Tax trap doubt

RobHT

[Deleted User] said:

RobHT said:

p00hsticks said:

RobHT said:

[Deleted User] said:

RobHT said:

Jeremy535897 said:

The relevant figure is adjusted net income. See: https://www.gov.uk/guidance/adjusted-net-income#what-is-adjusted-net-income

This will include earnings, interest and dividends, whether taxed at the 0% rate or not, but not capital gains.

Thank you, but what it would be interests? Is it about a kind of tax rebate if you claim back some interest? (for example the mortgage interest)

In general, I think that or you stay above 125k, or stay below 100k to avoid this mess and potential money loss for external sources of CGT like investments...

The rate of CGT is unaffected whether you earn £100k or £125k from other sources. 

How it can be unaffected? Between these amounts, your tax allowance is lost...

Capital Gains is a differnt tax to Income tax, and has a different allowance.....

Oh .... So you are saying that I got confused between the income allowance of 12500 and the CGT allowance of 12300?

You have - but note that I specifically referred to the RATE of Capital Gains Tax.

I'm high tax rate, do you mean that for this reason it doesn't change?

If I take 100k salary, but I realize 10000 net worth in the share sell, do I preserve the CGT allowance of 12300? This was the main topic on this thread.

RobHT

Jeremy535897 said:

RobHT said:

I also wonder if job benefits in kind are in the equation, I think that it's only for benefits in kind though... Not benefits paid entirely by the company, where the taxes are paid entirely by the company and I get the service.

Capital gains don't affect the withdrawal of personal allowance. If you have an adjusted net income above £100,000, you will start to lose personal allowance. If you have an adjusted net income of £100,000 or less, you won't lose personal allowance, whether your gains are £1 or £1 million. As you are a higher rate taxpayer, gains on most assets will be taxed at 20%, but gains on residential property will be taxed at 28%.

If you have benefits in kind, these are part of your adjusted net income.

• Thanks, but let's break it down , I understood that my CGT allowance of 12300 won't be loss even if I take a salary of 120k, is it correct?

• Btw, do I need to declare taxes if I exceed 100k income? Or combined income with my CGT?

Based on what the HMRC websites says, it seems yes, I didn't do it though........................................................................

1. Did you work for yourself between 6 April 2020 and 5 April 2021?

No

2. Did you work as an ‘off-payroll worker’?

No

3. What was your total income for the year?

Between £50,000 and £100,000

4. Did you claim Child Benefit?

No, I do not have children or did not claim

5. Did any of your income come from UK property or land?

No

6. Did you get more than £10,000 from dividends or savings and investments?

Yes, I got more than £10,000 from savings and investments

You need to send a Self Assessment tax return

Based on your answers, you need to send a return for 2020 to 2021.

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• If I declare that my income was more than 100k, I need to send it even without stock sell, is it correct? This is what the HMRC website says.

Dazed_and_C0nfused

Correct, if your taxable income was more than £100k then you must complete a Self Assessment return.

Jeremy535897

You never lose your annual capital gains tax exemption of £12,300, whether your adjusted net income is £1 or £1 million.

If the sale proceeds of the assets you sell are £49,200 or less, and the gain is £12,300 or less, you don't need to report capital gains on the self assessment tax return, even if, as Dazed points out, your income level obliges you to complete one.

RobHT

Let's make it easier
Example 1, I take 99999 and I have CGT of 12000, shall I declare taxes? I'm not sure if the CGT counts in the matter of declaring taxes, even though I don't pay additional taxes.
If I need to do it, I'd see only as a way to declare what I have to the HMRC, because I'll need to disclose everything, also cryptocurrencies, even though I didn't generate CGT from them.

Example 2, I overtake 100k with my salary, for my understanding, whatever CGT I had, I need to declare taxes anyway.

Example 3, what about RSU shares? Will they count once I sell them? Normally yes, but who knows how HMRC sees it  

Jeremy535897

Example 1 You would only need to complete a tax return (unless HMRC tell you that you have to complete one) if the sale proceeds of the assets that produce a gain of £12,000 exceeded £49,200.
Example 2 Yes.
Example 3 Yes.

RobHT

Jeremy535897 said:

Example 1 You would only need to complete a tax return (unless HMRC tell you that you have to complete one) if the sale proceeds of the assets that produce a gain of £12,000 exceeded £49,200.
Example 2 Yes.
Example 3 Yes.

Thank you.

I checked again, between 50-100k salary, I need to submit the self assessment only if I got any CGT, even 1 pound...
That's why I didn't know that, otherwise, I don't need to submit it, as long as the salary remains in that range.

Now, I'm quite late for 2020/2021, I mean completely late, the fine is 100 pounds for late submissions (after 3 months), but it doesn't say how much is the fine if I don't do it at all, I'm completely out of range...
I'm not so much scared in the end, I don't need to pay anything to HMRC, but I wonder if you know anything about it.

Of course this year I'm gonna do it, the pain is that I need to declare everything (even whatever didn't generate CGT) and my portfolio and cryptos are too many, it's a disaster for no good reason...

Jeremy535897

If you don't owe any tax for 2020/21, and your income was less than £100,000, why do you think you need to file a return for 2020/21?

Dazed_and_C0nfused

And a £100 penalty can only be charged if you have failed to file a return on time that you have been asked to file.

If you haven't been served with a notice to file a return you can't be late filing the return so no penalty can be charged.

RobHT

Jeremy535897 said:

If you don't owe any tax for 2020/21, and your income was less than £100,000, why do you think you need to file a return for 2020/21?

Because of this: https://forums.moneysavingexpert.com/discussion/comment/79025665/#Comment_79025665
This comes fresh from the HMRC website, so, it seems that whatever you generate as CGT after 50k salary, it triggers the self assessment return.

Dazed_and_C0nfused said:

And a £100 penalty can only be charged if you have failed to file a return on time that you have been asked to file.

If you haven't been served with a notice to file a return you can't be late filing the return so no penalty can be charged.

I'm not so sure, it's always me against the rules...