Income Tax

DFChamp

Am I worrying about nothing?

I retired at 55 and my husband retired at 58. We don't receive a huge amount in pensions but we supplement our income from our investments.

Neither of us pay tax as our pensions do not exceed the personal tax allowance.

Does our "draw down" on our investments count as income for income tax purposes?

greenglide

Investment income is not subject to income tax.

Are the "investments" in ISAs though? Otherwise there could be a hit for tax on dividends or income tax on interest.

What are the "investments" and how are they held? This is key.

xylophone

https://www.gov.uk/income-tax/overview

OP, what exactly do you mean by drawdown and what is the nature of the investments?

Do you hold the investments wholly or partially in ISAs?

Pincher

Don't forget you have tax free allowances, so even if you received dividend, or had capital gains outside an ISA, you don't necessarily pay tax.

CLAPTON

DFChamp wrote: »

Am I worrying about nothing?

I retired at 55 and my husband retired at 58. We don't receive a huge amount in pensions but we supplement our income from our investments.

Neither of us pay tax as our pensions do not exceed the personal tax allowance.

Does our "draw down" on our investments count as income for income tax purposes?

what are you drawing down and from where

are you simply spending savings from savings a/c
are you selling shares where a capaital gain may have been made
are you with drawing dividends
are you selling heirlooms

or what exactly

bigfreddiel

DFChamp wrote: »

Am I worrying about nothing?

I retired at 55 and my husband retired at 58. We don't receive a huge amount in pensions but we supplement our income from our investments.

Neither of us pay tax as our pensions do not exceed the personal tax allowance.

Does our "draw down" on our investments count as income for income tax purposes?

As your pensions are below your personal tax allowance, you can earn up to £17k each, tax free. All the relevant info is on the HMRC web.

Cheers fj

PaulMTC

How do you arrive at 17k bigfreddie?

LXdaddy

PaulMTC wrote: »

How do you arrive at 17k bigfreddie?

11K tax free allowance
1K Personal Savings allowance (interest income)
5K dividend


Others have posted more details.

Credit-Crunched

greenglide wrote: »

Investment income is not subject to income tax.

Er, yes it is.

dunstonh

We don't receive a huge amount in pensions but we supplement our income from our investments.

What tax wrappers do you use for the investments?
What is your income strategy (return of capital or dividend distributions)?

It is possible to structure "income" from investments to have little or no tax liability. It all depends on how it is set up and arranged.

DFChamp

Sorry for not getting back sooner. Been out all day.

I thought I had this sussed and even asked a similar question last year but I am now starting to have nightmares about getting a bill from the tax man.

We invest via Cofunds. Approximately £55k each in Investment ISAs and a joint investment fund plan outside of ISAs amounting to about £47k.

This is all set up via a third party (FA) in an Income Portfolio which we draw down on each month to supplement our pensions. The FA did recommend moving the non-ISA funds over into ISAs each year until it was all moved over but I chose not to because I just felt is was unnecessary. But now I'm not so sure.