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Sam
Sam, Accountant
Category: Tax
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I am self employed and my income has fluctuated between 20-50k

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I am self employed and my income has fluctuated between 20-50k pa over the last ten years . I am about to retire and a company I have managed is about to be sold and I will receive a substantial sum of about 500k effectively my pension . I am not a sharehoder so I presume I will have to pay income tax at the top rate. Is there any sort of relief on retiring at 67 ? Someone has mentioned " Authors Rule) whereby tax on an exceptional amount can be spread over a number of years ???
Submitted: 2 years ago.
Category: Tax
Expert:  Sam replied 2 years ago.
Hi
Thanks for your question, I am Sam and I am one of the UK tax experts here on Just Answer.
I am afraid this relates solely to royalties, that recognises that many years of research and actual writing of a book make up the end position of bring in profits/royalties.
This does not apply to employment and lump sum pay-outs I am sorry to say.
You will be deemed liable to tax under the normal Income tax rules, and the only mitigation there might have been would be if you were to put an amount equal to 100% of your annual income (which does not exceed £40,000 this tax year although you may be able to carry forward unused contributions from previous years)
At 67 you will need to check with any current pension arrangement whether this is possible, as there are various cut off points with pension schemes - such as a bound by a maximum amount of years, some the cut off is age 65 - etc etc but many are up to age 75
This being the case then although you will suffer 45% tax - you will also be due some additional tax relief on any pension contribution you make (20% will given n at source by the pension plan) so highest rate of tax less 20% - which will refund you come of the tax back, so worth considering.
But other than this, there is nothing more you can do.
Let me know if you wish me to expand on any element of the information provided.
Thanks
Sam
Sam and other Tax Specialists are ready to help you
Customer: replied 2 years ago.

Thanks - as I suspected . Nothing to add thanks

Sam

Expert:  Sam replied 2 years ago.
Hi
Thanks for your response and for the rating - much appreciated
Thanks
Sam

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