Please verify tax payable
Discussion
With a £78k pension post is £6,700 the lowest amount of tax that can be paid on withdrawing all in this and next tax year?
25% tax free this year = £19,500.
Tax free allowance this year = £12500
Additional taxed withdrawal =£33,500
Tax on £33,500=£6,700
Post April 6th 2021
Tax free allowance = £12500
Total withdrawn =£78k
Total Tax = £6,700
The recipient has no other income and live in England.
Thanks in advance.
25% tax free this year = £19,500.
Tax free allowance this year = £12500
Additional taxed withdrawal =£33,500
Tax on £33,500=£6,700
Post April 6th 2021
Tax free allowance = £12500
Total withdrawn =£78k
Total Tax = £6,700
The recipient has no other income and live in England.
Thanks in advance.
Working with your own assumptions (no other income) and given you stated withdrawing the whole amount over this and the next tax year (so over 11 months) my figures are:
25% tax free this year = the same £19,500
The rest would be taxed at basic rate over the two tax years and only then after the personal allowance.
This gives rise to a £6,700 tax bill (£3,350 a year) on the whole £78,000 withdrawal (including the tax free cash element) – c. a 8.59% tax bill on the whole amount.
If this was all done in the same tax year (i.e. today) this would cost £2,500 more in tax (11.8% overall).
Obviously any other taxable income would add to this.
25% tax free this year = the same £19,500
The rest would be taxed at basic rate over the two tax years and only then after the personal allowance.
This gives rise to a £6,700 tax bill (£3,350 a year) on the whole £78,000 withdrawal (including the tax free cash element) – c. a 8.59% tax bill on the whole amount.
If this was all done in the same tax year (i.e. today) this would cost £2,500 more in tax (11.8% overall).
Obviously any other taxable income would add to this.
JulianPH said:
Working with your own assumptions (no other income) and given you stated withdrawing the whole amount over this and the next tax year (so over 11 months) my figures are:
25% tax free this year = the same £19,500
The rest would be taxed at basic rate over the two tax years and only then after the personal allowance.
This gives rise to a £6,700 tax bill (£3,350 a year) on the whole £78,000 withdrawal (including the tax free cash element) – c. a 8.59% tax bill on the whole amount.
If this was all done in the same tax year (i.e. today) this would cost £2,500 more in tax (11.8% overall).
Obviously any other taxable income would add to this.
Thats great, thank you.25% tax free this year = the same £19,500
The rest would be taxed at basic rate over the two tax years and only then after the personal allowance.
This gives rise to a £6,700 tax bill (£3,350 a year) on the whole £78,000 withdrawal (including the tax free cash element) – c. a 8.59% tax bill on the whole amount.
If this was all done in the same tax year (i.e. today) this would cost £2,500 more in tax (11.8% overall).
Obviously any other taxable income would add to this.
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