Chargeable Event Gain

gandalf24

Hi Meteredout, thanks for your help I am not very tax savvy.

My total earnings would be £13k and this will not change much over the next few years, and my cumulative 5% deferred tax allowance would be £2500 x 17 years = £42500
No need to cash in the full amount probably take a lump 30/40k sum by cashing in an equal amount from each of the 100 segments and do this over 3/4 years until the fund is exhausted.

MeteredOut

So if £42.5K is (effectively) tax free, that leaves £37.5K gains remaining, plus the initial £50K investment, so £87.5K.

Have you considered taking the difference between your earnings (£13K) and the top of the lower rate tax bracket each year? Since basic rate tax is deemed to have already been paid on the investment, my understanding is that there'd be no more tax due and therefore no need to worry about the top-slicing.

The question is whether you'd use the UK rate of £37,700 or the Scottish rate of £31,092. But, even if you used the latter, that would be £18K per year additional income, meaning you'd release the funds over 4 to 5 years.

Note this is really back-of-a-fag-packet calculations, based on my understanding of PIPs, so I'd still recommend getting professional advice, as I may have something wrong here.

You could also phone HMRC if you have any questions, but they will not be able to advise you.

ellie99

poseidon1 said:

You need specific Scottish tax advice. Halifax's explanation presupposes an English tax payer liable to potential 40% or 45% tax depending on the outcome of the top slicing relief exercise.

However, as I previously indicated you have 6 different tax bands in Scotland to contend with,  with 4 bands above basic rate ( ie 21%, 42%, 45% and 48%). So the question is,  does this qualitatively change how top slicing works for Scottish investors?

@gandalf24 May I ask if you got an answer to this question from your meeting with IFA?

I'm in much the same situation as you, although with a smaller gain. 

gandalf24

Hi still not got an answer from an IFA, plan to do in the coming months, I will post info  once I have done this.