I understand how pension offset of the LC worked for closed (unprotected years) , but am unclear for Open years.
Scenario (simplified for clarity) : I earned and declared up to the top of the 20% tax band in 2011/12, 2012/13, 2013/14 and 2014/15 , and had a loan for £30k in each year (total Loan £120k), all years open (protected).
I declare the loans for LC purposes spread over 2018/19, 2019/20 and 2020/21 (£40K each year), I earn up to the top of the 20% tax band in the same 3 years, and make a £40k gross pension contribution (£32k net) in 2019/20 and 2020/21.
For 2018/19 I assume I would be assessed to pay £16k (40% of £40k) for the loan charge, as I would in 2019/20 and 2020/21, however for these latter 2 years I would have received £8k pension top up and my LC would also be reduced by £8k, so in effect the £16K of tax for each year would go into my pension.
If I then settle the 4 open years at a later date, there will be £48k plus interest due in tax (4 x £12k for each year (40% of £30k))
Question: I assume I can offset the £16K of LC paid for 2018/19 from the £48K due for settlement, can I also offset the £32K LC for 2019/20 and 2020/21 LC (£16K each year) that I paid, but that actually ended up in my pension?
Also LC attracts NI, can I offset the NI paid for the LC from that due on the loans when settling?
Scenario (simplified for clarity) : I earned and declared up to the top of the 20% tax band in 2011/12, 2012/13, 2013/14 and 2014/15 , and had a loan for £30k in each year (total Loan £120k), all years open (protected).
I declare the loans for LC purposes spread over 2018/19, 2019/20 and 2020/21 (£40K each year), I earn up to the top of the 20% tax band in the same 3 years, and make a £40k gross pension contribution (£32k net) in 2019/20 and 2020/21.
For 2018/19 I assume I would be assessed to pay £16k (40% of £40k) for the loan charge, as I would in 2019/20 and 2020/21, however for these latter 2 years I would have received £8k pension top up and my LC would also be reduced by £8k, so in effect the £16K of tax for each year would go into my pension.
If I then settle the 4 open years at a later date, there will be £48k plus interest due in tax (4 x £12k for each year (40% of £30k))
Question: I assume I can offset the £16K of LC paid for 2018/19 from the £48K due for settlement, can I also offset the £32K LC for 2019/20 and 2020/21 LC (£16K each year) that I paid, but that actually ended up in my pension?
Also LC attracts NI, can I offset the NI paid for the LC from that due on the loans when settling?
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