Personal Savings Allowance

Matthew_Hawken

Any views on whether the unsliced chargeable gain on an onshore bond is used when working out if the client is a basic, higher or additional rate tax payer for the purposes of whether they have a £1,000 , £500 or £0 Personal Savings Allowance. 

The draft Finance Bill 2016 legislation does not specifically use a stated definition of adjusted net income which is of course what we use for seeing if someone has lost or starts to lose the Personal Allowance.  Instead the draft Finance Bill 2016 legislation uses another test which uses the terminology “…. Income on which income tax is charged at the additional rate or dividend additional rate” and “…. Income on which income tax is charged at the higher rate or dividend higher rate”  but I am unsure of whether you use the unsliced or sliced chargeable gain in that assessment.

DanAtkinsonUK

I believe it is the unsliced only for the Personal Allowance and top sliced for all others such as PSA

Caro

I spoke with Standard Life Tech about this last week and they said that it was the whole gain that is taken into account when calculating income for the Personal Savings allowance.Top slicing is only used to see if higher rate tax is payable on a gain.  I guess its the same as the Personal Allowance and Child benefit charge which use the full gain too. 

Matthew_Hawken

For both losing the Personal Allowance and Child Benefit, the legislation makes specific reference to the definition of the "adjusted net income" as defined under s58 of ITA 2007.  What puzzles me is that for the Personal Savings Allowance it has its own definition and does not refer to s58 of ITA 2007 at all. 

DanAtkinsonUK

Spoke to Canada Life this AM who gave same view as @Caro. Seemed a tad unfair on BRTs who have big gains but enough top slice to remain BRT...

Caro

Perhaps they were trying to make things simpler and in the process have actually just made it a lot more complicated, lets be honest, it wouldn't be the first time! 

benjaminfabi

It's a rubbish process. If a gain is able to be topsliced then it should follow that the topslice represent the amount of income for that tax year.

Then again, CGT was vastly simplified a few years back. You could argue (I wouldn't) that the topslice calculation is the bit that should be gotten rid of.

Jamie_Barnes

Its one where we as paraplanners can really show our value to advisers and pick up on little nuances like this because from my own personal experience, the advisers wouldn't or would forget.