PEP or not?

Is your marginal rate really basic rate? In the (approx) 21,000 -

25,500 range pensioners (65+) have a 33% tax band (basic rate +50%) due to the withdrawal of the additional personal allowance.

PEPs can't reclaim the tax credit so if you're marginal rate really is basic rate (accounting for above) then you aren't saving any income tax by having it in a PEP.

You may save CGT when you sell by having it in a PEP, but the annual allowance is quite high anyway (about 9000) and only gains after you take it out of the PEP would count.

I'm only earning about 15k a year - and don't fill out a tax form. My pension is taxed at before I get it. I don't pay any additional income tax. Could you explain the calculations behind your conclusion? I would like to understand the gain / loss between the 2 options.

thanks

really is

income

Right - so assuming your income isn't going to be greater than 20,900 (including dividends, savings, state pension etc), you won't get your personal allowance reduced so it should be 7550 or 7690 if you're over 75. So you don't need to worry about that.

So both in and out of the PEP dividends are treated the same - no further tax to pay but the tax credit can't be reclaimed.

Outside the PEP any gain would be liable to GCT, but only if you make gains of more than 9,200 in a tax year (this is paid on sale). If this is likely you could always spread the sale over two or more years.

But I am paying a £32 annual charge? This wouldn't be charged if I held the shares outside the PEP - therefore I would be better off with the shares outside the PEP?