Self assessment - bonuses

planforfuture

Please advice how the £8345 and £6266 are derived.  Thanks. 

Dazed_and_C0nfused

planforfuture said:

Please advice how the £8345 and £6266 are derived.  Thanks. 

If you take all of a crystallised pension (which can be a proportion of a larger pot) then 25% is the TFLS and 75% is taxable income.

So £8,354 (not £8,345) gross pension withdrawal is,

£2,088 TFLS
£6,266 Taxable pension

Albermarle

planforfuture said:

Thanks.  Since my capital gains and dividend for Fy 2023-24 will exceed the allowance threshold, am I right that  I need to submit self assessment to declare the tax I owe HMRC..I haven't done a self assessment for many years.

Check if you need to send a Self Assessment tax return - GOV.UK (www.gov.uk)

planforfuture

Dazed_and_C0nfused said:

planforfuture said:

Please advice how the £8345 and £6266 are derived.  Thanks. 

If you take all of a crystallised pension (which can be a proportion of a larger pot) then 25% is the TFLS and 75% is taxable income.

So £8,354 (not £8,345) gross pension withdrawal is,

£2,088 TFLS
£6,266 Taxable pension

It's my first time to withdraw fund from my uncrystallised pension pot. I just wonder how you came up with the £8354.

Dazed_and_C0nfused

planforfuture said:

Dazed_and_C0nfused said:

planforfuture said:

Please advice how the £8345 and £6266 are derived.  Thanks. 

If you take all of a crystallised pension (which can be a proportion of a larger pot) then 25% is the TFLS and 75% is taxable income.

So £8,354 (not £8,345) gross pension withdrawal is,

£2,088 TFLS
£6,266 Taxable pension

It's my first time to withdraw fund from my uncrystallised pension pot. I just wonder how you came up with the £8354.

It wasn't actually my figure but it was posted after you said this,

I also will receive £2304 dividends from my GIA (in US and in UK). Since the dividend allowance has been reduced to £1000 this tax year (2023-24) hence £1304 is taxable @8.75%.

AIUI you have now disclosed three sources of income,

Earnings £5,000
Dividends £2,304 (there is no "allowance" for dividends, anything from a GIA will all be taxable income)

If you are happy to let £1,000 of dividends be taxed at 0% (using up a small part of your basic rate band) then I think you have £6,266 of your Personal Allowance unused.

So £8,354 taken from your pension, inclusive of 25% TFLS, will be £6,266 taxable pension income.

£5,000 + £6,266 + £1,304 = £12,570
Leaving £1,000 of dividends to be taxed.

I think this thread is getting confusing because you seem to be flirting between not wanting to pay tax but then seemingly wanting to pay tax so it's unclear what you really really want!

[Deleted User]

JamesRobinson48 said:

Might not the salient figures here also be affected by the amount of US dividends (included within the £2304) that have had 15% US tax withheld?   I assume there's likely to be some kind of available UK tax mitigation in respect of that US w/h tax. But unable to quantify unless OP discloses those US dividend and w/h tax figures.

Indeed. If the op pays no tax in the U.K. on that source of income the foreign tax will not be repayable. 

planforfuture

Dazed_and_C0nfused said:

planforfuture said:

Dazed_and_C0nfused said:

planforfuture said:

Please advice how the £8345 and £6266 are derived.  Thanks. 

If you take all of a crystallised pension (which can be a proportion of a larger pot) then 25% is the TFLS and 75% is taxable income.

So £8,354 (not £8,345) gross pension withdrawal is,

£2,088 TFLS
£6,266 Taxable pension

It's my first time to withdraw fund from my uncrystallised pension pot. I just wonder how you came up with the £8354.

It wasn't actually my figure but it was posted after you said this,

I also will receive £2304 dividends from my GIA (in US and in UK). Since the dividend allowance has been reduced to £1000 this tax year (2023-24) hence £1304 is taxable @8.75%.

AIUI you have now disclosed three sources of income,

Earnings £5,000
Dividends £2,304 (there is no "allowance" for dividends, anything from a GIA will all be taxable income)

If you are happy to let £1,000 of dividends be taxed at 0% (using up a small part of your basic rate band) then I think you have £6,266 of your Personal Allowance unused.

So £8,354 taken from your pension, inclusive of 25% TFLS, will be £6,266 taxable pension income.

£5,000 + £6,266 + £1,304 = £12,570
Leaving £1,000 of dividends to be taxed.

I think this thread is getting confusing because you seem to be flirting between not wanting to pay tax but then seemingly wanting to pay tax so it's unclear what you really really want!

Thanks for info. I am just not sure which is more tax efficient wrt personal income tax. 

planforfuture

[Deleted User] said:

JamesRobinson48 said:

Might not the salient figures here also be affected by the amount of US dividends (included within the £2304) that have had 15% US tax withheld?   I assume there's likely to be some kind of available UK tax mitigation in respect of that US w/h tax. But unable to quantify unless OP discloses those US dividend and w/h tax figures.

Indeed. If the op pays no tax in the U.K. on that source of income the foreign tax will not be repayable. 

£1800 within the £2304 are dividends from the US shares held a US bank where 15% withholding tax was automatically deducted. The rest £500 are from UK GIA dividends. 

[Deleted User]

planforfuture said:

[Deleted User] said:

JamesRobinson48 said:

Might not the salient figures here also be affected by the amount of US dividends (included within the £2304) that have had 15% US tax withheld?   I assume there's likely to be some kind of available UK tax mitigation in respect of that US w/h tax. But unable to quantify unless OP discloses those US dividend and w/h tax figures.

Indeed. If the op pays no tax in the U.K. on that source of income the foreign tax will not be repayable. 

£1800 within the £2304 are dividends from the US shares held a US bank where 15% withholding tax was automatically deducted. The rest £500 are from UK GIA dividends. 

The point still remains. If, for example, you paid £5000 income tax under PAYE and there was no U.K. tax payable on the U.S. dividend, no withholding tax can be repaid. 

planforfuture

A quick maths indicates that I m slightly better off by not incorporating the dividend into personal allowance (I.e pay the 8.75% tax). And used up the remaining income allowance  (I.e. less bonus) to withdraw from by Sipp to take advantage of the 25% TFLS.