Hello all.
This is a follow on thread from a previous discussion (same title) in March. Started a new thread as I wasn't sure if the historic thread would be easy to resurrect....
...So it appears that the 4 year FIG regime for returning expats will indeed apply.
On that basis, I am currently trying to figure out optimal tax strategy upon repatriation (scheduled for tax year 2025) and to shift the bulk of my (taxable) general investment account (GIA) portfolio into tax sheltered UK wrappers (ie - SIPP/ISA). SIPP is currently very light and GIA very overweight. GIA is comprised of 100% global equity tracker (just one for simplicity).
Here is my current thinking (any feedback very welcome!)
Pension strategy
- In first tax year : explore using up previous years’ allowances
- In the first year (Assuming annual income of ~250k), utilize:
• 2025 allowance (£60k)
• 2024 allowance (£60k)
• 2023 allowance (£60k)
• 2022 allowance (£60k)
- If this is correct, does it mean I could sacrifice £240k of income into a UK pension? All of this would go into a global equity tracker. We would sell equities from GIA to fund living expenses in this year.
- If this is not correct – what is the maximum amount of salary that could be sacrificed in first year?
- Is the most tax efficient/cleanest way to do this
• directly into SIPP or
• via employer’s salary sacrifice pension scheme (where there is some company matching) and then transfer this over to SIPP?
ISA Strategy
- Sell shares in GIA each year to fill ISAs for self and wife (S&S ISA and purchasing same global equity tracker)
- Sell significant shares from GIA during the 4 year FIG period without attracting CGT
• Drip feed these into ISAs over the next few years, maximising annual ISA allowance (currently £20k each)
Gilt Strategy
- Sell 25% of GIA portfolio during the 4 year FIG period (so this sale will not attract CGT)
- Purchase short dated zero-coupon gilts (e.g. 3-5 year duration)
- On maturity of gilts repeat purchasing (so effectively keeps rolling this amount)
- No CGT to pay on maturity of gilts (as gilts don’t attract CGT) and no income tax (as these will be zero coupon)
Whatever is left in GIA at the end of all this - bed and breakfast it during 4 year FIG period to rebase the portfolio value. When it comes to drawdowns in retirement/semi-retirement; plan for following drawdown sequence to maximize tax efficiency (1st) ISA/gilts; (2nd) SIPP/gilts; (3rd) GIA.
Sorry this is a bit long-winded!
This is a follow on thread from a previous discussion (same title) in March. Started a new thread as I wasn't sure if the historic thread would be easy to resurrect....
...So it appears that the 4 year FIG regime for returning expats will indeed apply.
On that basis, I am currently trying to figure out optimal tax strategy upon repatriation (scheduled for tax year 2025) and to shift the bulk of my (taxable) general investment account (GIA) portfolio into tax sheltered UK wrappers (ie - SIPP/ISA). SIPP is currently very light and GIA very overweight. GIA is comprised of 100% global equity tracker (just one for simplicity).
Here is my current thinking (any feedback very welcome!)
Pension strategy
- In first tax year : explore using up previous years’ allowances
- In the first year (Assuming annual income of ~250k), utilize:
• 2025 allowance (£60k)
• 2024 allowance (£60k)
• 2023 allowance (£60k)
• 2022 allowance (£60k)
- If this is correct, does it mean I could sacrifice £240k of income into a UK pension? All of this would go into a global equity tracker. We would sell equities from GIA to fund living expenses in this year.
- If this is not correct – what is the maximum amount of salary that could be sacrificed in first year?
- Is the most tax efficient/cleanest way to do this
• directly into SIPP or
• via employer’s salary sacrifice pension scheme (where there is some company matching) and then transfer this over to SIPP?
ISA Strategy
- Sell shares in GIA each year to fill ISAs for self and wife (S&S ISA and purchasing same global equity tracker)
- Sell significant shares from GIA during the 4 year FIG period without attracting CGT
• Drip feed these into ISAs over the next few years, maximising annual ISA allowance (currently £20k each)
Gilt Strategy
- Sell 25% of GIA portfolio during the 4 year FIG period (so this sale will not attract CGT)
- Purchase short dated zero-coupon gilts (e.g. 3-5 year duration)
- On maturity of gilts repeat purchasing (so effectively keeps rolling this amount)
- No CGT to pay on maturity of gilts (as gilts don’t attract CGT) and no income tax (as these will be zero coupon)
Whatever is left in GIA at the end of all this - bed and breakfast it during 4 year FIG period to rebase the portfolio value. When it comes to drawdowns in retirement/semi-retirement; plan for following drawdown sequence to maximize tax efficiency (1st) ISA/gilts; (2nd) SIPP/gilts; (3rd) GIA.
Sorry this is a bit long-winded!
Statistics: Posted by Futureproofer — Thu Aug 22, 2024 3:37 am — Replies 9 — Views 472