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aw_evans_btinternet_com

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  1. Thank you Taxantics. This makes sense; my follow-on question relates to the logistics of doing this. The .gov /HMRC site for declaring a capital gain and calculating CGT gives no provision for including pension contributions, so I'm just wondering how to go about doing this? Similarly my tax code (which the HMRC asks for) only relates to the standard tax-free allowance and does not reflect the regular SIPP contributions I make.
  2. Just wondering if anyone else has found themselves in a similar position? My employment income is at a level where I pay basic rate income tax. I have some rental properties and the income from them, when added to my employment income, mean that I would pay 40% income tax. So, each year I make SIPP contributions to (legally!) avoid paying the higher rate of tax – I declare everything on my self-assessment form. The SIPP contributions offset against my other income, which means I don't pay income tax at 40%. So far, so good. I have now sold a property and am liable to pay CGT. This is charged at different levels, according to your tax band (18% for standard rate, 28% for higher rate). I was expecting to be charged CGT at the 18% rate as I am not paying 40% income tax, HOWEVER the CGT calculation on the .gov website indicates I will be charged at the higher rate. This is because my tax code does not take account of the pension contributions and the CGT calculation includes income from all sources – with no ability to offset SIPP contributions against income. Overall, this does not feel right – why should I pay a higher rate of CGT when I don’t pay higher rate income tax? Do I need to pay the higher amount and then reclaim at the end of the tax year? Does anyone have any experience or knowledge in this area? All suggestions welcome!
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