Tax query

Murrayminter75

Hi, I am looking for some advice/suggesstions or knowledge on the rules. I’m self employed and have investment income (which I don’t use to live on)- I’m in the 20% tax bracket with both incomes combined. However, I just sold my property and will be getting interest on that capital for the next however long until I find a suitable house to buy (I’m currently in rented- and have just spread the capital from my property in multiple easy access accounts) 
Are there any special rules or tax breaks for this kind of money from property that’s intended to repurchase a house at the drop of a hat ? As it’s money that’s a fleeting circumstance and that has an intended purpose. Or..
 Q1) if I put all the combined interest straight Into an SSIP pension before April does the additional interest I’m earning due to my property money become tax free and not affect my overall income tax bracket ? (If I got stuck in rented for a while tax year the additional income would put me in the 40% tax bracket) 

I would still have to declare it as income on my self assessment forms wouldn’t I and then state that I put however much into a pension and let HMRC decide what my tax bill is? I’m concerned and would appreciate advise as my actual annual disposable income is quite frugal and huge tax bills are of concern to me, I want to be money smart with this.

thanks in advance.. 

Dazed_and_C0nfused

Murrayminter75 said:

Hi, I am looking for some advice/suggesstions or knowledge on the rules. I’m self employed and have investment income (which I don’t use to live on)- I’m in the 20% tax bracket with both incomes combined. However, I just sold my property and will be getting interest on that capital for the next however long until I find a suitable house to buy (I’m currently in rented- and have just spread the capital from my property in multiple easy access accounts) 
Are there any special rules or tax breaks for this kind of money from property that’s intended to repurchase a house at the drop of a hat ? As it’s money that’s a fleeting circumstance and that has an intended purpose. Or..
 Q1) if I put all the combined interest straight Into an SSIP pension before April does the additional interest I’m earning due to my property money become tax free and not affect my overall income tax bracket ? (If I got stuck in rented for a while tax year the additional income would put me in the 40% tax bracket) 

I would still have to declare it as income on my self assessment forms wouldn’t I and then state that I put however much into a pension and let HMRC decide what my tax bill is? I’m concerned and would appreciate advise as my actual annual disposable income is quite frugal and huge tax bills are of concern to me, I want to be money smart with this.

thanks in advance.. 

Unless it's in an ISA interest from savings accounts will all be taxable income, subsequently using the money to add to a pension doesn't change that.

If you are going to be a higher rate payer then pension contributions can help as they will increase your basic rate band, meaning more income is taxed at 20% and less at 40%.

wmb194

Murrayminter75 said:

Hi, I am looking for some advice/suggesstions or knowledge on the rules.

 I’m self employed and have investment income (which I don’t use to live on)- I’m in the 20% tax bracket with both incomes combined.

However, I just sold my property and will be getting interest on that capital for the next however long until I find a suitable house to buy (I’m currently in rented- and have just spread the capital from my property in multiple easy access accounts) 

Are there any special rules or tax breaks for this kind of money from property that’s intended to repurchase a house at the drop of a hat ? As it’s money that’s a fleeting circumstance and that has an intended purpose. Or..
 
Q1) if I put all the combined interest straight Into an SSIP pension before April does the additional interest I’m earning due to my property money become tax free and not affect my overall income tax bracket ?

(If I got stuck in rented for a while tax year the additional income would put me in the 40% tax bracket) 

I would still have to declare it as income on my self assessment forms wouldn’t I and then state that I put however much into a pension and let HMRC decide what my tax bill is?

I’m concerned and would appreciate advise as my actual annual disposable income is quite frugal and huge tax bills are of concern to me, I want to be money smart with this.

thanks in advance.. 

BIB: no, outside an ISA or pension wrapper it would be taxable. You’d have the £1000 (basic) or £500 (higher) 0% rate though.

Q1: The, “combined interest”? You mean you’d earn it in a taxable account and then deposit the interest in an, “SSIP” (SIPP?)? It would be taxable.

DRS1

Don't forget you need the right sort of income to contribute to a pension - earnings or profits from self employment.  Interest on a bank account won't count.  So if your profits are £40k and your interest is £50k then you won't be able to get all the interest into a pension.