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Old 04 February 2013, 01:15 PM
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paulr
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Default Tax Question.

Your personal allowance is 10k
The tax rate is 20%
You earn 100k from a cash ISA
You have 20k from your state pension.

How much tax do you pay?

Last edited by paulr; 04 February 2013 at 01:16 PM.
Old 04 February 2013, 01:44 PM
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paulr
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Its either 2k or 4k.
Old 04 February 2013, 02:22 PM
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Leslie
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Surely you pay tax on your taxable income taking your personal allowance into consideration.

Les
Old 04 February 2013, 03:22 PM
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paulr
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Originally Posted by Leslie
Surely you pay tax on your taxable income taking your personal allowance into consideration.

Les
So the answer is ????????????????
Old 04 February 2013, 04:14 PM
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22BUK
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2K (20% of (pension - allowance)).

ISA not taxable until you die.
Old 04 February 2013, 04:40 PM
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Chip
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State pension will become part of your taxable income once your tax allowance has been reached.
Old 04 February 2013, 04:42 PM
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Chip
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How do you earn 100k from an ISA anyway?

You would pay £2000 in tax.
Old 04 February 2013, 05:19 PM
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paulr
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Originally Posted by 22BUK
2K (20% of (pension - allowance)).

ISA not taxable until you die.
So not only is the income from an ISA not taxable, it also doesn't count towards taxable income. Thanks for that.
Old 04 February 2013, 06:33 PM
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pslewis
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Income from an ISA is Tax Free - that's the point of it.
Old 04 February 2013, 07:24 PM
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billythekid
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Originally Posted by Chip
How do you earn 100k from an ISA anyway?
I guess its cashing it in?
Old 04 February 2013, 07:53 PM
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Matteeboy
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Originally Posted by Chip
How do you earn 100k from an ISA anyway?

You would pay £2000 in tax.
Indeed, at current interest rates, to "earn" £100k from an ISA, you'd need to have invested about £2.5m in them, which is actually impossible!
Old 04 February 2013, 08:20 PM
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Chip
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Originally Posted by Matteeboy
Indeed, at current interest rates, to "earn" £100k from an ISA, you'd need to have invested about £2.5m in them, which is actually impossible!
Thats what I was thinking, so not earning then.
Old 05 February 2013, 11:59 AM
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ChrisB
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The last couple of posts reminded me of an article I read about people who had got £1m + in PEP/ISA pots : Telegraph

One such couple, John Housden and his wife, Judith, from Kent, have accrued a combined pot of £1.3m having invested around £190,000 each since the first year of Peps in 1988. It pays them a handsome income of £57,000 a year.
Old 05 February 2013, 03:06 PM
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Leslie
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Originally Posted by paulr
So the answer is ????????????????

Presuming that ISA money is tax free, you pay 20% of the £20K minus the personal allowance of £10K which comes to £2K

Why did you ask the question?

Les
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