Monevator has an article for those who are frightened of the frothy US markets (paywall). I got into slight hot water last time by oversharing one of those so I will summarise that if you are frightened that 60% of your world tracker is the US then you can lean against that, unsurprisingly by investing in some ETF ex-US.
At a gut level I have the feeling that the US is way OTT. In the end we can’t all live inside our smartphones which is the inference of the Magnificent Seven, because people do need to eat and have clean water and live somewhere. It’s difficult to see what value most people can add while working in the virtual world, particularly ‘real value’ whatever that may be.
However, I have already given return up post GFC taking a US was overpriced line, and only got myself above the ‘what would have happened if I had gone balls-deep in VWRL, had it been available when I started’ by shorting Covid, so I have become less active since, because a) I have enough and b) I probably got the right answer for the wrong reasons.
I want to abuse the principle of that article in a slightly different manner. I hold a fair amount in a reasonable sized GIA. The ISA has a significant amount of VWRL already, and I accumulated more than a yearly ISA contribution worth of VWRL in the GIA, which has already drifted up by > 10% and is uncomfortably more than the current CGT threshold of 6k, so I want to get rid of it this tax year.
different wrappers for different asset classes
ISA and SIPP wrappers save you from thinking about capital gains tax. A SIPP doesn’t help me, however, because it converts the capital gain into something I have to pay income tax on. I’m better off in an unwrapped GIA, because the tax on dividends and capital gains is half of what I’d pay coming out of an SIPP.
To a first approximation the tax on capital gains and on dividend income is about the same now, in the order of 10% for a basic-rate taxpayer. The tax-free dividend allowance is also disappearing down the toilet but the actual tax rate on dividends remains lower for basic rate taxpayers than that on income. Or cash interest!
I have no basic rate tax allowance left due to pension income, so I get to pay tax on gains and dividends. The good thing is that the tax rate is about half of what it would be if I showed up and sold my time for money at work, I guess that’s the compensation for taking the capital risk, since I don’t see HMRC offering to pay me 10% of any losses any time soon 😉
The childed exercise themselves greatly with SIPPs because a pension is a form of trust so a SIPP is by definition outwith your estate and any IHT, but this is a problem I don’t have. Mrs Ermine can inherit the ISA as an ISA provided she is careful how it’s done, one probably worth taking advice on though it should be DIY-able.
VWRL is the best and the rest
VWRL is 60% US and 40% the deadbeat rest of the world. The US part is up on the half it used to be, that’s the Magnificent Seven for you. The time will come when that epithet will go the way of the Nifty Fifty, but let us assume for the moment that the world will continue to crawl into their smartphones to live in a Neuromancer style existence well away from from the tribulations of meatspace, in which case the Magnificent Seven will continue to eat the world.
I want to get rid of this VWRL, to harvest some of the cap gain tax free, so I need to sell it before the 5th April. It’s too much to simply buy £20k in an ISA, I don’t have to drip-feed in because I am already in the asset.
Noting Monevator’s observation VWRL is 60% USA, I could take 60% of the total amount and boot it into the ISA, buying SPX in the form of VUSA. And then search for a UCITS world ex US tracker, and buy the remaining 40% of that in the GIA. This will concentrate the deadbeats in the GIA, which should minimise the tax I pay. While roughly retaining the same balance as VWRL.
Until the world finally comes to its senses and realises that living life inside a smartphone is a meagre and unsatisfactory kind of life, but as I look around me I think this may not be a problem within my lifetime. Something else may cause the demise of the Mag Seven. If that something else is also from the US1, however, then VUSA should have it covered. Warren Buffett says never bet against America although one wonders what a civil war/insurrection would do, but he’s probably right. Corporate America will probably do just fine whoever is in the White House, and that’s basically what you are buying with VUSA.
FTSE-All-World ex US you say?
The index exists. Vanguard do an ETF for it, VEU. No, not that EU, you inward-looking Yurpean2, that’s EU as in Ex-US. What else could it mean? Unfortunately that looks like it’s only for sale to real Americans (or professional UK investors, who probably would do something else, because the tax thresholds are irrelevant for UHNW individuals, being in the noise), and even if I were to be able to buy it I would have to contend with withholding tax, W-8BEN forms and usurous platform FX charges.
I haven’t discovered an all-world ex-US UCITS fund or ETF targeted at Brits. It would have to be a distributing ETF because it would be held in the GIA, and life is too short to unscramble the egg that is an accumulation fund. It wants to be a reporting fund because: this. You can approximate it with a bit of EU, AsiaPac and EM, but it all starts to look like more work than I want.
business struggle to understand the non-attraction of work
Funny old game, eh? Shock-horror headline that 20% of the UK adults of working age, including the mustelid contingent, CBA to rock up for work. Much chin-scratching. Is it they are all too ill? Nope, this mustelid probably isn’t fit enough to be a brickie but I am still capable of lifting a soldering iron and even soldering SMT parts. I can still aim the odd claw at a keyboard and wrangle Excel and R, program in a range of computer languages. I was able to tramp about 10 miles and say hello to all of these old friends, apart from the ones the National Trust had roped off to reduce erosion.
Alexandra Hall-Chen, principal policy adviser for employment at the Institute of Directors, said many companies were
“still struggling to access the skills they need”.
Along with
“A future government should place tackling skills shortages and increasing labour force participation at the centre of its growth plan,”
she added.
To which a mustelid thinks to himself – what’s the problem? I’ll waive my usurous consulting fee to investigate this inexplicable conundrum.
Here’s a radical idea for you. Your offering is clearly unattractive. How’s about making work a whole lot less shit, and you know, maybe paying more for the product as it’s not coming forward at the price you’re offering? Have you ever had trouble finding CEOs? No? That’s because you pay shitloads of money for CEOs, but you’re only paying minimum wage for grunts? Well, piss off then. Either pay less for your CEOs and spread it around more widely3, or automate the bejesus out of what you are doing.
You could also try training people, like companies used to do when they wanted to solve skills shortages and they couldn’t find people off the shelf with the skills that they needed. In general, what the bloody hell is wrong with you lot, that you want government pork to do a job that previous generations of firms were able to do for themselves?
Do you want to know how firms used to fix skills shortages? They took people, often out of school rather than university, and they trained the buggers, often is special-purpose industrial teaching facilities, about their particular specialism.
Whazzocks. That’s what you get if you treat people like shit and pay ‘owt. Not so many raw recruits, eh?
Mind you, I’m also gunning for the chair of the OBR who delivered himself of this epithet
“If they’re not working, they’re not paying tax, and they’re also more likely to be on benefits,” he said.
Well, I’m not working, I am paying effing tax and I’m not on benefits, so stick it, mate.
FIRE in your twenties – don’t bother
Talking of people not bailing from the workforce early I’ve got a little bit of sympathy for this clickbaity Torygraph fellow with I tried the Fire method to retire early — my advice is don’t bother. I’m sort of with him, you need a certain amount of desperation to go balls-deep into saving to retire very early.
If you are that desperate in your 20s and thirties, arguably your effort would be better targeted at finding a job you hate less. Since he found a graduate job in marketing, he is clearly capable of playing the game well enough to get off the Deliveroo/Amazon NMW end. I could see that a career in marketing would be easy to fall out of love with. Funny the things that push you over the edge though – missing out on a weekend in Las Vegas was it for him.
I’ve been there a few times, and apart from concerts I wanted to see and using it as a launch pad for a tour of the Grand Canyon I found Vegas a soulless shithole that it was always good to leave. Having said that, you have a much greater tolerance/appreciation for manufactured fun (a.k.a. ‘experiences’ that you buy rather than make) when you are young, so good luck to him. I do wonder about these young’uns though:
but most of us would be bored after two weeks.
I never had any trouble imagining more interesting things to do than working, though I didn’t share his detestation of work for most of the time until the very end. Hinterland seems to be a fast-disappearing country. I’m sure it’s not good for us.
- For a while that something else looked like being TikTok which is decidedly non-American, but the US seems to have decided that TikTok is also unAmerican so maybe VUSA will not be displaced just yet. ↩
- I know Brits haven’t considered themselves European since 2016, but this is from an American perspective, and Americans are successful enough that they don’t have to trouble themselves with such trivial coquettishness. ↩
- This goes less far than you’d think, as I discovered way back when I divided the overpaid CEO of The Firm’s salary by the total number of wage-slaves there, who would each have got a salary increase of less than a pound a month ↩
Simple Living In Somerset 
Nice post.
To add to your “fears” have you seen this report: End of an era: The coming long-run slowdown in corporate profit growth and stock returns (federalreserve.gov)
Add to this that cash is still offering relatively OK rates and each day we are one day closer to death (to steal a line from PF) then it can definitely be hard to invest these days!
IMO, work should be a two way street – but that seems to be for the birds these days!
I agree 100%
Re your footnote 3 – yup such an approach is not the panacea it is understood by many to be!
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A mustelid is a glass half empty sort, but I kind off fell off that Fed guy’s wagon from the off
Ermine thinks to himself, what else was different about 1989? These American companies were more parochial, selling their stuff to the First World, so I have reservations about benchmarking to US real GDP growth, after the clue is in gross Domestic product… The world population was 5 billion in 1989, it’s now 8bn, and on and on in other areas, although I do note the predictions of Limits to Growth.
However, it was his last reference that prompted me to investigate his assumptions:
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Fair enough – but I am not sure that population growth alone is a good indicator. Perhaps, as you suggest, [real] growth in global GDP/capita may be fairer; although I am not sure if it would make that much of a difference.
FWIW, he explains the use of his last reference in an asterisked [*] footnote to the page with the Abstract.
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I don’t think it’s purely population growth, and a fair number of right-wing commentators are yelling the house down about this going into reverse at some point in the future, though I do also note that they tend to have an exceptional focus on particular aspects of those future citizens. But the world economy has grown stupendously in breadth and scope compared to the world I started work in.
I wonder if these charts show the answer to the questions we asked in the dot-com bust. “If this Internet malarkey is of the same significance as the advent of electricity and the railways, how come we are all going bust, and you can’t take money on t’internet?” People did make more money on it in the end, it was spread more evenly and what we thought was the bees knees didn’t turn out to be the thing. we thought people would speak unto others and there would be greater understanding and we would all become more informed, what people really wanted was hot takes, entertainment in 10 second bites and a virtual escape. And while it was hypertext transfer protocol, in fact video killed the written word.
Investing in railways was also a good way to lose money back in the day, and no doubt AI in the event it adds up to more than a stochastic parrot will be an excellent way for a lot of people to lose their shirts.
I did find an annual real growth in GDP/capita chart but it doesn’t go far back enough. I’m not sure this curmudgeonly mustelid is yet sold on the thesis that this is the final fade to grey.
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Not sure that ‘fade to grey’ is the thrust of the paper, but rather that over the last thirty years [US in particular] stocks have performed exceptionally well and this is unlikely to continue into the future for the reasons* given. The author could, of course, be wrong!
*primarily declining interest rates and corporate tax rates
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I guess my lizard brain inverted the thrust of
and postulated that these high PE multiples, for which the US markets are known now, could become unwound should these rates mean revert. That implies to me a serious capital loss, no?
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Could do, and I think this is probably captured as the ‘downside’ in the final paragraph on page 20:
“In the future, the real longer run growth rate of both stock prices and corporate earnings is
therefore unlikely to exceed 2 percent per year. Given that this represents an optimistic scenario,
the risks to this forecast, if anything, are to the downside.”
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The howls about not everyone who should be working not working is puzzling.
It was on every news outlet on the same day – what’s the message?
That we should all dig for victory? That there are secret scroungers who are undermining the prosperity of others? That some people don’t want to do shit jobs for shit pay?
I too was maybe late to the tech bubble game – and avoided crypto.
Obviously, I didn’t believe in unicorns and fairies and magic beans enough and paid the price in financial terms.
But I can’t complain overall – how you invest your money is less important than how to avoid spending it all on the UK’s “end the month with nothing” system of wage salvery.
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> what’s the message?
Probably all three 😉 I kinda like the idea of digging for victory, a at least it won’t take long to double dig a windowbox in a London flat
they were on about all these idle blighters in 2022. Funnily enough they haven’t been running towards the opportunities to do shit jobs for shit pay.
> how you invest your money is less important than how to avoid spending it al
Ain’t that the truth. The Grauniad has a ‘how to succeed at the no spend challenge‘, you gotta worry about the goal setting. No spending to save money to spend on summat else is perhaps a move towards intentional living, but eschewing one sort of consumerism for another still isn’t going to put the fire out.
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I think the problem with paying CEOs loadsamoney isn’t the money as such, there’s a lot of ruin in any company and they can probably carry the load. It’s that it incentivizes the CEO to think they are God and get ideas above their station. That CEO destroyed loads of value by an ill-considered acquisition spree of foreign firms, which eventually had to be unwound by the next head honcho and the one after that. Firms would almost be better off paying a ghost CEO whose sole job it to slap the other CEO round the chops with a wet fish when they get such wild ideas. I know that’s the theory of the CEO/Chairman of the board division but since they are all drawn from the same stratum the groupthink is strong in these folk.
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Your observation on the unhelpfulness of a SIPP for protecting from CGT and dividend tax struck a chord with me. I also have a significant GIA as a result of an inheritance and tax-free cash from both my DB’s AVC and a Section 32 DC scheme. Naturally I fund my ISA to the maximum each year and defuse my capital gains within the allowance. I have also been funding my SIPP to the maximum £2880 (£3600 with tax relief) each year, in an attempt to shelter everything as quickly as possible, but I’m slowly beginning to question the wisdom of this.
My thinking originally was that I get tax relief on the way in, the investment is sheltered so capital growth isn’t eating up that allowance and dividends aren’t impacting the dividend allowance. Even though I will be taxed on the way out I get 25% tax-free, so what’s not to like? Then in the last year I realised that fiscal drag could cause me to be to be higher rate taxpayer before too long if tax thresholds don’t rise soon, interest rates on cash remain relatively high and inflation-linked rises on pensions also remain high. Again, sheltering some of my GIA in a SIPP seemed the right thing to do as it removes from the equation a small chunk of capital that was generating interest or dividends. Regardless of the rate at which it is taxed, the gross income is what is counted in determining whether you have breached a threshold, so every little sheltered helps. Not only is the interest and dividend removed from the equation, but the tax relief effectively raises the higher rate threshold by £3600. Again a win.
Then comes the dawning realisation. What if even though I have sheltered as much of my capital as possible, the tax thresholds remain frozen for years? Increases in my SP and DB pension will eventually catch up and make me a higher rate taxpayer in any case. This would be unwelcome but I could perhaps be philosophical about it. What would be especially galling, though, would be to pay HRT on any money extracted from the SIPP when I had voluntarily added to it while I was only receiving basic rate relief.
So this is what I am mentally grappling with at the moment. Even if we have a different government soon, I can’t imagine they would be able to afford to raise the thresholds. If they did, I suspect it would only be at the bottom end and not the HRT threshold. Hopefully inflation will moderate soon, but it would be a shame to see cash interest rates fall too far as a result.
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I am reflecting on this at the mo. While I am probably OK from a narrow income POV from becoming a HRT payer, if I make a capital gain and that added together with income pushes me over, then I will need to consider that too, possibly crystallising CG in the years before I reach SPA and paying tax at 10% CGT rates. Obvs nice problem to have and all that, but maybe I need to think about spending it rather than paying tax on it 😉
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Yes, that’s yet another consideration. So far I’ve been able to fund my ISA and SIPP each year either from cash or selling equity within the CGT allowance. Definitely something to remember if I find myself selling equity above the CGT allowance and then forgetting that the gain above this allowance adds to income when determining the CGT rate.
A fair amount of my unsheltered cash is earmarked for spending on the house. The sheer magnitude of what I want to get done has inhibited me from getting started! It would certainly ease my tax musings if I got on with spending that particular cash bucket.
I fully agree that all these factors are nice problems to have. I suppose I find it intellectually satisfying to optimise these tax matters rather than actually needing the money saved.
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> the gain above this allowance adds to income when determining the CGT rate.
which in my case may imply flipping ‘twixt VWRL and HMWO annually since it would appear that there is a rate limit here. Obviously if AlCam’s Fed paper comes to pass this will more be a case of crystallising a loss annually, perhaps to set against the increase in the gold. I take it the CG loss doesn’t offset any other income from a tax POV…
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@ermine No, but you can bank your capital losses until the good times roll again!
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@Al Cam
I’m very happy for you that you seem to get such good service from HMRC. Unfortunately my experience has recently been rather different. The trouble is that HMRC have a tendency, every time they have correct information, to revert to incorrect information at any opportunity. Here’s a timeline of my latest issues:
So my 2023-24 code is currently the correct number but is on a month1 basis, and I will have substantially underpaid tax at the year end (around £1k). My plan now is to hope to qualify for SA in April. If I do, I will submit my return as soon as I have all the statements, probably in June and opt to pay underpaid tax as a lump sum. I have a friend and former colleague who gets a DB pension from the same scheme as I do, and also does SA. He tells me that having opted for paying underpaid tax as a lump sum, HMRC do not collect tax on any untaxed income other than state pension through his tax code.
Despite your positive experience in adjusting your 2024-25 code through your PTA, I’m not inclined to attempt this, mainly because of the large underpaid tax adjustment. If I manage to qualify for SA, submit a return and pay my 2023-24 tax bill, I envisage four scenarios:
I sincerely hope the last of these does not occur. My guess that it won’t initially but on previous experience could well occur later in the year.
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@DavidV
Clearly not the worst problem to have.
Having said that your observation reminded me of this comment I posted at Monevator late last year:
“A key thing to look out for in de-accumulation (that I personally overlooked until almost too late) is that it is about the whole taxable income stream and not just the DC pension income. May also be worth noting in passing that the pensioner effectively pays the deferred tax on all contributions (plus hopefully growth), not just those made by him/herself.
The overall balance is not just about tax rate differences but there is also a critical time (actuarial) component too. Take the following completely non-realistic example as a thought experiment. All contributions made in one year attracting say an average of 60% relief. Pot grows well and many years later the family/survivors use it as a perpetual trust that they withdraw 2%PA from for ever that they pay 15% or maybe after a while 20% or even more tax on. Is this optimal or ……….
IMO, the tax man does rather well out of pensions and has somehow managed to convince people that the costs/benefits he incurs are only the upfront cost of tax reliefs and he apparently gains absolutely nothing from the deferred income tax streams – a great piece of spin if ever I saw one.”
That is, there is definitely more to it than just tax rate differentials!
Hence my view that paying HR to access my DC/SIPP would be a fail and I am still on track to flatten mine before my SP starts. Just my take though.
P.S. have you seen my latest comment on @ermine’s previous post?
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@Al Cam I’m still digesting your thought experiment. I need to think harder whether I can become sanguine about paying HRT on SIPP withdrawals of money I had the choice not to have contributed in the first place!
I had not seen your latest comment on ermine’s previous post until you drew my attention to it. Well done for pursuing this. At least it makes sense now.
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@Al Cam Sorry, I’m being slow here and I’m not sure I have understood the thrust of your argument. You conclude ”… paying HR to access my DC/SIPP would be a fail …” , so it seems that we are in agreement on this.
I concede that what I am about to say is totally mental accounting and so should be a no-no, but we have often agreed that many aspects of decumulation are psychological and not necessarily rational. So here goes:
Now we all know that money is fungible, so everything I say above is total nonsense! To remain sane all I have to do is convince myself that the HR tax I may pay in future is on the slice of income that I am comfortable paying it on. But my discussion on this post started with considering whether it was good idea to continue contributing to my SIPP. If I have just contributed £2880 and then a year or two later find it is only worth £2520 (ignoring growth) on withdrawal I won’t be congratulating myself on sound organisation of my investments.
Moving on to trying to unpick your points above. Your comment on the Monevator article last year makes the point that on withdrawal tax is paid on employer contributions and growth as well as employee contributions that received tax relief when they were made. This may be a net gain to the government (ignoring discounting tax receipts back to the time the tax relief was given). However, following my arguments above I don’t think this is an issue for me psychologically. As long as I do not pay a higher tax rate on withdrawal than I received relief on contribution, I can remain content.
On your thought experiment, I think your point is that, although the contribution received 60% relief and withdrawals many years later only pay 15%/20% tax, because of the growth and low WR the tax paid over time could far exceed the relief originally received. This may well be true, but to determine whether the government had truly won it would be necessary to discount the tax receipts back to the time the relief was given. (Don’t ask me about the discount rate – how these are determined has always been a total mystery to me.) Once again, if I was the recipient of this income stream and was only paying a ‘normal’ amount of tax, I think I could remain content.
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> Where I totally balk at the prospect of paying HR tax is on SIPP withdrawals of basic allowance £2880/£3600 contributions that I have made in recent years. Paying £2880 in and getting £2520 out is not my idea of a sound investment! Hence my current thoughts of whether I should continue making these contributions.
With you on that. I put in my £2880 into HL in cash, three months later I have it out + HMRC bung, they give me 25% of £3600 tax free and tax the remainder full whack. I leave £1000 of VWRL in the a/c to keep it open, I make £180 on the turn. Not a lot, but worth pressing a few keys for. I ran all the accumulation out in the fear they woud put NI on pension income, and what with the annual rate limiting on CG I want to keep the total in the SIPP as low as possible so eaxctly your scenario doesn’t happen
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@ermine I guess I have the good problem that my SIPP is too full to empty in a hurry, not to mention the problem of then having more unsheltered money that I have to manage the interest, dividends and capital gains to try to stay out of HR tax. It is not only a few years of basic allowance £2880/£3600 contributions – I also have 12 years of occupational DC contributions (including employer contributions) and 19 years of NI rebates from the time I spent contracted out of SERPS/S2P via personal pensions.
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@DavidV,
IFS figure A.1 was bugging me too, and I am glad we seem to have bottomed it out now. OOI, this is not the first time I have communicated directly with IFS authors and have always found them to be approachable and communicative.
I agree. As well as being devilishly complex it is seemingly built on shifting sands and – as if that were not enough to be going on with – it is also rather personal/emotional/situational too. Therefore, I totally see the logic behind your four bullet point “pain ladder”
Actuarial calculations can seem especially problematic but FWIW I reckon the approach is basically sound.
IMO, a key point in my thought experiment is that the drawdown is perpetual and under such extreme circumstances I think the initial allure of the tax relief is possibly an illusion (FWIW, I reckon I just about fell into this trap – see below). Worst case, the initial relief gets ‘lost in the noise’ (versus all the tax paid over time) and best case (paying all the tax due up-front for no tax on the way out (ISA model)) would clearly have been a better overall way to go. I do take your point about the family/survivors point of view – but I am not overly concerned about their perspective, nor IMO is HMG!
When I was busy filling my DC/SIPP I did not really giving any serious thought to emptying it and was so content with the tax relief I was getting that I too took BR on some of my DC contributions. Sure there were employer contributions too – but these IMO should be viewed as deferred income. Only my baseline DC contributions were salary sacrificed; all my additional contributions were not.
Ouch! OOI, did you start your DB when you retired or could you have deferred it a few years and ‘set about’ your DC/SIPP in the interim?
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@Al Cam
I think your thought experiment and the idea of perpetual drawdown makes me more comfortable of the idea of possibly paying HR tax on withdrawals derived from contributions made many years ago. These will have had time to grow and the fact that the contributions only received BR relief at the time may be lost in the noise. Bear in mind that when my DB scheme closed to new contributions in 2003 I was still 15 years away from NRA. I did not realise at the time that my DB scheme would pay as much as it eventually did, so I continued paying into the new DC scheme at the same level as I had been doing for my DB+AVC (before 2005 this was capped by legislation at 15%). The fact that I received only BR relief back then was irrelevant to me – this was years before the 2016 pension freedoms and it was the occupational scheme now available to me, so I used it.
The major pain point for me is still the recent £2880 contributions that only gained BR relief, have had little time to grow and may be subject to HRT on withdrawal. However, if I get to the HRT threshold with SP + DB + unsheltered investment income it will be again worth making these contributions as they will effectively receive HR relief (or raise the threshold depending on how you prefer to view it).
Ouch! OOI, did you start your DB when you retired or could you have deferred it a few years and ‘set about’ your DC/SIPP in the interim?
I didn’t start my DB as soon as I retired – I initially lived off my voluntary redundancy payout. I took my DB pension at the NRA of my 65th birthday and started my SP at the same time (I was eligible for this at age 65 – just!). The idea of deferring my DB pension and emptying my DC/SIPP first never occurred to me then (2018), and I can’t say I had considered it since until you just asked the question. We were in a different era then – inflation was low, interest rates were rock bottom, and there was a £5k dividend allowance. I never thought I would ever be fretting about HR tax. With hindsight this could have been a viable strategy – I can’t remember the details but there was a reasonable uplift on offer for DB deferral. I think I judged the uplift at the time as actuarily fair, but not more generous. My mindset regarding DC/SIPPs would have been totally on SWRs and preserving it for the rest of my life, not on emptying it as soon as possible!
@Bill
I love your analogy of filling a big bucket and only having a pinhole to drain it. As for the pain of doing your tax return, let me assure you that getting HMRC to get your tax code correct when you have dividend and interest income but are not eligible for self-assessment is itself extremely painful. In fact this year they messed up my code so badly that I have been driven to let the tax tail totally wag my investment dog. I have now made a non-optimum adjustment to the location of my investments solely in an attempt to qualify for SA in April.
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@DavidV,
Your story is a really good illustration of my “shifting sands” comment; the amount of pension related changes we have all lived through is, I would imagine, rather unprecedented.
I guess you will probably end up pausing your “£2880 contributions” for a while before starting again once you are a HRT payer. Another example of just how ridiculous this all is! FWIW, I have never bothered with the £2880 play.
When I pulled the plug at the end of 2016 I was already worried about HRT so decided to tackle my DC/SIPP from the outset*; HRT was definitely a risk if I held off claiming my DB until NRA and this was well before advanced fiscal drag took over. My other primary objective at that time was around the LTA. At that time I was convinced that the LTA was the bigger threat – mmmm.
IIRC, once upon a time you could voluntarily do self assessment – I guess this is no longer available or I have mis-remembered?
*my plan being to shuffle it into ISA(s) and live off other savings plus redundo in the interim
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@Al Cam
I guess you will probably end up pausing your “£2880 contributions” for a while before starting again once you are a HRT payer.
Yes, this is my current thinking after publicly working through my issues.
IIRC, once upon a time you could voluntarily do self assessment …
I don’t know whether that’s the case or not. It has only become a bugbear of mine in recent years since I have more unsheltered investments, interest rates have risen and the dividend allowance has reduced. It did not used to matter if HMRC got this income wrong if both their incorrect figures and the correct figures were within the allowances.
When I last did a search on this topic I found reference to a court or tribunal case where it was determined that HMRC have to accept and take account of a tax return submitted voluntarily. However, the taxpayer in question had already been registered for SA for some time and was then later told that he should no longer complete a return. He would therefore already have been issued a UTR and would be able to log in to his SA account. I know HMRC are trying to reduce the number of people required to submit a tax return. I don’t know why – it most be far more difficult for them to process information by phone or letter than simply take information off a return submitted electronically. I do note that being a HR taxpayer is no longer a criterion on its own to qualify for SA.
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Surely self-employment is your friend? I would charge someone 50p to fix some gizmo and return to SE if they gave me the order of the boot, even though I don’t need my class II NI. From what you say it would be cheaper in terms of my time to fill in SA with Taxcalc and fix some wotsit than to declare CGT, dividends, interest etc outside the SA system.
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@ermine
As I mentioned a few comments up, HMRC managed to mess up my tax code so spectacularly this year that I had another look on how I could qualify for SA. The lightbulb moment came from the Monevator article last month on Excess Reportable Income. In the course of reading the article and some exchanges in the comments I realised that ETFs, usually domiciled in Ireland, produce ‘foreign income’. That is one of the qualifying factors for SA, although it seems you need at least £300 foreign income. I also use IWeb for my GIA and, as funds are free to hold with them, that is what I had used there.
I have now made some changes to where I am holding investments to have an ETF in the GIA that should produce just enough income at the end of the month to qualify me for SA after 6 April. I just hope HMRC don’t increase the limit from £300 for next year. The strategy is non-optimal as, in an attempt to generate £300 for a single quarter’s dividend, I went for VUKE. The annual dividend total for VUKE will be more than I ideally want in the GIA to keep away from the HRT threshold. I may swap it for VWRL in the new tax year if I can do so without using up too much of the capital gains allowance.
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I have £1k of ETF divi in the GIA so perhaps that is the way this is resolved. I note HWMO IE00B1TXLS18 is also Irish. I have always been an ETF guy rather than funds as it was a surprise iWeb didn’t charge to hold funds, other platforms i use do. I do note the lack of FSCS protection on ETFs so I wonder if I should swap VWRL for an equivalent fund in the iWeb ISA.
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One other thing possibly worth mentioning is that the latest (Feb ’24) inflation forecasts from both the BoE and the OBR have slightly improved versus those published in Nov ’23. Thus, in my model* the boundary to the HRT fun zone (see Mustelids mulling a new year at megalithic sites – Simple Living In Somerset (wordpress.com)) is a tad (c. £400) higher than it was in Nov ’23. Not much of an improvement, but as a well known supermarket is fond of saying: every little helps.
*which is sensitive to my own situation
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@DavidV,
Re: SA
Blimey, that is quite a faff! I hope it works out as you foresee.
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@DavidV
On taking another look at your four rung “pain ladder” this morning:
re rung one (SP) – I know you had periods both contracted in and contacted out but I am not too sure if your DB/DC contributions were all salary sacrificed. If they were, or even some of them were, then (in a manner of speaking) your SP contributions were lower than they might have been but were almost certainly higher than they needed to be to qualify [as an employee] for SP too.
re rung two (DB) – I was initially amazed at the 3% and 3.5% you mention. However, on checking my own records I note that my own average DB contributions to 2003 were 3.8%. We really were very lucky to have received this benefit. I do know some DB schemes were non-contributory, but was always led to believe that they were particularly rare in the private sector.
In summary, I too (albeit reluctantly) am just about OK with the possibility of paying HR tax on rungs one or two. And, it may be worth noting that no tax is ever directly deducted from rung one, but rather, if any is due, it is usually extracted from rung two.
You know my position on rung three – paying HR tax would be a fail – primarily, for the reasons I outlined above. As I see things, your DC/SIPP pot might, in due course, become a ‘hostage’ as you dare not touch it for fear of adverse tax consequences. Now, whilst I accept the usual lock-up period for pensions, this additional barrier would IMO be beyond the pale.
Finally, as I have never done rung four it does not apply to me.
HR tax on savings interest, dividends, capital gains, etc is for another time. But I tend to favour @ermines argument about “compensation for taking the capital risk”. That is, if HMG really want people to invest they need to encourage them to do so, rather than brow beat them – see e.g. the reactions to HMG’s drive to push pension schemes to invest more in Britain and even the, so-called, Brit ISA
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P.S. in my previous comment I really should have said “beyond the pail” to riff on @Bills nice bucket analogy! Apologies, this awful pun came to me somewhat later – but I just could not resist.
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@Al Cam @DavidD
Just catching up on interesting comment threads here…
Hah! That bucket analogy seems to be paying dividends 🙂
I’ve just topped up my bucket too transferring in another “legacy” employment pension into the SIPP. I re-jigged the ETF allocation scheme getting rid of some small bond ETF holdings and adding a big slug of VWRL after much pondering on where global markets might go re. Magnificent 7 etc. Feeling positive – hopefully things will go well with more of the AI take-up in data centres etc boosting Google, MS etc in which case I may need a bigger hole in the bucket. Who knows, I may just end up crying into the beer but I left some cash to move into the drawdown account later this year.
I think at some point I will need to pay some BR tax taking more out of the SIPP than just the dividends. Currently my tax code shows as 1257L at HMRC online – it will be interesting to see how this changes after the upcoming income withdrawal from the SIPP. HMRC seem to think I’m still earning from my previous employment this year and some tax will be due…they’re going to be disappointed. I have no idea why the tax account shows HMRC expecting me to have some employment income each year, they must have got their part of the P45 when I was made redundant.
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@ermine
I use ETFs in my ISA and SIPP, which are both with HL. For my GIA with IWeb I took the opportunity to invest in a fund as there is no charge for this with them. I use HSBC FTSE All World Tracker (Income), which tracks the same index as VWRL and is cheaper. When I harvest capital gains I flip to Vanguard FTSE Global All Cap Tracker (Income). This is a different index and has far more constituents, most of which must be too small to have any significant impact.
@Al Cam
Firstly, a correction. When I said that in Dec 2018 the dividend allowance was £5k, I was wrong – it had already reduced to £2k in the April of that year.
I’m glad my ‘pain ladder’ is still providing you with so much food for thought. Addressing your latest thoughts in turn:
Salary sacrifice was only available to me for the final four and a bit years of my working life, i.e. from 2013. For all the time before this I only received standard tax relief on contributions. Unlike your situation, when I did benefit from salary sacrifice it was on the whole pension contribution. So yes, at the time when my salary was at its highest, I received more relief than just the income tax I would otherwise have paid.
Your initial surprise at my 3.5%/3% DB contributions reminds me of a time many years ago when my employer was considering how better to promote the DB scheme and whether a revamp was necessary. I was part of a focus group on this. One of the questions was would you like the option to pay more for more benefits? The next was would you like the option to pay less for less benefit? My reply – I you want to pay less than 3% for your pension, you’re not taking the subject seriously!
As you say, SP is paid without any tax deducted and any tax due on this is paid from other income where a tax code can be applied (heavily negative for me at the moment). We have discussed before what may happen when the standard level of NSP exceeds the personal allowance. My bet is on a special additional allowance for anyone over SPA, possibly with a taper at higher levels of income. That said, tapers have produced all sorts of anomalies in the tax system and I don’t suppose any party would want to overly upset the grey vote by applying it at too modest a level.
I’m also beginning to question whether I will ever be in a position where I dare extract money from my SIPP. It is remarkable to think how recently it was that I was musing over annuitising part of it on the theory that having guaranteed income induces you to spend more. (I think you quoted a paper making this very point.) I have long held the conventional wisdom that the hierarchy of spending in retirement should be pensions/annuities, unsheltered assets, tax-deferred (i.e. SIPP), tax-exempt (i.e. ISA). This originated in the USA, but the order of the final two is often reversed in the UK context by those who want to use the SIPP to avoid IHT and pass it on to their heirs.
My thinking is beginning to develop in this direction but for slightly different reasons. I am single and have no living relations and so no legacy motive. A large part of my legacy will therefore go to charity. Now I’m quite a bit older than you (and ermine) so I’m beginning to think that the most likely scenario where I need considerably more income than I’m currently living on is if/when I need to go into some form of assisted living or long-term care. If this is effectively a rental situation, there will be the house proceeds to use up first. If this were to run out, the tax would likely be punitive if the extra income needed all came out of the SIPP. Therefore the ISA would have to carry most of the burden (it is over twice the size of the SIPP anyway). If what is left over on my death is all in the SIPP, that’s no problem as charities will receive it tax-free anyway.
Just to touch on unsheltered savings interest and dividends. My understanding is that HMRC treat dividends as the top slice of income with interest just below. Therefore if/when I do pay HR tax it will initially be at the dividend rate of 33.75%. I’m not sure where capital gains above the allowance sit. I suspect it is on top of income, which isn’t too bad as 20% is better than 33.75%.
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@DavidV,
Almost seems like a different world doesn’t it?
I remember that annuitizing chat. IIRC, one of the things you were attracted by was the seeming inducement/permission to spend some more that annuities seem to confer. Perhaps, you could try and somehow apply this logic/mindset towards your unsheltered funds, and that may ameliorate some of the HRT threat too. Perhaps, making a start on your planned house mods would be a good place to begin. I note in passing that spending more seems to be an approach @ermine is considering too. Having said that, I suspect this is far easier to say (or write about) than to actually execute. The idea of spending as a form of tax management might just help a bit though?
I can see your logic re your DC/SIPP and how it works in your situation. Having said that, you are fortunate to be in a position where the DC/SIPP is probably surplus to your [current and foreseeable] needs. I suspect you might be a tad less philosophical were the DC/SIPP needed?
Also, I now far better understand you apparent aversion to RMD’s and the like; in your case they could be especially punitive. Avoiding such a scenario, albeit in a US context, helped form my plan to flatten my DC/SIPP. The US analogue IIRC is called Roth conversion.
Lastly, I agree that the UK tax ‘layer cake’ is important too.
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Yes, I am old enough to remember companies that didn’t consider their staff as their enemy to be rightsized, downsized, nickel-and-dimed and generally shat on. Heck, a company was more a joint enterprise than a slave ship. I don’t know if this Grainiad article is right that
but it seems to go along with the whole problem with what’s wrong with work in Britain. FFS my first in the holidays student job I had a flipping payslip even though it was paid in cash (as many blue collar wages were at the time)
It also gives some truth to the French moan about the small boats stuff – roughly summarised that ‘until you rosbifs sort your casualised employment market out the pull is always going to be strong’.
Enough fo that else I need the old man yelling at cloud pic.
Note that only about 1 in 5 end up in care, but also that you would be much better off in that case with a purchased life annuity where the funds are paid directly to the care facility. This can only really be done by a financial adviser. look for a SOLLA IFA, that is most emphatically not one to DIY. Some of these are closer to insurance products than open market annuities
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@Al Cam
Yes, getting on with the house refurbishment is definitely the way to go. I like the idea of thinking about it as a form of tax management, as finance interests me far more than property!
Thank you for providing a knowledgeable and understanding ear while I publicly but anonymously work through all these issues with you courtesy of ermine’s blog.
@ermine
First of all thank for once again tolerating such an extensive discussion between me and Al Cam on your blog. I hope we have added some value to your many other readers.
It’s true that statistically only a small proportion of people go into care. However, many of the remainder receive some form of informal care from a partner or family. I can’t call on that, so I am more vulnerable to needing a formal care arrangement when the time comes.
I have direct experience of care needs annuities, as I helped my late mother purchase one through a SOLLA adviser (I had Lasting Power of Attorney for her). As you know, the income is tax-free when paid directly to the care home. It was not relevant for my mother, but for my possible future situation it is a shame that they cannot be bought with SIPP capital as a pension annuity would be.
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@ermine,
As I think I mentioned in a previous post we are old and every day offers more things that reinforce this!
I am part way through reading All Out War: The Full Story of How Brexit Sank Britain’s Political Class: Amazon.co.uk: Shipman, Tim: 9780008215156: Books and whilst the 600+ page tome is packed with interesting things what so far has really stood out for me is the practical (mis)use of social media. Quite, for me a least, eye-opening.
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Social media eh, if ever there were an oxymoron that’s it, social media can never be good for anything social. It’s one of the reasons I am/was Pollyannish about the M7 – never underestimate the appetite for crass rubbish, the Dirty Digger’s done well enough out of it. Social media is like turning the lights out and telling everyone to be whatever you want to be. Hateful gits seems to the key message, and when it’s not that it’s the sort of inanity that makes bread and circuses look like philosophy. More of that is basically what you’re buying with VWRL and even more so with VUSA. Though I do acknowledge my category error @HeadedWest highlighted.
Monevator, that increasingly curmudgeonly old git, I’d say he’s less than 10 years behind us, had a link to Ed Zitron’s blog on the enshittification of the internet, and the article made me wonder if Ed was older than me 😉 I looked at the photo on the strapline and he looked like an all-American 40-ish male. I know that on the Internet nobody knows you’re a dog but there was enough to establish he’s about 37 😉
This post seems to be the Homage to Las Vegas edition. First we have our Telegraph reader who abandons his dreams of early retirement for a trip to Las Vegas. While I do acknowledge the high-level principle, falling off the wagon for Sin City seems raw. Then we have Rhino our intrepid reporter from the front-line back from a tour of duty there, and then we have the old head on younger shoulders Ed who seems to have done time there. Stay out of Vegas if you want to stay sane, look what it did to Elvis…
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@DavidV,
Glad you found it useful.
@all readers,
A few postscripts re my chat above with @DavidV:
a) implementing the thought experiment using ISA’s is sub-optimal as they would be subject to IHT; as I said above the thought experiment was a “completely non-realistic example” designed to try and illustrate some points rather than as a vehicle to fairly compare SIPPs and ISA’s;
b) my shuffle plan was not possible prior to Osbornes 2014 pension changes;
c) for other largely un-related reasons I began adding AVC’s to my DC pension from mid 2013 (to some extent as a leap of faith (as I did not know how it would pan out) to try and manage a specific situation) and then instead of stopping them, as originally foreseen, I just carried on in light of the Osborne changes – this was a massive stroke of luck;
d) having said that, IMO those same Osborne changes are probably (at least in part) responsible for the current bulk annuity feeding frenzy in the DB world – the impact of which is TBD;
e) I am now well on with my shuffle plan and it seems I may well pay less tax to empty my erstwhile DC than the reliefs I received on the way in. However, it may be worth noting that the ratio is far smaller than that given by the ratio of the respective rates – some of which (but not all of it I venture) may be down to the calculations being in nominals;
f) @ermines achievement of flattening his DC/SIPP at nearly no cost (tax, advice, etc) [documented elsewhere on this blog] is pretty close to the best achievable outcome (IIRC he did not benefit from any of his employers NI savings from salary sacrifice) and IMO is very hard to emulate.
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@DavidV,
Re: Tax Code Issues
HMRC issued me with a tax code notice for 24/25 a few weeks ago. Surprise, surprise it was wrong! On Saturday I reviewed and revised HMRC’s assumptions – using my online tax account (>>PAYE >>check next years tax code) – and, as of this morning, my tax codes for 24/25 have been corrected (online) as foreseen. Only time will tell if they role out correctly and consistently from there.
IIRC, I was able to alter any of HMRC’s assumptions – for info, I altered two. Whilst, I am not exactly sure of the form/nature of the tax code problems you experience, this may be the time to try and get your tax code for next year on a better footing. Any final discrepancies (which hopefully should be relatively minor) can then be ironed out, retrospectively, assuming they enrol you in SA as you describe above. What do you think?
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The bull case for the Magnificent Seven isn’t that Americans will stop needing clean water and shelter and spend all their money on tech.
The bull case is that M7 will sell to the rest of the world, that which British/Indian/Brazilian companies used to sell 🙂
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pecunia non olet, as the old boy Vespasian once said
There’s hinterland to explore yet…
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I found the origin of this Vespasian phrase (via his son Titus) QI, see e.g.: Vespasian – Wikipedia
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it’s kind of strange to find myself on the Pollyannish side here regarding the whole M7 smartphone/social media crap, but to borrow another topic from Rome, never underestimate the appetite for bread and circuses…
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It does seem somewhat out of character for @ermine to be offering “an unfailingly optimistic outlook”; but, c’est la vie or perhaps it is just that spring is in the air?
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Funny how there’s all this noise the last few years about the lazy, workshy plebs who should go and find the nearest grindstone tout de suite, when one look at the ONS website shows that the percentage of economically inactive has never dipped below 20.5 % since records began in 1971…
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Thank you for that piece of fact-checking. The closest I came to was
https://www.ons.gov.uk/employmentandlabourmarket/peoplenotinwork/economicinactivity/timeseries/lf2m/lms
which is in terms of total numbers, it seems remarkably steady state given the change in population ofver that time, and the remarkably narrow definitions
There is more description here
Maybe FI/RE is increasingly a thing post 45….
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That sounds plausible to me. To achieve Fire sub-40 in this day and age requires great clarity of purpose, and single-minded determination from a young age. Or a trust fund or inheritance.
Post-40, I can image that the pool of firees is extended with those who grow disillusioned with work, realise that life is short and have accumulated some assets already. They read up on readily available resources, crunch the numbers and find the escape hatch, by which time they’re 45+.
Thank you for the clear insights, it’s always a pleasure to read your blog
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Post-40, I can image that the pool of firees is extended with those who grow disillusioned with work, realise that life is short and have accumulated some assets already. They read up on readily available resources, crunch the numbers and find the escape hatch, by which time they’re 45+. - Emma
Yes, I would count myself in this definition. Post 40 and ejecting from the workplace due to the disillusioned work and the poor management. Treated like a number and fed up of the senior management making decisions based on their bonus payments rather than the long term success/survival of the company.
My numbers add up so off to find something better to do with my time. I am not lazy, just fed up of the broken work contract and the disrespect of the management to the workers.
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Glad there is a 20% rate since records began. I guess the ONS will be resetting their rules so they can massage the figures and then requote them to fit their current view of the time.
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Good read with thought provocations
>>I’m better off in an unwrapped GIA, because the tax on dividends and capital gains is half of what I’d pay coming out of an SIPP.
This is essentially why I’m not planning to put any more in my SIPP like that £2880 for the tax bung now I’m starting to draw on it. I fattened the SIPP / DC pensions with salary sacrifice to avoid a lot of 40% HRT and pocket some generous employer match. Now to get the cash out of the SIPP avoiding too much tax it’s like I filled a big bucket and I just have a tiny pinhole to drain it. You’ve made me think that after filling the ISA then plonking funds into the GIA and paying CGT / dividend tax is not such a bad thing. It is just the pain of doing the tax return!
I had the fear of global trackers being toppy with US tech stocks particularly “intangibles” like Facebook back in in 2018. So when I took control of my SIPP moving it out of the employer chosen OEIC default fund to save on uncapped .45% platform fees I set up an allocation using ETFs and chose VHYL instead of VWRL for a lower US allocation and some VUSA mixed in for a smaller tech exposure. In hindsight I have some regret tilting it away from the 60% US but I slept better and also I like having an allocation spreadsheet so I stick to a plan when transferring in other pensions, rather than choosing funds willy nilly. Also, I have plenty enough. I think the problem with tilting a portfolio away from the US exposure of a global benchmark is when to move it back the other way when that VWRL or whatever just keeps going up? That said, I did load some VWRL in the ISA to offset the UK exposure in there with various ITs for the dividends.
I’m envious that you’ve got those stones within striking distance, there’s not much like that above ground around here!
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I have a smidgeon of sympathy for the oik in the Telegraph. Being sensible with your cash isn’t especially glamorous and the benefits mostly lie far in the future.
Also, he has an article to write and there are very few ways to restate the ‘make a virtue of a necessity’ mantra in an interesting or palatable way. So attacking the concept is easier, though no doubt there is a follow-up article about how to make £20K available for trips to Vegas and the like (frugality in everyday life) lying in his drafts folder.
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@ermine If you’ve not already seen it I suggest you check out comment #19 by Kwaker on the paywalled Monevator article.
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That’s pretty cool, thanks for the headsup. At the mo Iweb won’t sell me IE0006WW1TQ4 and the ETF has a platry 3.4M AUM, but I can take my time to buy these deadweights. Intriguingly, looking at the components I already have some of this in the HYP part of the ISA and could give them the order of the hoof if I am going to go buy a serious amount of that in the GIA. Probably swap them in favour of VWRL or the HSBC version rather than major in even more VUSA than needed to offset the GIA holding…
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Another problem with the ETF is that it seems to be accumulating which is a pain in a GIA.
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I don’t think I would get out of bed for an ETF with less than 100M AUM, it would be at risk of liquidation due to lack of interest and you find yourself with unexpected tax calculations? I usually like something with half a billion AUM size at least as a risk check for large portfolio holdings, I’m not sure if this is something Monevator folks have highlighted…
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”Whazzocks. That’s what you get if you treat people like shit and pay ‘owt. Not so many raw recruits, eh?”
Yup, I have a huge problem filling low-paid positions at a corporate entity, because they don’t accept that it’s a catch-22 situation in that if you pay that low, the candidates you get mostly can’t or won’t do the job properly. Those with the decision-making power on this issue don’t care because they can ignore the problem, it becomes the fault of the middle-manager responsible. This allows the ones at the top to cream off the thusly accumulated savings to prop up their own disproportionate wealth piles.
So yes, anyone who can possibly make a plan to survive unexploited will obviously do so, but the system endures because so many simply cannot.
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interesting debate on the pros and cons of SIPPs/ISAs. Mrs T and I are both below SP age, and earning under the tax threshold, so any pension contribution up to net relevant earnings effectively gets a 25% bonus. In retirement we could withdraw 25% of the 125% tax free via flexi drawdown, leaving the remainder outside our estates for IHT, or paying BR tax on it, depending on circumstances. But once in it’s tied in, and subject to future government meddling…. Tough one.
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Any contribution to a personal pension or SIPP outside of your employer will receive the 25% uplift regardless of you earning below the tax threshold (I’m assuming you mean the basic personal allowance of £12570). However, do you have the opportunity to join your employer’s scheme? This is trickier to evaluate, as tax relief is normally given by deducting pension contributions from your gross salary and calculating the tax on what’s left. As you earn below the personal allowance, you would not then benefit from the tax relief. However, your employer’s contribution to your pension would possibly more than make up for the lost tax relief..
If you in fact meant to say that you were both earning below the higher rate tax threshold, then the tax relief situation would not materially differ between your employer’s scheme and an external personal pension/SIPP. However, why would you turn down the employer’s contribution and not join his scheme?
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Thanks @DavidV. We’re both self employed (and I have been most of my working life), so no employer contributions, and yes, both below basic personal allowance. We have enough capital from downsizing to be able to contribute 100% of our earnings to our SIPPs, and the tax relief is effectively free cash, as it’s not tax we’ve paid, so seems worthwhile. Just concerned over the inflexibility. Or we can fill our ISAs instead – no tax relief on the way in, but no restriction on the way out!
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Just got back from Vegas a few days ago having spent some time in the desert with work, and I can honestly say that if America represents exceptionalism then we are all monumentally fucked.
They can’t even get basics right like a sensible method of paying for petrol or your restaurant bill.
I think there means of boosting GDP is probably just changing the suggested bands for tipping on their receipts which are absolutely eye-watering.
They don’t know how to eat, they don’t know how to move, they struggle stringing a sentence together – honestly, exceptional my arse.
US is now borderline scandinavia prices but without any of the tidiness or organisation.
They may have big tech, but I don’t think I spotted a single American whilst at Google/Deepmind a few weeks back. There were plenty of other nationalities.
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Trump will fix it all that for ’em in November 😉
That could be down to the GBP still showing the war wounds from La Truss’ escapade I wonder?
Do they still have that game where you have to deposit your credit card at the kiosk, or have they adopted pay at pump? Mind you, I do rather tip a hat to American vacuum vapo(u)r recovery every time I inhale petrol fumes on filling up here. They had that sorted 30 years ago, I’ve never seen it in Yurp. Or Blighty.
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There is another interesting column by Paul Lewis (presenter R4 Money Box) in this week’s Radio Times. He talks about a new experimental inflation index from the ONS, the Household Costs Index (HCI). It has only been running for six months. Apparently a recognised flaw in CPI is that it measures total expenditure by households, so is biased towards the better-off. HCI attempts to rectify this. Inflation for poorer households is usually higher than for better-off households, but the latest HCI figures reverse this. One of the reasons is said to be mortgage costs. These are included in HCI but not CPI.
Strangely I can’t find any information on this index on the ONS website. A search brings up Household Cost Indices but this seems to be used as a generic term to cover CPI, CPIH and RPI.
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See: Household Costs Indices for UK household groups – Office for National Statistics (ons.gov.uk)
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You may also find this (admittedly rather long) review, that reported in 2015, of some interest:
UK Consumer Price Statistics: A Review – UK Statistics Authority
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@Al Cam Thank you – I thought you would be across this subject. For the benefit of other readers I found this article, linked from the article Al Cam references, useful background.
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@Al Cam I’m repeating a comment I just made, as my original attempt seemed to disappear. Apologies if it eventually appears twice,
Thank you – I thought you would be across this topic. For the benefit of other readers I found this article linked from the article referenced by Al Cam useful background.
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@DavidV,
Yes, it might just qualify as one of my retirement hobby’s. As I mentioned at this recent ermine post: Capital Gains cogitations – Simple Living In Somerset (wordpress.com), I have been looking at inflation for over seven years now. And, as a result of this work I strongly favour official CPIH.
In the same post I also mentioned in passing that “… I can see the attraction of the so-called personal inflation rate, but happen to see it as practically unactionable; and I have tried!” and that there are “practical barriers that are common to all personal inflation calculators – including the one provided by the ONS”.
I have done a little work on the HCI’s and whilst they do provide some interesting additional information I believe my previous comments equally apply to the HCI’s. As I understand them, the HCI’s are calculated as follows:
a) build a slightly different basket of goods & services*, lets call this basket++;
b) apply differing weights** to the basket ++ component level inflation indices (aka the [United Nations] COICOP divisions e.g. food & non-alcoholic drinks, alcohol & tobacco, clothes, etc) to generate the various overall HCI inflation values (e.g. all households, Income decile N, Households with children, etc)
The practical limitation with this approach is that it explicitly assumes that all folks have the same basket of goods & services, but just use differing amounts (including zero) of each component part. Clearly this is not the case, but the alternative of some 26 million separate household baskets is entirely impractical. Why does this matter, well the current HCI’s give a good example as follows: currently higher earners have higher HCI inflation as they pay out more for their mortgages. However some of the said households will still be on fixed (near zero rate) mortgages and therefore, in reality, those [higher earner] households will have a lower HCI inflation. This point became clear to me during the recent energy price debacle. I had been lucky enough to fix my gas & electric prices for two years not long before Vlad the bad decided to invade Ukraine, so in a manner of speaking, we managed to sit out some of that inflation surge.
Lastly, inflation is fundamentally a latent variable. That is, you cannot buy an ‘inflation meter’ and plug it in somewhere and take a reading. Inflation is a useful economics concept whose utility (pun intended) is generally well understood, but it is no more than that.
*It cannot be too different otherwise the cost of producing the HCI’s could quickly become prohibitive
**FWIW, IMO the plutocratic vs democratic weights debate is really a bit of a side show and is not entirely different to the discussion about equal weighted trackers vs market weighted trackers
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@Al Cam
Getting a reply to appear in the appropriate place has entirely defeated me today. I’ve posted a lengthy reply to your recent suggestion to me titled Re: Tax Code Issues, but it has appeared far above your comment in the thread. I suggest you just search for March 25 to find it.
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@DavidV,
Found it. I will reply here as it is probably easier all round.
IMO, navigating WordPress can be tricky. It is even weirder that people who have WP accounts seem to be able to insert comments precisely where they want – ie not necessarily in strict date order within a branch either!
To your reply. That is truly a tale of woe. For some inexplicable reason it reads to me like it is primarily humans that are messing you about. But what do I know.
Getting into SA will hopefully help, albeit IMO SA is very clunky and also a bit of a pain to navigate; I only really need to enter a handful of figures, but the form is really very long and requires careful tailoring.
Also, you need to be very careful about the particular wording of some of the questions. IIRC the sense of one question was totally reversed one year by the insertion of a NOT into the previous text; so copying previous returns is not without risk!
Lastly – and believe it or not – some Q’s do not actually mean what they say on the tin! That is, the detailed instructions can (and do sometimes) change the sense of some of the Qs, an example being that you can enter overseas interest in the UK interest box provided it is less than X and can leave the overseas interest box blank in that case. Go figure!
I can see why your option two is your preference, and your friend / ex-colleague may well be correct. I have never agreed to pay ‘back tax’ as a lump sum (preferring it to be added into PAYE down stream* – an interest free loan from HMRC if you like) and in that case HMRC certainly did/do try to collect tax on any untaxed income I had. For completeness, as I do not yet qualify for SP, I have no practical experience of that particular wrinkle.
Hope SA works out as you foresee and option 4 (and any as yet unknown variants) is finally consigned to the bin. I completely understand your reticence about using your online tax account now to tackle your 24/25 tax code. However, it may be useful downstream even if only as a tool to check for any further gremlins, etc assuming you can get this year straight via SA and a lump sum payment.
*the calculus of which may change if such an approach were to inadvertently put one into a higher tax bracket in the year of payment – but this was never really a consideration in the past
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@Al Cam
Glad you found it. Now you fully understand my current frustrations with HMRC and my scepticism of being able to use my Personal Tax Account to change things for the better. That said I fully agree that it is a useful tool to monitor what they are doing and I have frequently used it in this way.
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Re: It is even weirder that people who have WP accounts seem to be able to insert comments precisely where they want …
See for example yesterdays comment from @Bill.
@Bill,
That is well odd. Is this for the current tax year 23/24 and/or for the next tax year 24/25? Have you tried to fix this? I can think of two possible approaches:
a) phone HMRC and talk them through the issue – once you get hold of somebody (last time I called HMRC it took around 40 minutes to get somebody) it should take them no time to confirm (or otherwise) if they have a P45 for you; or
b) use your PTA to correct (ie delete or possibly set to zero) the employment income?
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@Bill (& @Al Cam)
When you left work and received your P45 did you make an in-year claim for a tax refund? If you did, the P45 would have been part of the process. You would not necessarily have had to submit it, but you would have been required at least to provide figures from it. If this all went through correctly then HMRC would certainly know you had stopped work, at least for that tax year.
Regarding the employment income showing in your Personal Tax Account, my inclination would be to leave well alone. You’re not receiving any income from your former employer, so you’re not having any tax deducted. It should eventually reset when no returns are received from your former employer. The only time I would worry is if you get a BR code on your drawdown (i.e. all income taxed at 20%) rather than something akin to 1257L (i.e. you will receive up to your personal allowance in a tax year before tax is deducted). I’m assuming here that you do not have any other source of PAYE-taxable income (e.g. a DB pension in payment or an annuity).
Just my thoughts.
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I can see where you are coming from. Having said that, I think it would depend on how much income HMRC are actually assuming.
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@Al Cam @DavidV Thanks for the feedback – the tax account is showing just estimated income amounts so I am inclined to leave it. I did a SA tax return for the tax year I was made redundant (20/21) and got a decent tax refund for overpaid tax after that tax year. My tax account does show an end date for the previous employment so I’m OK with it.
Then a further two SA tax returns have been done for 21/22 and 22/23 with only my GIA dividends and savings income etc. HMRC have now notified me that no more SA tax returns are needed for now.
I think the HMRC system may take a couple of years to “let go” of the estimated employment income amount that makes them think I might be in the BR tax bracket, but with no income for two years I’m not paying tax at all (just VAT and Council tax etc…what a free loader I am!).
I’m getting a small payment of £1047 from the SIPP in a few days so I will see what my tax code updates to after that. It is the smallest amount I can take without emergency tax and I’m told none will be taken off. Yes, after the TF cash I’m just getting a small dribble of cash out of the SIPP for now to see how it goes…
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@Bill,
Thanks for additional info. A few Q’s if I may:
Is the end date shown for your previous employment correct?
Does the estimated income appear in [only] the “PAYE Income Tax History” view? This might just about make some sense because AFAICT this view covers only the last five tax years. It is now more than seven years since I left work, and I currently have no such entries in my account. Furthermore, seeing as I have never looked at this view before I cannot say if it ever did have any such entries. So, really, this is just a thought!
OOI, will your £1047 drawdown be in 23/24 tax year or 24/25 tax year?
You previously mentioned possibly off loading “a bricks and mortar asset”. Does this not generate any income?
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@Al Cam
Yes the previous employment end date was all correct, redundancy dates stick in the head for some reason although the event itself it did not sit badly with me!
Well, I just looked at my tax account over breakfast and it has all changed! It now shows me as taking a private pension and has been updated to reflect the £1047 HL SIPP withdrawal which will be paid this month 23/24 tax year. The estimated tax payable for this tax year and the next is now £0. It shows my current tax code as 1257LX and the next tax year code as 1257L. So I think the previous estimate was based on historical pay. It was in the PAYE Income Tax History area. I take PDF prints of these for the records since as you imply it seems to change over time. So it seems my SIPP withdrawal “experiment” to take 1/12 of the personal allowance has worked to sort out the tax account income estimates.
Yes I still have a 2nd property to offload, so that will change things tax wise. Not a rental, sorting it out has just been dragging on thanks to life and Covid. Looking at sales listings of similar 2 bed terrace properties I discovered that it may be in the wrong council tax band and after doing some due diligence checks (even walking local streets to find exact same properties) it seems I may have grounds to contest the banding and potentially get a juicy refund of over 30 years overpaid council tax. I have no experience of this though!
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@Bill,
As I understand your situation next years tax code being 1257L is a good outcome. So, I think you can indeed declare your drawdown “experiment” a success – well done.
The actual tax payable in 24/25 should hopefully no longer be influenced by any ‘phantom’ employment income. Albeit, you will still have to deal with the [monthly] apportionment of your tax free allowance, if you intend to do more than just one big drawdown towards the end of the 24/25 tax year. Anyway, the SIPP taxation should be somewhat under your control next [tax] year and the emergency tax hurdle should have been dealt with.
Your comment also highlights another point made during the previous related chatter hereabouts (@SLS), namely HMRC know what you are going to be paid before you get paid!
Might it be worth you adding an update to the associated Monevator posting about drawdown?
Re council tax, I have no experience either, but did look into it once and this link has some useful info (including cautionary remarks about possible unintended consequences, and likely brush offs used by councils), see: Council tax bands: Check your council tax band & challenge (moneysavingexpert.com)
Lastly, I always have to check my redundancy date – but maybe that is just a sign that I am getting older!
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@Bill
I wish you every luck with HMRC when you become a taxpayer again, now that they have told you not to complete SA tax returns any more.
As you will have read in my comments on this post, I am jumping through hoops to try to qualify for SA for the first time as managing my tax otherwise has become extremely difficult with HMRC’s current level of service.
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I do hope this works out well for you but, as I noted above, IMO SA is very clunky and also a bit of a pain to navigate!
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@Al Cam @DavidV Thanks for wishes of luck and good luck with your tax situations which do sound somewhat painful to say the least.
Tax does seem to be over complicated. I regret not maximising PEPs and ISAs early on because I couldn’t understand the tax situation with them back in the day regarding the restrictions and limits on subscribing into cash and stocks accounts etc and the potentially punitive measures if you got something wrong and had to pay unexpected tax bills. The best thing was when The Company changed to a salary sacrifice pension arrangement so I didn’t have reclaim the higher rate tax relief on pension payments every year.
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From what I’m hearing it’s a lot less clunky than the alternative. Having said that I am intrigued at the precision you guys expect. Last year I received what I assumed was a spam email from HMRC saying i had a ~£500 refund. I ignored it. Anyway in July the refund appeared, inbound tagged HMRC SA. Damned if I know why. In December they sent a letter wanting a little bit more than £500. I just paid it, I didn’t try to find out why. I could imagine it’s a balancing payment on the tax on the dividend and cash income they expect me to have next year. Life is too short to go through a load of call centre hell for the differential which was ~£55.
I will learn from this thread to put my VWRL ETF dividends in foreign income 😉
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I assume you are picking up on DavidV’s suggestion about how to force his way into SA?
On further reflection, I think his approach might just come at a small additional cost over and above the issues he identified above. I also reckon that perhaps DavidV may be willing to pay this cost, but thought the topic may be worth a bit of further chatter.
Specifically, is it not the case that income is taxed higher than dividends or is there a separate sub-class called something like foreign dividends?
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There’s a separate section for foreign dividends. This among others, allows you to offset foreign withholding tax if there is a double tax treaty. I ballsed this up with IE ETFs and listed it in the UK dividend section because, well, it comes in as GBP so it’s UK dividends innit ;) Having said that I only had £1822 of unwrapped ETF dividends last year, since gold doesn’t pay a dividend, so it is below the £2k threshold. I can be charged with incompetence listing this in TR2.4 rather than box TR2.6 but it doesn’t make any difference to the total tax, I have just checked this using TaxCalc. I have rendered unto Caesar his due.
However, I will sort my shit out this time and invoke the foreign pages as I have more ETF holdings.
I believe that other than permitting you to offset withholding tax there isn’t any difference in the tax treatment for foreign dividends (ie for BR taxpayers it is preferential to cash interest or earned income)
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Thanks for additional info – good to know.
But just so I am clear, will you primarily be doing this [separating out VWRL dividends and invoking the foreign pages – as tax free dividends limit drops to £1k in 24/25] primarily to ensure you stay in SA, or did I miss something else?
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@Al Cam
Thanks for your encouragement and warning. I’m a details guy (as if you didn’t realise!) so I’m not fazed by the prospect of navigating the online form. I’ve navigated HMRC manuals and helpsheets in the past in the pursuit of negligible value claims for capital losses and gift aid carry-back to the previous year, all without the benefit of SA. Many years ago I even reported capital gains on an unsheltered monthly unit trust savings plan using accumulation units! The gain was below the allowance but the disposal more than four times it so needed reporting (there was no concession on this for non-SA people in those days – SA may not even have been in existence then).
@Bill
Well done on the tax code outcome. That sounds ideal.
I’m confused by your statement about salary sacrifice enabling you to avoid reclaiming HR tax through SA. Surely, as long as your pension contribution was being deducted from your salary, the tax relief is effectively applied automatically? From my earliest pay slip this has always been the case for me, and my P60 has always shown the pre-tax salary as my gross pay after pension deduction. I only became a potential HR taxpayer fairly late in my career, but always avoided being an actual HR taxpayer by increasing my pension contribution accordingly. Only last three years of this was with salary sacrifice. The earlier years were just standard pension deductions.
@ermine
I’m amused and surprised by your unwillingness to question why you were due a ~£500 refund, then had to pay it and more back again. And to write off £55 without question. You obviously didn’t grow up in Yorkshire as I did!
I’ll have to read up on withholding tax again – I’m fairly sure when I last read about it I concluded it didn’t apply to me. The one complication that will apply is Excess Reportable Income, but the relevant dates for Vanguard ETFs mean that this won’t be an issue for me until after the 2024-25 tax year has ended.
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I figure it’s probably a better use of my time to git some of my cash out of Raisin and bung it in VWRL (or rather HMWO, now). As I get older I grow less tolerant of frustration and techno-admin that saves other people money at the expense of my time. Life is short. A walk in the woods or possibly giving HMRC £55 that it would take an hour of bashing my head against a brick wall for? A walk in the woods every time 😉
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@DavidV
Yes thanks, I’m happy with the tax outcome so far.
On higher rate pension tax relief – sorry for the confusion. When my employer switched us over to salary sacrifice for the pension I had to agree to a lower nominal salary. For some years before that I was in the 40% tax bracket so I had to claim the 20% tax claw back on the company pension contributions and also for another personal pension I paid into as per this article otherwise I lost out : https://www.unbiased.co.uk/discover/pensions-retirement/managing-a-pension/how-to-claim-higher-rate-tax-relief-on-pension-contributions
I think I did lose out on some years because I didn’t know about this, all water under the bridge now! The salary sacrifice scheme saved a lot of the pain of this and I did contribute 30% into the pension in the end game years but not quite enough to get me out of the 40% bracket. Nice problem to have though especially as the pension sacrifice and employer match was also on all bonuses not just the basic salary. I don’t think my colleagues always realised that…the full bonus didn’t hit the bank because some of it went into the pension but the bonus was also increased into the pension by the employer match of 8%.
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Try looking up net pay agreement (NPA) vs relief at source (RAS). In essence, RAS only provides BR relief and any outstanding tax relief (HR, etc) must be claimed back from HMRC. Company schemes usually use a NPA. I know which I prefer!
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@Al Cam
Well yes, that’s my very point. I assumed Bill was talking about an occupational scheme as salary sacrifice would have been irrelevant if he wasn’t. As you say, the vast majority of employers use NPA so I would be surprised if Bill’s former employer is an exception.
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See my comment above. I worked at the place 23 years so the pension arrangements inevitably changed over that time. The pension provider changed 5 times and also the deduction arrangement changed to salary sacrifice in 2009. It’s hazy memories but I’m pretty sure I was told I needed to reclaim the pension tax relief in the early days before that when I was in the 40% tax band which I did via HMRC SA. I’ve finally unwound all the diverse pension pots from that employment now putting most of it into my SIPP which was with the 4th provider chosen by the employer. I experimented putting a small pot into a Vanguard SIPP but they’re dreadfully slow to action a transfer, don’t offer cash-back carrots, slow on customer support query response and actually the platform charges are higher than holding ETFs in HL.
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Let’s see what Bill tells us.
Re SA:
I have been doing an annual tax return for some time now. IIRC I began doing them about the time SA was introduced. Up until about seven years ago I exclusively used the paper forms. But then I changed to using the online system. The advantages of the online system are said to be: extended penalty-free submission deadline, checks your sums as you go along, quicker payment of refunds, and (especially for Yorkshire folks!) avoids having to pay postage to return the form as at some point HMRC stopped issuing SAE’s for returning your return – although there has always been a rumour that you do not actually need to affix a stamp to tax returns! To test their speediness of refunds claim I submitted my return on the afternoon of April 6th following my first drawdown and had my substantial refund back in my bank account just under two weeks later. I thought this was pretty impressive.
So much for the good news. I got along OK with the forms, but the online implementation started out as essentially an attempt to replicate the paper forms; albeit IMO it is clunky and far from slick. Over the years I have been using it it has gone the way of a lot of IT systems and just get worse and worse with more verbiage added each year. A couple of years ago, some new authentication requirements for refunds were added. I did manage to successfully navigate these at the first attempt, but apparently lots of folks did not, and even having been successful this procedure added about a week to the repayment timeline! For @ermine, it even has copious links to YT videos in it now. There is also an associated email reminder system, that sends me loads of guff (almost all of which is about the same topic and largely irrelevant to me) and I just cannot find out how to turn it off – but I must admit I did not look for very long.
I am not sure if paper forms are still an SA option, but in many ways IMO they were better than the online version. If you go for the online system you will need to be patient and if you start with sufficiently low expectations you may find it about acceptable. Forearmed is forewarned!
And, saving the best to last, I reckon that the PTA is much better than online SA!
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I used to do the paper forms for my mother, she didn’t have that much but it was in awkward places, share holdings, this and that. It was OK. The main incentive to do it with paper was so that didn’t crosstalk with my own SA and UTR no. It was okay.
I quit when that started to become clunky, they never heard of RESTful design, it was the old-skool post and callback. I discovered taxcalc and life got simpler, initially bought on my mother’s account so I could fill in, print out PDF and God knows how many sheets of CGT cruft because of that old 4x CGT allowance rule, I don’t think she ever paid CGT. Then I discovered I could submit my own online. Sure, it’s an extra £36 a year, so taxation has cost me a random nearly £100 more this year. But it does the calculations as you go along, there’s not the HMRC pathology of it sometimes borking and you get to start over, and it saves the time. And their calculation gets the same answer as HMRC, and looks the same. Where I cocked up majorly last year is failing to tick the box that says DO NOT RECOVER TAX BY FIDDLING WITH MY TAX CODE. So they did fiddle with it, and I am not clever enough to have any idea of whether it is right. I far prefer to simply pay HMRC Cumbernauld the tax on savigns and investments due after doing the return and keep my normal tax code.
Next TY taxcalc will go online and recover the fudged tax code information, so it will do the calculation right, and I will untick that damn box. I only submitted the return after I got all the tax certificates for investments and raisin through, so some of the year was under the original unpolluted tax code and then they must have caught up. I’m not going to allocate any more mental clock cycles to tax than I have to
Taxcalc FTW
Purely as a satisfied customer!
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@Bill,
Indeed!
And with an employer match of 8% too I would say very nice!
Thanks for clearing up the HR tax relief. As I mentioned to DavidV “[C]company schemes usually use a NPA” but clearly not all! Another area of possible confusion is that, as I understand things, a NPA need not be salary sacrifice, but salary sacrifice is a NPA.
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@Al Cam
And with an employer match of 8% too I would say very nice!
Sorry to wind you up but as long as I contributed at least 5% my employer match was 10%! And, as I’ve mentioned before, for my three years of salary sacrifice this was on my whole contribution. No contribution for employer NI saved, though.
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@DavidV,
Your 10% match does not wind me up at all.
At my peak I got an even higher percentage match, albeit only on my baseline contributions though!
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@ermine:
P.S. the techno admin link you provided is very good!
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Yep, I though it was just me getting older and more cantankerous, but it appears this is only part of the story. Seriously, I think far too many people have drunk the smartphone/AI Kool-Aid, even Monevator’s TA
I am a late boomer I believe, so anomalous is some respects. Like I got shat on by residential property to the surprise of GFF. However, I can perfectly well use an effing smartphone, but I don’t want to go through life carrying a cattle tag followed around by a cloud of advertising. But I’m capable of configuring Meshtastic on mine if I want to do an easy RF survey. It’s not that I cant, I don’t want to carry. It may come as a surprise to anybody under 40 but you don’t disappear in a puff of smoke if you go for a walk without a phone.
The smartphone is the vector of a load of techno-admin in life, and this is complicated by the fact that it’s such a terrible data-entry device, and a lot of techno-admin is You filling out the data entry forms They used to. There are two things from the last 20 years that I’d uninvent in a heartbeat, social media and the smartphone, but if I could torch only one it would be the smartphone, for the win. I see couples gazing intently into their smartphones in restaurants more than into each other’s eyes. I feel for the whiny kids trying to catch a parent’s attention, and last week I was watching a load of dogs on a beach and even some of these poor bastards were being phubbed by their owners, I felt for the hounds and I don’t even like dogs 😉
I am prepared to pay for for my arseyness – I don’t subscribe to anything if I can help it, I always refuse Amazon Prime. I pay with coins or cards for parking, though the evils of RingGo are slowly painting me into a corner as they take over more and more of the parking estate. Thankfully my National Trust membership relives me from this pestilence as they scan the membership cards, though I really do think the NT should have tested mobile coverage at Burton Bradstock before they went that way – there isn’t any, so before I bought my life membership Mrs Ermine had to wrangle RingGo on the top of the track down.
So yes, I am getting older and more cantankerous, but the new Kool-Aid doesn’t seem to be making people any happier, why do it to yourselves.
But as someone said over a pint in a pub IRL, I got out of the workplace just before the smartphone pathology took off. It is likely that a lot of working people don’t have any choice but to be rude shmucks to the people they are with IRL, because their jobs depend on techno-admin. I felt for the parent in the article
because while his kids may grow up paranoid that he’s ignoring them and doesn’t give a shit, perhaps he’s just trying to feed the Beast that is making a living, getting them to school.
It’s the whole bits versus atoms problem writ large, all the effort and capital in the West is going into improving the world of bits, we could do well to get half as good at making things in the world of atoms as we were 40 years ago. Rank the Wikipedia list of reservoirs built in the UK by date for instance and the story’s not good, people haven’t given up drinking water since 2012. But progress. Our phones aren’t screwed to the wall any more and you can trade crypto on them and tackle the increasing flood of techno-admin while being forever elsewhere ignoring the people and dogs that really matter in your life.
Right, where’s that old man yells at cloud picture again 😉
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Loved the techno-admin link. What P’s me off is having to scan a QR code in sit down restaurants to order food. The whole point should be to engage the waiter / waitress hopefully in a friendly way then they help with allergies etc and we’ll also give them a decent tip. 9 times of 10 there isn’t even a decent mobile signal for that anyway. Oh wait the point is to sign up on their WiFi so they can harvest my details. I just have to pretend to be a techno challenged boomer and hide the camera gear…
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Yup, it is everywhere – even HMRC are at it; see below re HMRC guff emails.
The pathology seems to be: suck you in (using freebies or other enticements), obliterate the alternatives (if any ever existed), then take the piss mercilessly. I have noted more than once recently that a lot of erstwhile free stuff on the net now requires you to pay up or at the least register. And techno stuff you have to pay for (like ISP, phones, etc) get away with well above inflation price increases! This seems to be what progress looks like!
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Not sure if Cory Doctorow is correct in his diagnosis of the problem that it was the busting of antitrust law 40 years ago was the reason we have the big five but his enshittification description nails it in one!
The slight worry is that it is exactly this that one is buying with VWRL, and doubly so with VUSA. There again, I can’t totally see President Not-Quite-Yet-Elect Trump taking the rubes’ pablum away without replacing it with something else, after all they pumped the capitalisation of Truth Social to $8bn so he has skin in the game.
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@ermine,
Likewise I am not sure – but he [Cory Doctorow] seems to makes a good case. Looks like it might just be an interesting book too.
Do you think the recent US anti-trust noises might just be related, see e.g. Office of Public Affairs | Justice Department Sues Apple for Monopolizing Smartphone Markets | United States Department of Justice
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And, saving the best to last, I reckon that the PTA is much better than online SA!
Oh dear!
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The tragedy is that it doesn’t seem to work. Like a flawed sword, it fails you in your hour of need ;( SA is tractable, particularly if you don’t let them bugger about with your tax code
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I must say that has not been my experience with the PTA. I have used it exclusively to “bugger about” with my tax code for either the current tax year or the next tax year. That it does not allow you to go further back in time seems reasonable to me as that would require re-opening at least one closed tax year. I know from personal experience that this re-opening can be done manually by HMRC but it takes a rather long time to process – think just shy of a year, although Covid-19 did breakout during that period.
I have had to make one phone call to HMRC in relation to PTA, but that was to swap its nomination of primary and secondary pensions (it seems to default to the pension it knew about first (in time) being the primary) – and apparently this selection cannot be changed by a user using the PTA anyway.
WRT SA online I only need to enter a handful of figures (at least two of which HMRC know in advance accurately anyway) and it just amazes me the contortions, concentration, and patience required to wrangle the online forms. Add to this random kick backs/resets (or your “borking”) and increasingly frequent crashes/freezes and it is really not a good experience. FWIW, I have a home brewed spreadsheet that generates the correct answer in a fraction of the time.
So whilst I have only used PTA a few times and online SA far more, my experience, to date, is that I have done more complex transactions using PTA and whilst it is not perfect it knocks spots off the current version of online SA; which just seems to get ever worse!
P.S. I note your concern re crosstalk, but I do the BH’s SA online too. The only area of confusion is that we lodged the same email address, so sometimes it is not clear who a guff email from HMRC is addressed to as they generally begin ‘dear customer’. But then again they are mostly guff and destined for the WPB. Anything specific or related to an actual return is usually personalised.
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I dare say that the PTA has a superior UI than SA – I’ll see if I am lucky enough to qualify in April. The trouble is that the PTA in write mode ultimately is only a vehicle for sending information to a fallible human, and this year for me they seem to have been particularly fallible. I don’t believe there is any automation in the PTA system, otherwise it wouldn’t have taken over a month to process my December submission. I don’t really believe either the tale I was spun that ‘the system’ rejected my interest estimate because it combined multiple banks. Rather I believe that a fallible human updated my dividend estimate and then either failed to notice the interest estimate or entered it and then forgot to hit save. The classic problem of making two changes at the same time.
As for the inability to submit information for the previous tax year, if you are not on SA it is not a closed year – it is very open until HMRC complete the P800 tax calculation, correctly or incorrectly, usually in the following autumn. They claim to get interest information directly from the banks, but I have yet to experience a year where this has been both correct and complete. As for dividends, they only know this information when you tell them, and the PTA is useless for this as by the time you get accurate information through statements you are already in the following year. Letter or telephone are then the only possible methods.
So even if SA is extraordinarily clunky, its ability to calculate tax owed or to be refunded automatically is very attractive to me at the moment.
As for the earlier discussion on where ETF dividends are entered, the only information readily available to me currently is the guidance note to accompany the paper SA100 form. I researched this before deciding my current course of action. My understanding is that if I have foreign dividends over £300 but less than £2000 (may be £1000 for 2023-24) I enter them in a separate foreign dividend box, but on the main form. If the foreign dividends are over £2000 (or possibly £1000 for 2023-24) then they go on separate form SA108. I’m desperately hoping that they don’t raise the £300 foreign dividend threshold to qualify for SA. I shall find out in the next few days how much my new VUKE holding is paying out for its final quarter. I’ll then have to wait until 6th April to see if this will be sufficient to qualify for SA.
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I am not so sure that the PTA is entirely person dependent. The last change I made was dib dobbed in by me on a Saturday and had updated before 7:30am on the Monday morning; thus meeting the 48 hour deadline. My previous change was submitted on a Thursday morning (c. 09:30) and had updated by 07:00 on the Friday. Perhaps it is off-shored or I am just being unkind to tax office employees?
The SA rules about closure could/probably also use the P800 timescales. The years I required re-opening were possibly at least two years back – but the finer details escape me right now.
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I’ve had a quick look for a refresher on withholding tax and found a rather old Monevator post by TA dated 25 November 2010. In it he states:
“Funds/ETFs domiciled in Ireland and Luxembourg do not levy withholding tax on dividends paid to UK investors.”
Assuming this has not changed since then I shan’t worry about this particular complication.
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No need, in this case since I think you are considering VWRL. You need a lot of it to get up to 2k. I have just switched VWRL to HMWO, which at a paltry 1.75% yield requires about 115k. I only have about half that much, and it;s not a good time to liquidate of the renewables ITs. Maybe I should take up Monevator’s comment and buy about 50k across VEUR and an Asiapac ETF, then hit the ISA with VUSA. Most of the indexy ETFs we’d use are domiciled in Ireland so you’ll be fine as Monevator’s post describes, any of the common Vanguard ETFs marketed at Brits for instance. You have to watch for Lyxor and DBx-trackers I think. And anything US-based you have to fill in that W8-BEN form. Every three years…
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@ermine @Al Cam @Bill
Well my bad news today is that I’ve blown it in my attempt to qualify for SA this April. My first VUKE quarterly dividend is showing in my IWeb account today, a day early because of Good Friday, and it’s only £289.02 – £10.98 short of what I needed to be in with a chance of qualifying. In most years VUKE’s final quarter dividend has been higher than the other quarters, but occasionally it is lower and this must be another of those years.
Plan B is to wait until 5th April when I should be able to see accurate and final figures for all unsheltered interest and dividends for 2023-24 and then hit my PTA that same day with an update. A few days later I’ll do the same with my best estimates for 2024-25. My DB payments for the next year are going to be pitiful as I pay the ~£1k back tax for 2023-24, and still high interest and dividend tax for 2024-25 all through my tax code.
A complete year of VUKE dividends should eventually qualify me for SA in April 2025.
@ermine
As you see from the above, my failed strategy was actually to go for VUKE rather than VWRL in the short term. Even though the dividend derives from UK shares and is paid in GBP, the fact that it is domiciled in Ireland means that it produces foreign dividends. VUKE’s yield is approximately double that of VWRL, so going for VUKE was my only prospect of getting to the £300 threshold for SA with a single quarter’s dividend. But as you see it didn’t quite pay enough.
Apart from its failure as a qualify for SA strategy, buying VUKE wasn’t a problem for my asset allocation as I do have a significant equity home bias. I can easily rebalance my overall allocation within my ISA. Unsheltered VUKE was a problem of asset placement as its higher yield puts me closer to HRT than VWRL would have, and a full year’s worth of VWRL dividends should have been enough to qualify for SA. However, I didn’t have a full year – just a single quarter, so VUKE it was. I should now try to switch my VUKE to VRWL, but I have the good problem that in the month or so since I bought it it has gone up a lot. So switching within next year’s reduced £3k CGT allowance will probably be impossible. I’ll have to consider whether it is worth paying CGT to complete the switch.
I assume your reference to £2k is the tax-free dividend allowance for 2022-23, and also the threshold for foreign income to go on a separate foreign page in SA (paper form SA108) rather than a box on the main page. Of course the dividend allowance for 2023-24 has reduced to £1k and we’ll have to wait until 6th April to find out how that affects SA – not that I should care anymore 😦 . My recent VUKE ETF investment, though, isn’t my only unsheltered equity. I have the HSBC FTSE All World Tracker fund and when I harvest capital gains I flip this with Vanguard FTSE Global All Cap Tracker fund. I also have a collection of individual shares, mostly quite small holdings. The timing of my CG harvesting this year actually meant that I did not receive dividends from either of the tracker funds and as a result I was on course to stay below the £1k allowance. My VUKE £289, though, combined with the individual share dividends will now put me slightly above.
@Al Cam
A question, if I may. When you have successfully used your PTA to tweak your tax code, have you had cause to submit interest estimates covering more than one bank? If so, did you combine the amounts into a single figure or did you find a way in the PTA of showing them separately?
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@DavidV
Sorry to hear your plan didn’t work. Good luck with Plan B.
BTW I switched new money going into my FTSE 100 tracker ETF to the Blackrock iShares ISF ETF as the OCF was 2 BIPS less compared to VUKE. Obsessive or what! It also gives me some fund manager diversification FWIW. My unsheltered ETF holdings are all “Bed & ISAed” now just leaving some Vanguard VLS funds and a diminished amount of Intel INTC stock from employment. I suspect this is why my HMRC SA requirement was nullified.
My experimental small £1047 SIPP income drawdown hit the bank today. I also got a message from HL that my MPAA is of course restricted to £10k now. What I didn’t know is that I’m required to inform my other pension providers of this within 92 days. With modern tech, you’d think they’d be able to get this info automatically from HMRC via my NI number which they have. The IT techno geek in me weeps…
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Are you absolutely dead certain sure that £300 foreign divi is enough?
Looking at HMRC
I personally read that you must breach one. So for you case
Check, no need for SA yet
unknown at this stage, say yes, then no need for SA
unknown. I certainly don’t see a £300 threshold, so IMO you have missed it bigly, though if you can add non-foreign stuff to get over the £2k hump in total. The £300
OTOH if you go to do I need to fill in SA website any foreign income puts you over the edge. As does needing to declare a capital gain. I have currently targeted my capital gains at 5772 to keep within the CGT limit, I may push it just over the top to satisfy that condition, as well as talking the £2.80 of tax-free CGT off the table
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@ermine
Sorry I forgot to include this in my previous comment. Where did you see that having CGT to pay qualifies you for SA? My previous investigations have suggested that if you do not otherwise qualify for SA you can report your capital gains either by letter or by registering for a separate online CG reporting system.
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@DavidV,
Shame about the shortfall, and so close as well.
Re your Q: I have not yet exceeded the unsheltered interest allowance so have no relevant experience to share. Sorry. Having said that, I would be very surprised if you needed to split the interest payments out by institution – but I would be guided by how the interest figure(s) is(are) presented on the PTA form where you can revise HMRC’s assumptions.
A final thought, if you do your 24/25 tax code changes ASAP you maximise the chances of the revised code getting to your DB pension folks in time for your end of April payment. The code could always be refined again, by you, as you proceed through the 24/25 tax year if necessary.
FWIW, the two HMRC assumptions that I revised (for 24/25) were both pension payments which, in due course, HMRC will have full visibility of anyway. I have no idea if the visibility point is relevant or not but it might be.
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@DavidV,
IIRC my experience was that back tax for tax year X repaid via PAYE is not collected in tax year X+1 but rather in tax year X+2!
Also the way PAYE recovers back tax might have some unexpected side effects. For a BR tax payer for each £1 of back tax owed your personal allowance (in year X +2, I think) is effectively reduced by £5. If in year X (or X+1) you are still a BR tax payer but borderline HRT (ie in what I previously called ‘the fun zone’) the recovery of back tax (for year X) in tax year X+2 may push you over the edge into HRT. The good news is that if ordinarily the back tax is recovered via PAYE in tax year X+2 you will have some time to explore the alternatives – like clearing the back tax by paying a lump sum. This is what I was getting at in my comment above which has a footnote that begins “*the calculus of which may ….”
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@Bill,
IIRC, this requirement only applies to DC (ie not DB) pension providers.
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@ermine
Thanks for that first HMRC link. I hadn’t stumbled across that particular page before. It actually raises a small glimmer of hope for me, rather than making me think I have missed the mark by a wide margin. Come 6th April that £2k threshold should reduce to £1k to reflect the current year’s allowance, and then by those criteria I would qualify – by £16! I also have other income to report – interest above the personal savings allowance.
As you say the SA eligibility checker suggests that any amount of foreign dividend is sufficient. However, if you try part-completing the SA registration process it asks if foreign dividends are over £300. I think someone in the comments on the Monevator post on Excess Reportable Income provided a link to the paper form equivalent, and this also makes the £300 threshold clear.
My fear had been that even if I had achieved >£300 foreign dividends this year, the threshold would increase on 6th April to, say, £400.
@Bill
Thanks for your commiserations! I can’t remember whether I checked out the iShares FTSE100 ETF. A key requirement for me was that I had to be in time for the ex-div date to get a dividend payment this tax year, and VUKE satisfied this.
Re the lack of joined-up reporting via your NI number, the opposite situation continues to amaze me. HMRC claim to get bank interest details directly from the banks. However, I can’t remember a year when for me this has been both accurate and complete. This is probably no surprise as they can’t link it to a NI number. You only provide a NI number to a bank for an ISA, not an unsheltered savings account. So HMRC are reduced to matching only by name and address and possibly DOB, although I can’t remember if I provide this when I open an account.
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Glad to bring some good news 😉 As indeed you did for me, my £700 from VWRL this year should clear the £300 bar, and £1k+ from HWMO next should put me in a good position. I have looked more at VHYL, and while I do note indeedably’s deprecation in Shortcut it has a very different composition to VWRL without the Magnificient Seven. So that may be my deadbeat balancing against £20k of VUSA in the ISA next year.
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@DavidV
iShares ISF / VUKE ETF dividend pay dates turn out to be the same. Actually interesting that your VUKE dividend has arrived. I’ve noticed that the Vanguard ETF dividends including some remnant VUKE held with HL have not yet arrived in my accounts although the iShares ETF dividends paid the same day have. This is quite common with HL / Vanguard I’ve found especially before bank holidays. That low cost rowing boat full of Vanguard cash from Ireland must get held up somewhere in the Bristol Channel while caught in the wash from the iShares Jetfoil 🤣
Interesting on HMRC joined up-ness. I had noticed that HMRC for some years adjusted my tax code to reflect bank interest amounts before I actually told them about in in the SA return. I assumed it was based on the previous years numbers with some optimistic adjustments as I never saw anything in my personal tax account telling me the numbers they got from banks. I would be entirely happy if they got it all directly (and it was accurate..) without me having to seek out the info in statements etc.
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@Bill
and it was accurate..
Ay, there’s the rub!
HMRC never break down the various sources of interest in either the Personal Tax Account or the tax code letter. You end up trying every combination of individual banks’ interest for the relevant and previous years to see if you can work out how they came up with the figure. One year the only correlation I could find was with an amount I had previously notified them of for Gift Aid!
I haven’t actually received my VUKE dividend. I have IWeb pay it out to my bank account and they always sit on it for a few days before paying. But it is already showing in the dividends section of my account.. My SIPP and ISA are both with HL. As I leave dividends in there to accumulate and reinvest I haven’t paid much attention to the gap between the iShares and Vanguard declared dividend dates and the money being in my HL accounts.
I can imagine Vanguard using a rowing boat, but surely iShares can’t afford a jetfoil if they’re 2bp cheaper :-) !
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Possibly CHAPS vs BACS; the former is faster (possibly even same day); the latter is slower (usually three working days) and of course cheaper, but not free!
Nice analogies with jetfoils and rowing boats, however IMO typical financial hocus pocus which is often more akin to skimming off!
IIRC scheduled jetfoils across the channel were withdrawn years ago. However, I think I read recently of some type of come back. I used the jetfoil a good few times years ago (before the chunnel was open) and on a calm day it was very impressive; but much less so in even faintly choppy seas, where the hovercraft seemed to fair much better – but that might just be down to the fact that it was bigger. The sea cat was a bit of a hoot in rougher seas. But when it was rough the only option was a ferry. The jetfoils I used were manufactured by Boeing and did not carry any vehicles, just passengers and crew.
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@Al Cam
Thanks for your response re your updates in your PTA. I never imagined that separating out bank interest was either necessary or possible from the way it is presented in both the PTA and tax code letters. It’s only because that’s what the HMRC call agent offered as a reason for no interest at all being included in the 31 Jan reissue of my tax code over a month after my late Dec PTA update. She suggested I should just do multiple interest updates within the same submission (even though they wouldn’t be tagged with the name or A/C number of the bank). I don’t know yet whether her suggestion is either possible or wise!
I won’t be delaying long before doing my 2024-25 update. Out of an excess of caution I don’t want both years’ updates going into the sausage machine at the same time and getting minced together. I’m not too bothered if my tax code update isn’t until the May DB payment rather than April. (My DB pays on the last working day of the month.)
I’ve never had any problem with the connection between my two PAYE payers and HMRC. As well as my DB pension which carries my main tax code, I also have a small annuity with a BR code. (The annuity is the result of a Section 32 DC pot that offered enhanced tax-free cash. A consequence of getting enhanced tax-free cash under pre-2005 rules was that there were no realistic alternatives for the taxable part than to buy an annuity.)
My PTA usually seems to show correct amounts for these two sources, and it’s not too much of a problem if they don’t (like for the coming year as HMRC aren’t yet aware of the DB increase ) as the providers pay what they owe and the tax code gets applied regardless. The other potential pitfall is the deduction for state pension. Fortunately HMRC always seem to have the correct figure for this once you get your head round the way HMRC calculate the total for the year when the increase actually occurs surprisingly far into April. Needless to say it’s not to the taxpayer’s advantage.
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My issues/discrepancies were not really biggies, but big enough to tilt me over into HRT and you can guess how that pushed my buttons!
Fortunately one of the pensions is my erstwhile DC pension, so I can select any withdrawal to suit. Also, the issue with my DB was hopefully a one-off as I only commenced it this tax year and whilst I understood the first payment I received was for some two months; HMRC apparently did not – although I would say it was bleeding obvious from the figures. By my estimation, HMRC did seemingly also factor in some DB indexation too. But you know, all is apparently fair in HMRCs [undeclared] mission to maximise the tax take.
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P.S.
The previous time I used the PTA was to correct HMRC’s assumption (for TY 23/24) that my DB pension would pay out the same amount each and every month that I received in my first payment. Now that was a bit of a biggie – ie more than a factor of two!!
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@Al Cam
I’ve no idea why my last response appeared twice. Regarding your comments on back-tax being collected in year X+2, IMO this is a consequence of the SA timetable.
AIUI SA taxpayers have three deadlines. 30 Sep if you do a paper form and need HMRC to calculate your tax, 31 Dec if you submit electronically but want to pay any tax owed through your tax code, and 31 Jan if you want to pay by lump sum (also by 31 Jan). I assume the 31 Dec deadline is because this is just before the period where they work out and issue the year X+2 tax codes.
There is nothing in principle, I believe, to prevent something similar happening for non-SA taxpayers. However, if you provide updates late in year X (and not X+1) as has become my routine, HMRC will then recalculate the year X code. If it would result in a large amount of additional tax to be collected in the following month through PAYE, they will issue the new code on a month 1 basis. This means only the new regular monthly tax is collected the following month rather than the entirety of the underpayment. HMRC know the total underpayment for year X that results from this and will adjust the year X+1 code accordingly. This has happened to me a few times over the years, including when I was working, and I hate it. I prefer to get one year straight and only concern myself with the current year. I have learned to phone my updates late in the year and ask them to issue a normal cumulative code. I then take the hit (or sometimes get a refund) in my February or March DB payment – similar to paying a lump sum. I tried that this year after HMRC’s mistake gave me a massive refund in my Dec DB, but it seems that to collect all the underpaid tax in February would breach the 50% rule. So I ended up with a month 1 code anyway. When it arrived in the post I also received in the same envelope a 2024-25 code with the back-tax adjustment included.
I’m afraid I can’t explain why, if a SA taxpayer does his year X return early in year X+1, HMRC do not attempt to collect through the year X+1 code.
I don’t quite understand why paying underpaid year X tax through the year X+2 code could cause HR tax to be paid. I do understand that if you are in the ‘fun zone’ the underpaid year X tax could cause some of your pension to be taxed at HR. However, when you submit your X+2 return during X+3, surely the tax calculation uses the actual tax owed from year X and not the notional income used in X+2’s code to recover it. Any tax paid at HR during X+2 would add to the refund due or offset some of the tax owed.
Incidentally, I’m not aware of any mechanism for a non-SA taxpayer voluntarily to make a lump sum payment. That’s why fighting my tax code, preferably in a timely manner, is the only path available to me.
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IIRC, the X+2 return tax calculation requires you to pay both the tax owing in X+2 and the back tax due from X. So more tax is due in X+2 than that owing for X+2 alone. As you ‘underpaid’ in X so you have to ‘overpay’ in X+2. So imagine if you paid all the tax due in X you would be hard up against the HRT threshold and you actually underpay in X, then when you overpay in X+2 [assuming no other changes] you will be over the HRT threshold. You cannot carry forward unused TFA, BR band, etc from earlier years unfortunately.
I do tend to leave my tax returns until late in the year but do have a very good idea what the answer should be many moons earlier. Hence why I submitted my tax return on 6th April after I made my first [erstwhile] DC drawdown in Jan/Feb of that year. Thanks for the reminder about difference between Dec & Jan SA deadlines.
So yet another difference between SA and non-SA. That non-SA folks cannot pay a lump sum seems a bit rum to me!
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@Al Cam
Thanks for your response re your updates in your PTA. I never imagined that separating out bank interest was either necessary or possible from the way it is presented in both the PTA and tax code letters. It’s only because that’s what the HMRC call agent offered as a reason for no interest at all being included in the 31 Jan reissue of my tax code over a month after my late Dec PTA update. She suggested I should just do multiple interest updates within the same submission (even though they wouldn’t be tagged with the name or A/C number of the bank). I don’t know yet whether her suggestion is either possible or wise!
I won’t be delaying long before doing my 2024-25 update. Out of an excess of caution I don’t want both years’ updates going into the sausage machine at the same time and getting minced together. I’m not too bothered if my tax code update isn’t until the May DB payment rather than April. (My DB pays on the last working day of the month.)
I’ve never had any problem with the connection between my two PAYE payers and HMRC. As well as my DB pension which carries my main tax code, I also have a small annuity with a BR code. (The annuity is the result of a Section 32 DC pot that offered enhanced tax-free cash. A consequence of getting enhanced tax-free cash under pre-2005 rules was that there were no realistic alternatives for the taxable part than to buy an annuity.)
My PTA usually seems to show correct amounts for these two sources, and it’s not too much of a problem if they don’t (like for the coming year as HMRC aren’t yet aware of the DB increase ) as the providers pay what they owe and the tax code gets applied regardless. The other potential pitfall is the deduction for state pension. Fortunately HMRC always seem to have the correct figure for this once you get your head round the way HMRC calculate the total for the year when the increase actually occurs surprisingly far into April. Needless to say it’s not to the taxpayer’s advantage.
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@Al Cam @Bill
Re ferries, jetfoils and hovercraft. I’m not a good sailor so craft such as hovercraft make me nervous in rough seas. I have used the Harwich – Hook of Holland ferry a few times and, provided you do it overnight in a cabin it’s no problem. For a while they operated a high-speed ferry on this route – I guess this is like your jetfoil, but much larger as it took vehicles including the coach I was on. That year the sea was rough and it was announced that the HSF wouldn’t be able to travel at its usual speed and the crossing would take an hour longer. This had me and the other poor sailors in the group worried – but it was fine. Even though the vessel was pitching all over the place the movement was completely different from a ferry.
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I suspect the HSF was more akin to a catamaran, but am not 100% sure. The Seacat was a catamaran and also took cars IIRC.
A jetfoil uses a hydrofoil approach, see Boeing 929 Jetfoil – Wikipedia. It is quite something to see the hull rise out of the water on a jetfoil!
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@Al Cam
Yes, I think you’re right about HSF being like a catamaran. I’ve twice been on a genuine passenger-only catamaran across the Adriatic from Rovinj/Porec in Croatia to Venice. The first time was in Yugoslavia days and the catamaran was certainly Russian-built. The second time it was independent Croatia but I’m not sure if the catamaran fleet had been renewed. They travelled seriously fast and, at least the first time, I remember being very green on arrival in Venice!
The only time I’ve been on a hovercraft it was a very small passenger-only one between Hong Kong and Shekou (I think the name was), the port for Shenzen in China. I seem to recall I didn’t feel that wonderful after that trip either!
I’m still not convinced that paying back-tax alone presents any danger of being taken into HR tax, at least in the long-term after all calculations have been completed. I’m reasonably sure that any tax is only calculated to be paid at the rate that was due at the time, with the exception of the possibility of added interest and/or penalty if it wasn’t declared at the proper time.
As for non-SA taxpayers being unable voluntarily to pay lump sums, I must stress voluntarily. I’m sure we’ll soon hear of pensioners with just the NSP and an equity portfolio being pursued for tax that HMRC are unable to collect through PAYE. Most of those with just the NSP and savings interest will probably remain non-taxpayers because of the starting rate for savings.
I also, as executor of my late mother’s estate, had to pay the income tax (estate too small for IHT) as a lump sum on the income received by the estate during the period of administration (i.e. before it was distributed, largely but not exclusively to myself).
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@Al Cam
I went googling to make sure I was correct about being unable as a non-SA taxpayer to pay tax owed as a lump sum. I came across this typically unhelpful response in the HMRC forums.
https://community.hmrc.gov.uk/customerforums/pt/f0dd8b7b-aba0-ee11-a81c-002248004b84
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Yup, that response is really helpful!
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@DavidV @Al Cam
Oh yes, I’ve been on one of the seacat things way back going to St Malo with my brother in his car – I think it was one of these with Condor Ferries https://brittany-seas-ships.jimdofree.com/condor-ferries/condor-ferries-past-fleet/condor-express/
The weather was not good and it was borderline whether it would sail but we did. I seem to remember feeling rather green on the journey and spending a long time wishing it was over! Waiting to drive on board my brother had showed me the security system on his Merc that would detect movement of the car via a mercury switch…he got called down to the car deck to disable the alarm.
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“Do you want to know how firms used to fix skills shortages? They took people, often out of school rather than university, and they trained the buggers, often is special-purpose industrial teaching facilities, about their particular specialism.”
I used to work for an engineering company in the 1990s and they had their own training centre and they would train their staff and make sure the employees had the skills needed to do the work that was required in the company. Now to prevent them loosing these trained up individuals they made it a condition of the training that the employee could not leave for 3 years. If you did leave within 3 years then you had to pay back the training costs which were detailed to you when to attended the courses. You knew exactly where you stood. Now, this did not stop them laying you off but if they did within the 3 years, they would void the training costs, not that I remember this happening while I was there.
As the company was well regarded in their sector, their training was viewed as excellent for your CV and getting jobs at competitor companies. I remember one guy leaving for a competitor as he was given an offer he could not refuse and the competitor would also settle the training cost so that the employee was not out of pocket and the competitor would gain a fully trained up employee.
How times have changed. Now, if you are an employee and you do not have the right skills for a new project, they sack you and recruit a new person who has the correct training. In-house training and investment in employees has disappeared. The companies are just interested in profit targets and cutting costs. Employee training is a cost that most companies just do not want to have on the books any more.
Sadly, this engineering company was bought by a foreign international and the order book transferred abroad to cheaper locations, staff laid off and the sites closed and now redeveloped as residential estates.
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I recall that sort of thing, in some ways it’s good value for everyone. Obvs the first company takes the costs of onboarding a raw recruit, but the second company pays for the training indirectly and the first company spreads their training fixed costs over more people even if they don’t end up working for them.
I despair of the bellyaching of companies about the skills, it’s not like people get born with an instinctive understanding of [insert specialism that may not even have existed when they were born]. It’s well within living memory how firms used to fix this problem and the bellyachers need to STFU spit on their hands and get with it. It is true that there was more vertical integration in the past which lent itself more to in-house training, but if companies feel they have a problem with this, well, they know what to do, rather than whingeing to gov that they are short of skills
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