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Previously on "(Possibly) 100% legit ways of mitigating the loan charge"

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  • Loan Ranger
    replied
    Originally posted by webberg View Post
    I went away and asked the question.

    I have two responses.

    The first is that there is probably no official HMRC position on whether the DR charge is treated as earned income for the purpose of calculating pension contributions. I have asked that this is included in the next update. (I have no idea if an update is planned but there are plenty of unanswered questions, so I hope so.)

    The second is one that is not official policy but comes from an experienced person. The view there is that it should be possible to base a pension contribution on the value brought into tax by the DR Charge.

    I stress that this is a personal view, not official HMRC policy, not binding and I certainly will not be saying where it came from or even if the source was HMRC or not.

    My own view remains more cautious. I have a number of questions here and am pursuing them. I do not expect them to be answered quickly.

    Given the few months to the beginning of the 2018/19 tax year, I would advise caution here and you should not make any decisions on paying contributions which may not qualify (or which might produce a liability) until there is better information.
    Many thanks for looking into this.

    Hopefully we'll get a definitive position on pension contributions, and EIS, VCT etc, in the coming months.

    Btw, can you think of any other reliefs that could potentially be utilized?

    Leave a comment:


  • webberg
    replied
    I went away and asked the question.

    I have two responses.

    The first is that there is probably no official HMRC position on whether the DR charge is treated as earned income for the purpose of calculating pension contributions. I have asked that this is included in the next update. (I have no idea if an update is planned but there are plenty of unanswered questions, so I hope so.)

    The second is one that is not official policy but comes from an experienced person. The view there is that it should be possible to base a pension contribution on the value brought into tax by the DR Charge.

    I stress that this is a personal view, not official HMRC policy, not binding and I certainly will not be saying where it came from or even if the source was HMRC or not.

    My own view remains more cautious. I have a number of questions here and am pursuing them. I do not expect them to be answered quickly.

    Given the few months to the beginning of the 2018/19 tax year, I would advise caution here and you should not make any decisions on paying contributions which may not qualify (or which might produce a liability) until there is better information.

    Leave a comment:


  • eek
    replied
    Originally posted by BrilloPad View Post
    Personally I don't trust HMRC at all.

    I am waiting for the first case of when a pension fund is taken to pay HMRC.....

    It's probably worth reading https://www.stepchange.org/debt-info...y-pension.aspx especially the clawback bit if you are putting more than 15% of your income into your pension and the bit regarding bankruptcy being refused if you can access your pension and the lump sum available is more than what's owed.


    One thing I wouldn't do is to start to draw your pension while bankrupt unless you really really have to....

    Leave a comment:


  • webberg
    replied
    Originally posted by Loan Ranger View Post
    If paying into a pension, EIS etc were legitimate ways of offsetting the charge, do you think HMRC would be prepared to confirm this? It may stick in their craw but surely they wouldn't lie about it?
    I think I will ask but I'm expecting a fudge of a response.

    HMRC would not knowingly lie (yes, I hear the screams of angst out there but I've not seen any hard evidence of outright dishonesty) but I think they would hedge and perhaps say that "based on current interpretation ..."

    Then when push came to shove, would they be forced to stand by that?

    They would almost certainly claim that their view was just an opinion/devoid of internal sanction/subject to "better" analysis/[enter excuse here].

    We'll ask.

    Leave a comment:


  • BrilloPad
    replied
    Personally I don't trust HMRC at all.

    I am waiting for the first case of when a pension fund is taken to pay HMRC.....

    Leave a comment:


  • eek
    replied
    Originally posted by stonehenge View Post
    Wrong!

    If you go over £210k, you can still contribute £10k in the current year, and it doesn't affect carry forward.

    https://www.youinvest.co.uk/sites/de...ward_guide.pdf

    Stop spreading FUD.
    It may be FUD , equally it may not be. Hmrc is after a tax payment. Now they may say hey that £100,000 in the pension is fine we accept you are using carry forward, equally they may say that’s not on we still want the tax on that money.

    I suspect the difference here is how ruthless we believe Hmrc are going to be here. Either way i would suggest getting explicit personal advice before using your pension to avoid the charge

    Leave a comment:


  • Loan Ranger
    replied
    Originally posted by webberg View Post
    It might.

    The DR charge rules contain anti avoidance sections. If you are found to be guilty of using a tax avoidance scheme to avoid the DR charge, then not only will the DR charge still apply, but you might be liable under the "failed" scheme.

    I'm not suggesting that EIS/SEIS etc are tax avoidance schemes, but given the warped and devious minds that seem to be driving HMRC policy .... ?
    If paying into a pension, EIS etc were legitimate ways of offsetting the charge, do you think HMRC would be prepared to confirm this? It may stick in their craw but surely they wouldn't lie about it?

    Leave a comment:


  • webberg
    replied
    Originally posted by BrilloPad View Post



    It is not even a solution. It cannot make things worse.
    It might.

    The DR charge rules contain anti avoidance sections. If you are found to be guilty of using a tax avoidance scheme to avoid the DR charge, then not only will the DR charge still apply, but you might be liable under the "failed" scheme.

    I'm not suggesting that EIS/SEIS etc are tax avoidance schemes, but given the warped and devious minds that seem to be driving HMRC policy .... ?

    Leave a comment:


  • Loan Ranger
    replied
    Originally posted by BrilloPad View Post
    Remember that this thread is not about a scheme or plan which is paid for. It is not even a solution. It cannot make things worse.

    What the mods will object to is any scheme/plan/solution that is paid for. Quite rightly too.
    I would hope that folks would do their own research, get advice from an accountant, before doing something suggested on an internet forum by the "Loan Ranger".

    The purpose of this thread was to point out that there may be kosher ways of reducing the impact of the loan charge.

    Leave a comment:


  • BrilloPad
    replied
    Originally posted by eek View Post
    the fact they are just your ideas and may (read will) not work.
    You do not know they will not work.

    Originally posted by eek View Post
    Equally there are people on here who know that in a panic people may join another scheme or plan which may result in what was an already significant issue becoming significantly worse than it already may be.

    That's why the mods won't allow people to discuss some "solutions" to schemes and why I'm unhappy with a post that claims to offer 100% legit solutions that seem to be based more on straw clutching than actual advice..
    Remember that this thread is not about a scheme or plan which is paid for. It is not even a solution. It cannot make things worse.

    What the mods will object to is any scheme/plan/solution that is paid for. Quite rightly too.

    I will send you a PM too.....

    Leave a comment:


  • stonehenge
    replied
    Originally posted by eek View Post
    I mean even the pension solution won't work if your income goes above £210,000 once the loans are taken into account.
    Wrong!

    If you go over £210k, you can still contribute £10k in the current year, and it doesn't affect carry forward.

    https://www.youinvest.co.uk/sites/de...ward_guide.pdf

    Stop spreading FUD.

    Leave a comment:


  • eek
    replied
    Originally posted by stonehenge View Post
    Mate, I'd be careful who you listen to on these forums.

    There's a lot of posting motivated by schadenfreude.


    Equally there are people on here who know that in a panic people may join another scheme or plan which may result in what was an already significant issue becoming significantly worse than it already may be.


    That's why the mods won't allow people to discuss some "solutions" to schemes and why I'm unhappy with a post that claims to offer 100% legit solutions that seem to be based more on straw clutching than actual advice..

    Leave a comment:


  • stonehenge
    replied
    Originally posted by Loan Ranger View Post
    I'll remove any options from the opening post if they are ineffective.
    Mate, I'd be careful who you listen to on these forums.

    There's a lot of posting motivated by schadenfreude.

    Leave a comment:


  • eek
    replied
    Originally posted by Loan Ranger View Post
    I'll remove any options from the opening post if they are ineffective.
    May I suggest you update your opening post to reflect the fact they are just your ideas and may (read will) not work. I mean even the pension solution won't work if your income goes above £210,000 once the loans are taken into account.

    Leave a comment:


  • Loan Ranger
    replied
    Originally posted by eek View Post
    So we are now down to thinking (hoping?) rather than 100% sure. Don’t you think you should change the thread title?
    I'll remove any options from the opening post if they are ineffective.

    Leave a comment:

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