by then finance minister George Osborne – the architect of austerity measures that are forecast to last a generation – was “not a good way to get growth.

“Very clearly Brexit was an economic own goal….economically speaking that has been very bad news indeed and continues to be bad news, particularly the way that we’ve done it, the hard Brexit…distancing ourselves from the (EU) single market.”

Reporting by Frank Prenesti for Sharecast.com