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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4203
Experience:  FCCA FCMA CGMA ACIS
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I am self employed and get tax credits, this last year i had

Customer Question

I am self employed and get tax credits, this last year i had to take some of my pension and put it into the business,
Where do i put this in my tax return
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.

Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question.

When you say take some of your pension did you mean pension liberation?

Customer: replied 1 year ago.
In uk we can now take additional out of our pension fund if we want,
I took some to help my business
Customer: replied 1 year ago.
But we have had some pretty bad years and i am trying to keep my business going
Customer: replied 1 year ago.
How do i show this on the tax credit forms ottex return forms
Expert:  bigduckontax replied 1 year ago.

Yes, I am aware of the pension liberation rules, but if you are under 55 the costs of liberation can be horrendous tax wise. You enter the taxable sum liberated at Box 11 on your self assessment tax return.

The tax credit forms are not affected by the level of the pension pot.

Customer: replied 1 year ago.
The hmrc are saying its income, but its gone into the business
Expert:  bigduckontax replied 1 year ago.

HMRC are correct, 75% of the liberated pension is taxable at your marginal rate. What you have chosen to do with your liberated funds is your affair. It does not impinge on your taxation position save for the taxation liability on receipt.

I am so sorry to have to rain on your parade..

Customer: replied 1 year ago.
Part of the money went to buy into another business, does that make a difference
Expert:  bigduckontax replied 1 year ago.

Sorry, not in the slightest. What you do with your liberated pension funds is your own affair; sorry to have to be so negative, but that is the reality.