Tax Systems Share Discussion Threads

[miata] 05/12/2013 10:39

The chancellor is due to begin his autumn statement at 11.15 this morning.

[miata] 29/11/2013 08:47

Welby wants to tax spreadbetting.

[miata] 22/11/2013 17:39

The Treasury has promised to abolish "Schedule 19" stamp duty reserve tax, which applies to some investments sold by funds. The tax cut, worth £145 million a year to the fund management industry, is politically controversial and Labour has promised to reverse it.

[miata] 21/11/2013 10:57

Stamp duty tax revenues increased by 46% to more than £1.2 billion in October compared to the same month last year.

[sarahbudd] 02/11/2013 11:50

Thank you again Miata. I have emailed them.

[miata] 02/11/2013 11:16

Read the declaration that your SIPP provider requires you to complete with additional contributions.

Some will require you to declare that your contribution does not exceed your earnings in the current tax year. (This is to avoid the administrative hassle of voiding non-compliant plans). If this is the case you will have to contact them.

[sarahbudd] 01/11/2013 17:46

Thank you so much..does my pension provider need to know recent contributions are for last year's pot?

[miata] 01/11/2013 15:53

Online self-assessment allows you to re-open last years tax computation online.


You can also claim the difference by telephoning 0845 900 0444 or writing to HMRC if you are a 40% income taxpayer. If you pay 50% tax this must be done through your tax return. You will need to provide HMRC with the following details if you telephone or write:
Your name, address, National insurance number, Tax office address,
Your gross annual pension contribution (including the relief you have already got).

[sarahbudd] 01/11/2013 12:58

Hello I have a question please? I'm self employed, & have a SIPP. I want to add to last years contributions to make up to £40,000 max allowed. I have paid into SIPP this tax year already, how can I show that I want those contributions to be put against last years allowance? I'm completing TAX return and need tax relief.. Thanks

[miata] 14/10/2013 07:58

Does this smell of Lib-Dems?

[miata] 02/10/2013 15:18

Annuity calculator

[miata] 02/10/2013 14:56

2)a) I gather you are referring to IHT gift exemptions?
£3,000 in total in each tax year.

So, NO you cannot gift £3,600 to each child exempt from IHT lifetime transfer rules (unless via 2)b).

I imagine the £3,600 you are thinking about is the pension tax relief limit for non-earners.

2)b)You are referring to IHT exemption on 'Regular gifts or payments that are part of your normal expenditure'

"Any regular gifts you make out of your after-tax income, not including your capital, are exempt from Inheritance Tax. These gifts will only qualify if you have enough income left after making them to maintain your normal lifestyle.
These include:
monthly or other regular payments to someone
regular gifts for Christmas and birthdays, or wedding/civil partnership anniversaries
regular premiums on a life insurance policy - for you or someone else
You can also make exempt maintenance payments to:
your husband, wife or civil partner
your ex-spouse or former civil partner
relatives who are dependent on you because of old age or infirmity
your children, including adopted children and step-children, who are under 18 or in full-time education"

If you have investments such as ISAs where income rolls up, this is clearly not necessary to maintain your normal standard of living, so can be gifted to children or grandchildren free from IHT, and without limit.

Whilst funds into their pension pots would be enhanced by 20%, charges over their long (starting young) pension fund lifetime would erode this benefit and of course they would be taxed on the ultimate income at their highest rates. Do consider the ISA alternative, being able to release the funds to invest in a house at age, say, 25 might be more beneficial that money they couldn't get at all before 55.

4) QROPS are basically for non-UK residents. There are a host of member payment charges if the member is resident in the United Kingdom, which I would have thought make them a non-starter for you.

The member payment charges are:
on unauthorised payments. These charges broadly represent recovery of the tax relief already given in respect of the contributions made by the employer, the member or on their behalf, and the income from the investment of those contributions. The amounts of relief given are not evaluated on a case by case basis, rather set rates of charge apply to all. The individual charges are:
the unauthorised payments charge - at 40% of the amount of the payment, and
the unauthorised payments surcharge. If the payment and any other unauthorised payments to the member in a 12 month period exceed 25% of the member's accrued rights, the member becomes liable to an unauthorised payment surcharge of a further 15% of the payment.
the short service refund lump sum charge on the member instead of the scheme administrator, at a mixed rate of 20% and 50% respectively below and above £20,000 refunded the serious ill-health lump sum charge on the member instead of the scheme administrator at 55% the special lump sum death benefits charge on the recipient instead of the scheme administrator at 55% [s206 FA04] payable on
a pension protection lump sum death benefit,an annuity protection lump sum death benefit, or a drawdown pension fund lump sum death benefit, trivial commutation lump sums and winding-up lump sums - taxed on recipient as pension income at marginal rates under PAYE on between 75%-100% of the amount paid, trivial commutation lump sum death benefits and winding-up lump sum death benefits - taxed on recipient as pension income at marginal rates under PAYE on the amount paid.

[serratia] 02/10/2013 14:16

Hi,
Thanks for the reply.

2)"The income would attract tax relief for our children and would not be limited at £3600 as it would be surplus income ?" Explain?

At present I understand that I can gift £3600 to each child. Above that it has to be surplus income. As I don't need the income and have over £20k I can give them this extra money without penalty I assume. If I put this surplus into their pension funds it would be enhanced by in their cases 20%.

3) If I understand this then if we die before age 75 they inherit the pension with no tax deducted. If we make it past 75 we are forced into say an income drawdown on which we'll pay tax. I take it we just can't leave it until we go if we live past 75 so they can have all of it tax free. I'll check out 'capped draw down'.

QROPS - I'm a UK resident and so are the children. I'll tread carefully and look into this. My assumption is/was you can set up a QROPS in say Gibraltar. Leave it there and on our death the children can cash it in free of IHT, I guess this only becomes relevant if we live to 75+.

[serratia] 02/10/2013 12:17

MIATA,

A tax areA that I'm not too conversant with - My wife and I have a couple of pension pots - stakeholders that we do not need to convert to annuities. In addition our assets exceed the IHT limits. I am reviewing our options -

Take annuities and pay the income into our children's pensions. The income would attract tax relief for our children and would not be limited at £3600 as it would be surplus income ?

Leave the stakeholders in place. If we die before we're 75 are they included in your assets for IHT purposes, do the children just receive the cash ? If we reach 75 I think we have to take an annuity ?

I've just come across QROPS. It seems that we can transfer our pensions to an overseas jurisdiction and they fall outside IHT. Can our children convert them to cash or do they have to leave them until their pension age ? If they do that they would pay tax at the local rate but would they be double taxed if they bring the income back to the UK ?

[miata] 02/10/2013 10:33

More evidence of overpaid underskilled HMRC staff getting it wrong and causing distress to taxpayers:

[zorija] 30/9/2013 12:22

Thanks Miata - I need to raise £200k using these allowances, so as long as HMRC check the calcs then I can proceed. If I buy now then HMRC will check the calcs. when our tax returns are completed sometime next year...

ZZZ

[miata] 30/9/2013 11:36

Not quite sure about what you are asking, but if the proceeds of realisations exceed four times the annual exempt amount you have to submit your CGT calculations for HMRC to check even if your gains are within the annual exempt amount.

[zorija] 30/9/2013 11:22

Is there any issues with regard to the amount of capital raised when using capital gains ?

I am in the process of buying a house and need to raise a large amount of capital which I can do by using my allowance and also the wifey's allowance.

Thanks for any feedback...

ZZZ

[shareho1der] 14/9/2013 20:01

Can they confiscate your shares if you are convicted of benefit frauds.?

[optomistic] 14/9/2013 12:15

Thanks MIATA

[miata] 14/9/2013 11:58

No. Its about tax avoidance.