Offshore bond surrender - tax calc method check...

Hi there,

Just checking my understanding of a calc and I know everyone loves the techy stuff... Hoping I haven't oversimplified it too much...

Client has pension income & dividends

Step 1
Work out the tax on the gain. (as it's offshore, dividends will get moved to last in the calc so will move to HRT)

Step 2
Work out the tax on the entire gain with the gain as the top level of income, i.e. highest marginal rate and in this case after dividends, less 20% tax credit on entire gain (only £500 PSA as HRT)

Step 3
Work out the tax on the top sliced gain with the gain as the top level of income, i.e. highest marginal rate and in this case after dividends, less 20% tax credit on entire slice (only £500 PSA as still HRT)

Take 3 from 2 to get the relief

Take the relief from the figure in 1

Done!

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