Blagdon wrote:I do have reasons for using UFPLS, but they may be wrong...
* I have Fixed Protection
* I am only 10% away from the protection limit
* I do not really want to increase the amount of taxable savings/investments if I can avoid it
* I wanted to fully utilise my basic rate band to start withdrawing some money from my pensions
* I am fully using his & hers ISAs etc
* I am maximising my wife's pension contributions up to the limit of her salary
that all sounds sensible while you're under your fixed protection limit. my first thought would be that, if/when your pension grows big enough that it would exactly use the FP limit, you might want to crystallize the whole thing at that point.
Blagdon wrote:Do you know if HMRC is capable of coping with your final point around order of taxation. I ask the question for 2 reasons...
* When I did a bit of 'what if' with HMRC self-assessment last year, I think some of their calculations were wrong
* For last tax year, HMRC treated me as PAYE and sent me £200 refund cheque. I completed Self Assessment and paid them £400 it said I owed. I pretty sure that my self assessment is right and they are wrong! I am still trying to get them to sort it out.
i'm not quite sure. there are some known errors in HMRC's automated tax calculations for 2016/17, which they are supposed to be fixing. but i don't recall this situation as being one of the known error cases, so perhaps they'd get it right.
Blagdon wrote:As an aside, I think it is wrong that a supposedly 'self assessment' tax regime is this complicated. An average person should be able to sort it out without needing to use a specialist.
yes. it's mostly the interaction of various new allowances/bands that hasn't been thought through here. that combined with taxing different kinds of income at different rates. there's no good reason for it to be this complicated.