BN66 - JR Judgement Day

[SantaClaus]

Short of the UK going bust, a CTD is the risk-free option.

If you owe £100k in tax/nic + £50k accrued interest today. (Total - £150k)

And you take out a tax deposit for £100k now.

You will still owe £150k in 5 years time.

Strange Times

We have a very unusual set of circumstances at the moment where the bank base rate is incredibly low (0.5%), and yet there are savings products paying 3%+.

This gives a distorted impression that it's easy to match what HMRC charge ie. base + 2.5% (currently 3%).

When interest rates begin to rise, savings rates will not, and the gap will narrow.

Historically, it has been tough to match the base rate (and even more so net of tax).

Assuming a base rate of say 5%, the following is what you would need to get in a savings account to match HMRC's 7.5%.

ISA (tax free)............20% taxpayer.........40% taxpayer
7.5%........................9.375%................ .12.5%

Cash ISA
Even with the new limits coming in April, you can only shelter c. £5k per year each in a Cash ISA.

If you are starting saving from nothing, then ISAs would be a viable alternative to a CTD.

However, if you already have a lump sum to cover the liability, then you need to keep a close eye on interest rates and check what you are earning net of tax.

I completely agree with you DR.

Having said that, interest rates should rise very slowly. The risk to the Bank of England and going back into recession is too high to increase rates any quicker than 0.25% or 0.5% a time.

Apart from Quantative Easing, low interest rates is the only blunt tool they have.

[DonkeyRhubarb]

One aspect that may be important to individuals (and to HMRC for that matter) is that by putting cash into a CTD you can be SEEN to be being responsible about future settlement of any liability.

Good point.

There is also a psychological factor. It's half way to handing the money over, and letting go. To pay off your tax bill, you don't need to withdraw savings or write out a cheque to HMRC.

Even though I've got a CTD, I am going to be here on this forum until I'm the last man standing.

However, for others it may be better to step back and "get a life".

[PlaneSailing]

I have heard from WG that Montpelier are prepared to do whatever it takes to overturn the legislation.

Previously they had committed to take it as far as the HoL (Supreme Court).

If necessary, they will then take it to Europe (ECtHR).

Now that is good news!

[Doug1965]

I have heard from WG that Montpelier are prepared to do whatever it takes to overturn the legislation.

Previously they had committed to take it as far as the HoL (Supreme Court).

If necessary, they will then take it to Europe (ECtHR).

But will they charge extra for that ?

Either way I'm seeing it through until I have no other legal avenue open. Than, and only then, will I pay.

[Cantthinkof1]

Many Thanks DR for all your help!! - it is appreciated by me and everyone who reads your informative submissions....

Will now digest it all ...

[SantaClaus]

I have heard from WG that Montpelier are prepared to do whatever it takes to overturn the legislation.

Previously they had committed to take it as far as the HoL (Supreme Court).

If necessary, they will then take it to Europe (ECtHR).

That is all I need to hear.

I am in it for the long run.

[DonkeyRhubarb]

European Court of Human Rights

But will they charge extra for that ?

No!

[RockTheBoat]

That is all I need to hear.

I am in it for the long run.

agreed

and thanks to DR for the CTD advice. for now I will invest in ISA's, funds and trips to vegas. then if interest rates go too high will then look to consolidate into CTD.

Also, my favourite song at the moment that I am using for inspiration is the live version of Iron Maiden's Aces High with Churchill's speeach as the intro...

We shall go on to the end.
We shall fight in France,
We shall fight on the seas and oceans,
We shall fight with GROWING confidence and GROWING strength in the air.
We shall defend our island whatever the cost may be.
We shall fight on beaches, we shall fight on the landing grounds,
We shall fight in the fields and in the streets.
We shall fight in the hills,
We shall never surrender.

[Doug1965]

We shall fight on beaches...

Now this is not the end. It is not even the beginning of the end. but it is, perhaps, the end of the beginning.
Churchill - November 10, 1942

[Cantthinkof1]

CTD's

Maybe another question for DR...

I have looked up the HMRC site re CTD's...

Assume that I now owe £150K (£100K initial (tax + NI) plus £50K (penalties and interest). I imagine that interest is being accrued daily on this amount.
However, looking at the latest HMRC interest tables, if I purchase a CTD for anything less than £100,000, then this will attract NO interest.

So, am I right in thinking that if my total amount is over £100K, then it is not worth pursuing the CTD line UNLESS I put in £100K, otherwise they will be charging me interest and I will not be getting a penny for my £100K?

Have I got this right? - Apologies if this is not the case, but that is the conclusion I have come to !!

I have never had a CN, so not sure what my balance is sitting at!! (and really don't want to know!!)

Once again, any info would be very much appreciated!!