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Case Studies
Case Study 4 0 SIPP "in specie" transfers mean the government give client £10,000 back
A client of ours had built up a small shareholding in various banks, building societies, BT etc from demutualisations and privatisations over the years totalling £20,000 and wanted some advice on how to simplify his tax return regards the dividend income etc.
The client already had a SIPP in place so he gave the shares to his SIPP as an “in specie” contribution. The ownership of the shares changed from himself to his pension fund meaning that he no longer needed to worry himself about putting the dividends etc. down on his tax return.
As this transfer technically counted as a pension contribution HMRC added a further £5,000 in cash to his pension fund as basic rate tax relief.
In addition HMRC will give this client a tax rebate of a further £5,000 when he completes his tax return next year as higher rate tax relief.
Each transfer counted as a disposal for capital gains tax purposes but due to the low markets this was not in excess of his annual allowance.
The result of this exercise is that the client still owns the shares (via his SIPP) but he has generated an extra £10,000 for himself as a result of taking advice from Avidity Wealth Management. Ltd.
Do you hold single company shares and would you like to take advantage of this tax planning, if so contact us as soon as possible.
Case Study 4 0 SIPP "in specie" transfers mean the government give client £10,000 back
A client of ours had built up a small shareholding in various banks, building societies, BT etc from demutualisations and privatisations over the years totalling £20,000 and wanted some advice on how to simplify his tax return regards the dividend income etc.
The client already had a SIPP in place so he gave the shares to his SIPP as an “in specie” contribution. The ownership of the shares changed from himself to his pension fund meaning that he no longer needed to worry himself about putting the dividends etc. down on his tax return.
As this transfer technically counted as a pension contribution HMRC added a further £5,000 in cash to his pension fund as basic rate tax relief.
In addition HMRC will give this client a tax rebate of a further £5,000 when he completes his tax return next year as higher rate tax relief.
Each transfer counted as a disposal for capital gains tax purposes but due to the low markets this was not in excess of his annual allowance.
The result of this exercise is that the client still owns the shares (via his SIPP) but he has generated an extra £10,000 for himself as a result of taking advice from Avidity Wealth Management. Ltd.
Do you hold single company shares and would you like to take advantage of this tax planning, if so contact us as soon as possible.