Tax and how to avoid paying too much on return
Dec 16th 2010, 10:11 pm
#16
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Joined: Aug 2008
Location: UK
Posts: 25
Re: Tax and how to avoid paying too much on return
Believe me I have been doing that for the last 12 months ... heres hoping anyway and thanks.
Dec 17th 2010, 4:43 am
#17
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Joined: Feb 2009
Location: UK
Posts: 14,284
Re: Tax and how to avoid paying too much on return
once you invest and take out a salary from that investment, I know you can take the Capital Gains tax allowance off, I think at present it's £10600 plus your personal allowance before you pay tax on what's left but can any of the remainder be counted as "return of capital" if the investment was from tax paid funds as in the case of someone coming back to UK having been away a long time and 'Non Resident for Tax purposes in UK" who has saved that money and done the tax elsewhere. I know some of the income from Annuities can be counted as return of capital.
By the by, I didn't use Meow because I really need someone in UK who does the lot and fills in my tax return afterwards ... never was any good at those .
By the by, I didn't use Meow because I really need someone in UK who does the lot and fills in my tax return afterwards ... never was any good at those .
What do you mean by "invest and take a salary". You don't get salaries from investments, you get investment income. And a capital gain represents the increase in the value of an asset, perhaps a house or a share portfolio, the gain is realised and becomes taxable when you sell it and that is where the capital gain allowance comes in, you certainly cannot use the capital gain allowance to offset some income.
I do recommend you find an accountant or a financial advisor to help you through this.
Dec 17th 2010, 1:35 pm
#18
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Joined: Aug 2008
Location: UK
Posts: 25
Re: Tax and how to avoid paying too much on return
Thank you for your super insight, madam. Please let us let this lie now.
I know what I am talking about and maybe my terminology is incorrect from an accountants point of view. I refer to investments as a portfolio of shares, mutual funds etc be they UK, American, Australian or wherever held in joint names with myself and my wife. Our 'salaries' we draw every year by selling part of that portfolio. The portfolio will be held in the UK and as we are resident (or will be) in the UK will be taxable in the UK. My present accountant tells me that if there is a capital gain on the sales she can use the CGT allowance for myself and my wife individually and from what is left can be deducted our individual personal allowances, the remainder is our taxable salary. We have been doing this for the last 8 years since I retired and it has worked perfectly well.
I originally started this post to try to source information from folks who had done the same as we are going to do to check if there were any other things that could be done from what we are being told by accountants and persons various at the present. For instance one accountant had us using an Onshore Personal Portfolio Bond which paid tax within the Bond per annum (or the insurance company paid it). Tax had already been paid at 20% on any increase in the bond. As the insurance company had already paid any taxes due you could take what you liked per annum as long as it didn't put you into the higher rate tax bracket but the cost of running it came to more than the tax on the amount we intended to draw annually. The Offshore Bond variety, although almost as costly to run was offset by the fact that it rolled up without the insurance company having paid any internal annual tax so was more efficient from the gain point of view over the years. Whatever you drew out you had to pay tax on and could use all your allowances. Tax was payable on the bond itself only at the bonds termination (i.e deferred tax minus what you had already paid) and in this way you could use your personal CGT allowance and your personal allowances because unlike the Onshore Bond tax had not already been paid before you got at it. By the use of "clusters" i.e using the main bond as a "wrapper" for many other smaller bonds you could make it very tax efficient.
Ladies and Gentlemen I am in contact with several investment advisors and accountants but they all have different ideas. What I was trying to do with this post was sort the wheat from the chaff but that has not happened. Thanks for all your posts but I think we should close this now.
I know what I am talking about and maybe my terminology is incorrect from an accountants point of view. I refer to investments as a portfolio of shares, mutual funds etc be they UK, American, Australian or wherever held in joint names with myself and my wife. Our 'salaries' we draw every year by selling part of that portfolio. The portfolio will be held in the UK and as we are resident (or will be) in the UK will be taxable in the UK. My present accountant tells me that if there is a capital gain on the sales she can use the CGT allowance for myself and my wife individually and from what is left can be deducted our individual personal allowances, the remainder is our taxable salary. We have been doing this for the last 8 years since I retired and it has worked perfectly well.
I originally started this post to try to source information from folks who had done the same as we are going to do to check if there were any other things that could be done from what we are being told by accountants and persons various at the present. For instance one accountant had us using an Onshore Personal Portfolio Bond which paid tax within the Bond per annum (or the insurance company paid it). Tax had already been paid at 20% on any increase in the bond. As the insurance company had already paid any taxes due you could take what you liked per annum as long as it didn't put you into the higher rate tax bracket but the cost of running it came to more than the tax on the amount we intended to draw annually. The Offshore Bond variety, although almost as costly to run was offset by the fact that it rolled up without the insurance company having paid any internal annual tax so was more efficient from the gain point of view over the years. Whatever you drew out you had to pay tax on and could use all your allowances. Tax was payable on the bond itself only at the bonds termination (i.e deferred tax minus what you had already paid) and in this way you could use your personal CGT allowance and your personal allowances because unlike the Onshore Bond tax had not already been paid before you got at it. By the use of "clusters" i.e using the main bond as a "wrapper" for many other smaller bonds you could make it very tax efficient.
Ladies and Gentlemen I am in contact with several investment advisors and accountants but they all have different ideas. What I was trying to do with this post was sort the wheat from the chaff but that has not happened. Thanks for all your posts but I think we should close this now.
Last edited by donpedro1939; Dec 17th 2010 at 1:40 pm. Reason: something missed out
