Techy Tuesday Tax Tool Q&A
Last Updated: 3 Jun 25 5 min read
Methodology Matters
Can the tool calculate the position with a joint investment bond, using each individual's ISA allowances each year?
The tool is designed for a single investor only but you can just run it for each investor separately and halve the bond investment amount. It’s likely that they will have different incomes and if the investments are 50/50 then halving the investment should get you to the same position.
How does the tool work out dividends for capital gains for Acc funds (or does it just assume the funds are INC funds)?
The tool has been built to use income units.
So there isn't the ability to bed n ISA the collective but not the bond?
The tool will bed and ISA from the collectives and the bonds (onshore and offshore). It was mentioned during the presentation and is a caveat on the tool that whilst using the AEA to rebase the gain, the tool ignores the bed and breakfasting rules.
Does the ISA wrap take funds from the bond each year, and would contributing to ISA and withdrawing mean a double withdrawal from the bond?
If ISA wrapping has been selected this will be done over all three investments. If you select an additional withdrawal this will be on top of the withdrawal for the ISA allowance. If you select ISA wrapping and a £10,000 withdrawal, £30,000 gross will be withdrawn at the end of the tax year in total.
With the ISA Wrap - does it assume to use the AEA? or if you say to use the AEA - is that separate?
If using the AEA has been selected the tool will factor this in. It will firstly look to see from the collectives if enough income has been generated to use for the ISA investment. If this is not enough and using the AEA has been factored in then the amount turned over in the collectives will be used for ISA wrapping. If that is not enough then additional units will be sold.
Can the tool be adapted to illustrate encashment / income over multiple years?
No, the tool is built on the assumption that the investment will be fully encashed at the end of the selected term. But the tool does display what OEIC capital gain or Bond gain has been generated. This could be used as a starting point for an extraction strategy.
Does it factor in ongoing adviser fees for bonds and impact on 5%?
The tool doesn’t factor in any fund based ongoing adviser charges, but you could factor in a static ongoing advise fee in the regular withdrawal input section.
How does it work with an MPS within a GIA, especially when funds have been switched since inception and sale?
The tool doesn’t factor this in, as it’s assumed that this is new money being invested.
Does the overall income take into account the total tax paid?
Any tax displayed for the investments are the explicit tax increase for the individual caused by that investment. The tool doesn’t show what their tax is based on their existing income, but does factor in what tax is caused by each investment.
Tax Matters
Someone with no income other than £100k of interest & £50k of dividends, do they still get the full starting savings allowance and personal savings allowance?
In this example they would be an additional rate taxpayer. They would lose their personal allowance as their adjusted net income is £150k and also won't benefit from the personal savings allowance. They would still benefit from the £5k starting rate and £500 dividend allowance.
Scenarios like this can be run through our tax relief modeller to show what falls where in the tax bands.
Apologies for the basic question - is the notional income on an accumulation unit OEIC declared as income on a tax return each year?
Yes, it's taxable income in the year it arises even though it's reinvested and added to capital.
You should find this article on our Tech Matters page helpful.
Gains on GIA crystallised before 29/10/24(Budget), then losses crystallised before 5/4/25. Will gains v losses offset but at different CGT rates(pre/post budget)?
Yes, losses can be offset against gains in the same tax year. However, you cannot change the rate of CGT that wil be paid. That's down to when the investment was surrendered. So care needs to be taken if you have pre and post budget gains as to where you offset the loss. There is further information here
If net gains at year end will they be taxed at pre-budget CGT rates if gains crystallised pre-budget and losses crystallised post budget?
Yes, as per the above answer.
Good presentation - thanks. The allowances do clients have to look into these or is it factored in by HMRC?
Thanks. In terms of the allowances as the UK operates a system of self-assessment, the onus is on the individual to use these and settle any tax that is not covered by allowances or exemptions.
Sorry slightly off topic but, What is the standard rate band amount for income generated by trust assets? Is it £1,000 or has it changed to £500?
The standard rate band for trusts was abolished from 6/4/24. There's now a de minimis amount for trust "income" under £500. There is further information here
Support Matters
Great session and love the updated tool. Will there be a user guide available and can we print a report showing all the information?
We have the glossary at present to help with inputs and outputs and what they mean. The Tax Analysis tab can show most of the information. It’s always recommended to print these to PDF as the tools cease to function at the end of the tax year (a PDF will not be affected by this) and this will show all of the information.
Here we go !!. This always stops me . How do I enable macros without joining Microsoft 365 !. On a windows 11 computer.
In all of our excel tool landing pages we do state that macros need to be enabled and they all have a link to this page which should fix the issue for you.
Presentation is great and I would like to go through it with a Trainee Adviser. Will I receive or have access to the full presentation with the spoken content?
Yes, a recording of the session will be available on our Tech Matters site by the end of this week in the On Demand section.
Miscelleneous Matters
Where would you get the Investment assumptions for a fund for savings, dividend and capital gain please?
There is no exact place to get these, but broadly speaking from a fund fact sheet you can get the total return and the investment yield. In any one year the total return less the investment yield should be the capital growth. If your firm has an investment team they might be able to provide you with expected yields for the portfolios you are considering.
Is there a tool for Ltd Company investment in Bonds with underlying investments which are either dividend paying only or in the PruFund Growth Fund(in bond)?
We don't presently have a calculator that can support this.
Can the TWCT cope with reductions in the ISA allowance intimated by Angela Rayner?
We can only go with the rules that we have in place at the moment. The rumours we have heard on this was a restriction on how mucjh can be placed in cash. This tool deals with Stocks and Shares ISAs.
Tech Matters
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