TFLS withdrawal before Autumn budget

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/82132526#Comment_82132526

Out of interest, will your eventual exit from the company's employ also permit you to sell your shareholding in the business? If so are you exploring your likely CGT liabilty thereon having regard to business asset disposal relief ?

https://www.gov.uk/business-asset-disposal-relief

zagfles

https://forums.moneysavingexpert.com/discussion/comment/82132526#Comment_82132526

It was probably sensible to withdraw it anyway if you hit the old LTA ie you could take the full 268K LSA. I think it's unlikely they'll reduce it (complicated transitional rules or retrospective taxation, accusations of intergenerational unfairness etc), but I think its even more unlikely they'll ever increase it, at least not in the short to medium term, so it'll just be left at the current level to wither slowly with fiscal drag.

If so, then you'll effectively be taxed at income tax rates on any growth on the tax free part if you left it in the pension. Investing outside the pension would likely result in less tax as you can use ISA allowance, CGT allowance, premium bonds, low coupon gilts etc etc to pay less tax than the income tax rates you'd suffer on growth when you eventually withdraw it.

ali_bear

I wish they'd round it up to a more easy-to-remember number

Silvertabby

The maximum tax free lump sum has already been reduced three times (since its peak of £450K in 2011), without any noticeable drama.

mrklaw

https://forums.moneysavingexpert.com/discussion/comment/82134937#Comment_82134937

round number you say? ok deal - £250k

zagfles

https://forums.moneysavingexpert.com/discussion/comment/82135017#Comment_82135017

But with various protections for people over or close to the reduced LTA, also bearing in mind far fewer people would have been affected, not many people had a pension pot of over 1.5 million 15 years ago.

Reducing the LSA with similar protections won't raise much in the short term, and would be seen as discriminating against younger people.

ali_bear

https://forums.moneysavingexpert.com/discussion/comment/82135190#Comment_82135190

Vhmm good game good game. Higher? Are we going higher? Vhmm Four hundred thousand pounds ?

Steve182

https://forums.moneysavingexpert.com/discussion/comment/82132735#Comment_82132735

I believe I will qualify for what is generally referred to as entrepreneurs relief when I exit. Currently 18% on capital gain irrespective of your tax band I understand.

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/82136613#Comment_82136613

The relief is not as generous as it used to be , but certainly better than a poke in the eye with a sharp stick.

Steve182

Very true

I actually had a larger share in the company in the past, my directorship/shareholding beginning in 2016. In 2020, weeks before Covid we sold the company at what was then an attractive rate and my shareholding dopped to 5% . I signed a contract with other directors to remain for at least 5 years. My capital gain tax at the then entrepreneur's rate was 10% so that was a satisfactory result. Slightly annoyingly in some respects, the company has flourished during the past 5 years, and the value of my meagre 5% remaining share has trebled.

That's one reason I can now afford to exit early…….along with Trump destabilising the markets and pushing up oil prices