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The Big 75

taken2often
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The Big 75

#388895

Postby taken2often » February 22nd, 2021, 7:38 pm

When you reach 75 years, all go through a LTA Test even if you will not be paying tax. I am with two main Providers and not one sent a Test Certificate. One has acknowledged that this was a mistake and rectified it. Although not effecting me I have been in heavy negotiations with these two companies and HMRC. This came about and it highlights how unfair LTA Tax is Jan 20 I thought I would owe 35k tax. Luckily my birthday was not then. In March the markets get zapped so by August I owed no tax. February 2021 back to owing 35k if I had to face the Test this year.

So last year I thinks, after the test if tax was due I would pay it from funds outwith the pension as it is tax and I have funds earning nothing. So why sell stock at a loss to pay tax. I invest for income so once the stock is gone it is gone. These are stocks were purchased over 30 years or so.

I was told that the tax would be added to the fund and taxed. HMRC have confirmed this is not allowed only one LTA Test and anyway any funds paid into a pension after LTA has no tax relief, which is the whole point of the LTA Tax.

The crux of this is that if you know any one coming up for 75 and who may have to pay tax, then the above option should be offered to them. There is resistance to this. If you are pushed into selling stock instead, this would be a forced sale. If you do not do it they will sell your stock to pay the tax. They have the legal right to do so. If you have offered them the tax and they refuse it. I think you would have a good legal claim against them for the losses relating to your stock. This is what I intended to do, but it turned out no tax to pay. There is more detail in the LTA2 post

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