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  • Threshold Income ‘relief at source’ vs ‘salary sacrifice arrangements’

    The description of calculating your Threshold income (for pension tapering), on and does not make it clear what to do with your own contributions into a workplace pension. ptm057100 contains: 1. Start with the individual’s Net income (essentially the p60 figure for most PAYE people) 2. ADD The amount that would have been employment income but for the operation of a ‘relevant salary sacrifice arrangement’ 4. DEDUCT The gross amount of member contributions paid in the tax year using 'relief at source'. The question is what is a workplace pension scheme? i.e. Is it a salary sacrifice arrangement or relief at source ? If I look at the link for relief at source ( it states this is for "some workplace pensions" and "your pension provider will claim it as tax relief and add it to your pension pot (‘relief at source’)" - this sounds like a specific kind of pension scheme where companies rely on the scheme to request back 20% from HMRC If you read the salary sacrifice arrangement link (, it contains: below the heading "Examples of salary sacrifice" after which there is a section called "Workplace pension schemes" containing "an employer might agree to pay more than the minimum amount required, to cover some or all of the employee’s contribution. The employee may then become entitled to a lower cash salary" Up until now, for the past few years our financial discussion community where I work, has been confused by this wording and assumed that it was indicating you should add back your own pension contributions which had lowered your income (p60 figure) It makes sense that it shouldn't be possible to flip a switch for whether tapering kicks in, by simply contributing more (sacrificing your salary) and more until your Threshold limit falls under the point where you have to consider tapering. So we've assumed the pension scheme was a valid salary sacrifice arrangement, as such we should add back our own pension contributions to the Net to calculate the Threshold income. The Adjusted income is then the addition of the company matched portion of the pension. However the worked example: contains: "Jon is an employee..." "Jon has a salary of £112.000 and as a member of his employer’s pension scheme he pays 12.5% of his salary (£14,000) as member contribution." Full worked example: calculating threshold income "Step 2 Add the amount that would have been employment income but for the operation of a ‘relevant salary sacrifice arrangement’ Jon hasn’t entered into a salary sacrifice arrangement so there is nothing to add at step 2 in respect of a relevant salary sacrifice arrangement." ...jon hasn't entered into a salary sacrifice arrangement ?! There are some online calculators which appear to match the alternative understanding. That a workplace pension is a valid way of creating a lower Threshold income and thus switching when you are supposed to apply the tapering rules. Please can you confirm?
  • RE: Donations to a spouse

    This document (HS281) contains "although you’re taxed separately, you may be treated as ‘connected’ with each other" and for gifts "Any amount actually paid is ignored". This would seem to imply an inherent assumption of joint capital gains on gifted shares. This is in line with everything I'd understood before. But importantly doesn't indicate evidence of this be provided. For the scenario I'm inquiring about, assets are held in my name and section 2 of HS281 adds "You’re chargeable to Capital Gains Tax if you dispose of an asset held in your name, unless you’re holding it on behalf of another person." - so if I gift half my shares to my spouse, this fits this description without my having to laboriously try and actually pass them to a separate brokerage firm. Further clarified with "If you’re holding an asset on behalf of your spouse or civil partner, your spouse or civil partner is commonly known as the beneficial owner and will pay tax if a gain is made from its disposal." The part under question is what if anything, is needed to report this? I would assume simply uploading a pdf letter explaining this for our tax returns should suffice right? There is a suggestion to use the "formal declaration about beneficial ownership using Form 17, ‘Declaration of beneficial interests in joint property and income’". However Form 17 is *only* dealing with a house and doesn't permit entering any form of formal declaration of gifting of shares.
  • RE: "same-day" vs "auto-sell"

    Thank you for this reply, it is unfortunate but not unexpected. I was hoping the contract to sell having been locked in at the start of the year, could possibly be considered as that's separated by months from the time before the actual sale. Further that unwitting UK taxpayers are in complete fairness following the spirit of the same-day rule despite technicalities preventing actual same-day due to how the real world works. Do you have any suggestions as to how the capital gains rules could be adjusted to take into consideration the significant number of employees in the UK working in multinational companies who offer shares as part of the compensation package? I assume this forum and the helpful people I occasionally speak to on the HMRC helplines, are unlikely to help make any fundamental legal changes to the UK tax legislation. Could you please pass this to the powers that be, or provide details here of a contact that could consider this. There are a couple of extremely simple amendments to the existing rules which it would be useful for HMRC to consider, either one of which would prevent complex calculations*, or... more likely, unwitting misreporting on tax returns by thousands of people: + Company arranged, share auto-sell systems to be considered same-day + Remove the reporting requirement on 4x cap.gain limit if the gain is trivially low *Where I work we have an active internal forum discussing matters like this and over the past number of years, we've developed internal tooling to assist in this unfortunate setup using exports from the US-centric brokers. I can't guarantee and in fact expect, that potentially tens of thousands either don't know and aren't reporting, or are wasting hours creating details reports each year which are either skipped/accepted, or occasionally audited wasting HMRC's time too as no tax is due.
  • RE: State pension estimate is too generous

    Dear HMRC Admin 20, I really don't think it makes sense for me to add to "the high number of calls their are experiencing" on the (before pension age) number. In fact the recorded message says not to speak to them if I have no gaps*. I merely want to check how it could occur that I'm literally at the max pension, far under the expected time. But somehow my 2yr older wife has a *more* years to work despite essentially identical records albeit with 2 extra contribution years. The simple answer here is if the size of the NI contributions themselves have any affect, my income is high so I've contributed a significant sum to his majesty's government over the years. If it's not this, then there there must be some very weird situation going on where my 23 years of contribs pre-2016 plus 6 after (6 is the same for everyone who worked) vs my wife's 25 years contribs, plus 6 somehow means she needs to work 3 more years!? My wife has almost identical pension history (including missing 3 years at uni), but has 31 years where I have 29 as she's 2 years older. Yet she has to work for 4 more years and I only 1 (or maybe I max out after the 6th of April) *I don't think I can correct the gaps in 1992-4 when I was in full time uni education as this is simply too long ago (nobody at the time told me I had to do anything to inform hmrc). Gary: Thank you for a detailed response, but that's roughly a repeat of what the government webpages state. The numbers however don't seem to make sense to me unless some people's high contributions, decreased the years you need to contribute? Otherwise the timing of being a smidgen older means a determent to duration of work needed before reaching £185 p/w
  • RE: Donations to a spouse

    Yes, I understand that "there is no Capital Gains Tax liability arising from the transfer of assets between a married couple and civil partners". This is useful because somebody with over the cap.gains tax free amount, can claim to gift their wife (who they live with) half of the shares so they share the gain on the sale. The question is, can this gifting be done simply by a declaraytion given to HMRC? The reason for this query is that actually doing the share gifting can be extremely complicated by some brokerage companies.
  • RE: Donations to a spouse

    Does phoning the helpline and telling them, or sending an email/letter stating the gifting event count as formal notification? This is far easier than doing the laborious technique above. Probably not relevant, but these are "Unapproved employee shares" mentioned: 
  • "same-day" vs "auto-sell"

    Firstly, you may or may not know know but large multinationals often provide their UK staff with company shares which vest through the year as part of a compensation deal. I know of >5k people in my own employment and have friends in other large companies in this (tech: Meta, FB, Apple) and other sectors (banking: Morgan Stanley, etc) all with similar systems. This is likely at least 10k people if not many tens of thousands of high tax payers in the UK. No pressure HMRC Admin XX but your answer here is useful and important to thousands of us :) Feel free to escalate and confirm the official response. The vests are taxed as income and about 47% of the stock is taken away for the maximum tax level. The remaining shares stay in the broker unless you sign up for an auto-sell option. Due to insider knowledge (materials nonpublic information), there are blackout windows for those selling manually and strict rules on the timing for when you sign up for "auto-sell" after which you can't cancel for a year either, so you have no control over the sales. The vest and sales are in USD but as *some* of us (out of 10,000s of people) know how to do this properly we use the value of these stock in GBP at the vest/sale events (potentially using HMRC's provided monthly exchange guides). The vests are often monthly which is a pain because months vary between 28 and 31 days - this is important due to the 30-day B&B avoidance rule. (note: The brokers in question are typically in the USA have haven't got a clue about UK tax rules, the user interface shows irrelevant gain/loss based on specific shares, i.e. no knowledge of Section 104 mean - I know 1st hand that UK people don't understand this as this is all new and confusing to everyone who starts working in these companies). Manual stock sales need tax calculations. (Note: over the years I've learnt via threads of misc email lists at work indicate a distressingly high number of tax accountants make mistakes or simply don't understand these US share systems and UK rules). Same-say/30-day and s104 matching are all taken into consideration etc. At least some of us sort this correctly, I can't speak for everyone. But I do know that almost nobody ever owes capital gains tax as most of us intentionally stay under the gain limits. A lot of us do however have to report because that's just 4x the gain limit. HMRC presumably receive 10,000s of tax returns containing £0 owed but pages of stock numbers. Now we come to Auto-sell: So... when somebody signs up to this scheme, they receive the vest the same as everyone else, however in this case those "same shares" are then sold. They had no control over them, there is effectively no gain/loss reported by the broker - however... due to things like the US timezone and other administrative complications, the actual point the sale takes place is after midnight in the UK!!!! So my question is whether HMRC consider this a same-day match, shares purchased and all of them immediate sold? People are very clearly following the spirit of the law here as there is no intent to gain/lose with sales which are out of your control. If not, then it's a complicated mess. The purchase (vest) occurs, then a sale follows, the cap.gains is not calculable / documented. And before you comment that it'll clearly be under the £6k limit (from next month), for many earners it will also be over the reporting limit, even with £0 owed. The next vest might be 28-31 days away so on some months you need to match against the new vest and other times against a s104 pool! This is a messy nightmare impacting many people wanting to opt for auto-sell but scared to due to the tax mess. **** Please can you tell me that it makes sense to consider auto-sold stock as same-day ? **** Alternatively please consider escalating up to HMRC that the reporting limit is too low or should not be needed if the gain is clearly close to £0 -
  • Donations to a spouse

    Assume I purchased shares worth £20k a few years ago which are now worth £40k. According to and I am allowed to donate half of those to my wife before we both sell them, so that we both only have £10k gains each this tax year. This is under the £12,300 gain limit and ~£49k reporting limit - no tax is owed. How to donate: Trivial: I called my spouse over to my brokerage screen and nicely explained the donation, they excitedly agreed we should both sell our halves. I write a clear letter explaining this and upload the PDF to my next tax return for that tax year. Or - convoluted: I contact my broker and ask them about doing an actual move of the shares, they inform me I need to download a pdf, print it and fill it in in pen. I then need to *FAX* this to their (+1) US number!? ... and wait a few weeks before calling to see how it's going, they've lost it so I start again, they, like most of them are lacking in basic competence. My spouse in the meantime has struggled but eventually managed to open a brokerage account (with my help as it's complicated) sending off forms, ID etc etc and waits until they get an account number for the transfer. We wait weeks and finally the "donation" is made and we both sell. We've lost out some money with fees from both brokers which we validly discount against the gain (this can literally *decrease tax* that HMRC would get, e.g. if we over the limits and were set to pay, the banks/brokers gaining instead). The tax outcome is the same but the effort required is bonkers. Furthermore no actual evidence is technically required for HMRC to see any of this if the reporting limits are under. Please PLEASE can you confirm that a donation to one's spouse doesn't actually need to require weeks of arduous life-admin to do a "real donation" as they obviously equate to the same outcome? It would be very sensible if HMRC agreed that it's generally okay to assume that in matters of stock donations, that the higher earner effectively doubles their cap.gains limit due to being married, seeing as they could effectively donate half over each yearly gain - albeit with the effort. Some tax adviser websites even have "just assume you double your capital gains limit due to being married" or words to that effect. So I'm sure this is occurring already.
  • State pension estimate is too generous

    My state pension forecast on the government gateway indicates I've contributed 29 years, but that in just *one* more year (possibly this 6th of April) I'll have qualified for the full £185.15 per week. My wife who is a bit older needs to work 4 more, which will be around 35 years. I know that the old system needed 30 years (I was at around 17-18), but we're now past 2016 and only the new pension applies as I'm just in my late 40s. I can't find *any* reference anywhere as to why I only need to work for 30 years to get a full new pension. is difficult to understand and refers to a "starting amount" in 2016 but what could that have been? It would be nice to know I can stop working in a few years and know that when I get to 67 I'll get the full supplement from the state on top of my savings, and private pensions. Is this in 1 month or 5 years?
  • RE: ?Unexpected tax refund?

    This is not surprising, just based on the initial description I would assume you have been over taxed - which is fine and not really HMRC or your companies fault based on their knowledge of your employment, leaving in November rather than Mar/Apr is the clincher here. You can apply for a government portal login and see it yourself, or phone HMRC (0300 200 3300) and wait on hold, they're often very nice & knowledgeable and can look up specifics for you based off your NI number. I don't know exactly how they'd return the money. It's worth noting that for the vast majority of people in the UK under PAYE (pay as you earn), this is all automatic and works itself out eventually. So the really easy/lazy option is to just continue working and it'll all pan out fine. If you're retired I'd call or do a tax return etc. When you are earning an amount each month HMRC estimates what your yearly income will be over the tax year, between April and November. If we assume you were being paid locum work income amounts of £150 a day this is roughly an income of £38k per year and the tax on this each month would have been taken away. But you stopped in November, so you only worked 8/12ths of the time ~£25k (extrapolated over the year) which has much lower tax. I don't know your income figures but when I ran some numbers it was even more owed back, so I'm assuming locum work pays more than your normal base. Or they were unable to refund back enough tax yet and it needs more pay through further work.