Everything you ever wanted to know about tax but were too afraid to ask!

29:09There is software around. I'm not aware that free stuff will cope well. Actually, to be fair, the PAYE, you won't need to submit because HMRC has already got that data from employers. so you may well find that if you are PAYE and self-employed that some of the free software will do it there are more companies coming available getting approved by HMRC for making tax digital so with luck you'll be able to get a free free product mark I've been testing a variety of products for making tax digital so that I can advise my clients what's the best product for them and looking very carefully at the costs.

29:51And there are some really low costs. Name them. Let's name them. Come on. Rebecca, you can say them. Blame me. OK, I will. I will. If you're a spreadsheet person, I absolutely recommend a company called Absolute Tax. They're less than 50 quid a year. They will definitely cover PAYE and self-employment. And it's based around spreadsheets. Now, they'll probably now throw a book at me for overwhelming their phone lines. but I think it is an absolutely superb product. I'll name one other, so I'm not just picking one. There is an app-based one called Untied, which to me looks very good. You're not connected to either of them.

30:28Last question on this, Adrian, which I think is a really interesting one. Yeah, go on, you do it. So if you're self-employed, would you be able to claim the cost of these digital apps needed to send tax to government? Yeah, that's from Alison. Carrie, what do you think? Yes, I think she should be able to because that cost is incurred wholly and exclusively for the purpose of her business. So I see no reason why she wouldn't claim the cost. Savings tax then, what are we looking at here, Martin? So, I mean, when you get interest on savings, it's taxable. There are a lot of allowances. So the majority of people in the country do not pay taxes on their savings interest.

31:07I mean, you can earn as a basic rate taxpayer£1 ,000 a year of interest a year before you pay tax, a high rate taxpayer£500 of interest. If you're a non-taxpayer, your interest counts towards your basic personal allowance and there's a starting rate of savings anyway. We'll start with Matt. Matt wants to say, HMRC keeps incorrectly estimating my interest on savings I no longer have to my detriment via PAYE tax code adjustments. Why are their calculations non-transparent? Why can't they show the accounts and values behind their calculations? And how do I avoid overpaying tax and savings? Rebecca, it's a policy one, so I'll go to you on this.

31:43yeah so um essentially yes they will estimate and they will estimate based on uh the previous year or or indeed might be several previous years um and um you're right they are very slow and i've just had a lady that i've i've helped out with this um she's the wife of a client and she had had a rental property many years ago and she stopped renting it out seven years ago and um when the client came to me said oh my wife's got a problem as well can we look at it uh and she she said she's wrong and she's written and told them she hasn't got any rent uh over this seven year period and um they've continued to overtax her through paye on her private pension um and so I wrote a letter for her and she sent just before Christmas.

32:39And actually, I was staggered that she got a reply early this week. So you do need to go to HMRC and tell them. You do need to look at what they're doing. Now, I'm a bit surprised that you're saying it's not transparent because your coding notice will say why they've reduced your tax code. But it won't detail each account individually, will it, if they've got a number of accounts? No, no, it will just be. I think that's a lack of transparency. It will very often be a made-up figure, to be honest, around some. Now, unfortunately for this lady that I was helping out on a voluntary basis, we could not go back seven years and get that extra tax back.

33:20We've managed to get it back for four years, but that's why it's important you be persistent. Write a formal letter, a formal letter detailing this, go through it. It's the type of thing AI is actually good at helping you with, although obviously you check every single thing that goes on in there, to tell them that this is not on and you shouldn't be doing it and hopefully someone investigates. Let's do one last question on this. How does tax on savings interest get calculated on joint accounts? Does it get split equally? Or is there some calculation based upon, I suppose, respective tax codes?

33:52It gets split equally is the very simple answer on that one. There was another one from Jean-Ralph I wanted you to ask. OK, I had a two-year bond mature last year, but as all the interest was added to the balance on maturity, it put my interest outside of ISA's over£1 ,000. I therefore had to pay some tax. If the interest had been allocated to the two separate years, this would not have been the case. This does not seem fair, as the interest was quoted as per annum. I do watch this carefully and would have put more into an ISA if I'd realised. I wanted this question because it's something I've been looking at and campaigning on with my team, so hopefully Carrie and Rebecca agree with me.

34:27The rule on savings interest is the interest is crystallised for tax purposes in the year that you can access the interest. So if you have a fixed rate savings account, like a fixed savings bond, even if the interest is paid annually, if you can't take that interest out, then that interest has not accrued for tax purposes until the point you can withdraw it. And many fixed rates bonds where you have annual interest, you can only access the interest when you can access the money in the bond, in which case it vests for tax purposes in the year that it is all paid out. Now, if you had a bond that was paying you monthly interest into a separate account, then that would be vesting each time the monthly interest is paid.

35:12And it's very important. It's not whether you access the interest. It's not whether you take the interest. It's whether the interest is accessible. And I have concerns based on the previous thing we've been talking about, which is why I've been campaigning on it, that HMRC is often being fed information from the banks for the people who aren't doing self-assessment returns based on when the interest is paid rather than when the interest is accessible. Carrie, have you seen this? Yes, I have. And I would completely agree that the interest is only taxable when you can access it, not regardless of if you access it.

35:47So it's really important when looking at these bonds to be clear and maybe ask the providers, when can you get access to that interest? Yeah. So when you're getting a fixed rate savings account, what you need to look at is not when the interest is paid, but when the interest is accessible. Now, that may be good for you. Let's say you're two years away from retirement. You get a five year bond that's paying a decent whack of interest. You get a five year fixed savings account and invests in retirement when you're paying a lower tax rate than you currently are. that would actually mean you paid less tax for the first two years if the interest was taxable and you're above your personal savings allowance.

36:21But equally, it could work the other way around if you're going to be a high rate taxpayer later. So actually, choosing the bond sometimes based on when the interest will vest is important. And that was a tricky question for Carrie and Rebecca. Thank you so much. I'll be coming back to you in the pod only bit, which we'll be doing a little bit later. But for now, Adrian, I've got something for you. Play the theme tune.

36:46Welcome to Money Mastermind. Adrian, the score stands at 15 right and 29 wrong in this three-option multiple-choice quiz, which means you are currently... B-R-C. Better than random chance. Just. Though for this year, you're 1-0 down. OK. Well, let's take my miserable performance as a whole. OK. Adrian. Yeah. You were delighted at Christmas to receive a gift card for the Sensible Jumper Store, your very favourite brand of all brands out there. So delighted, in fact, that you decided to wait until the absolutely perfect jumper came along before committing to using this valuable commodity. Sensible.

37:29Unfortunately, that was Christmas 24. You waited and waited, and it's only now you've found the one. A medium-weight oatmeal-coloured jumper with a sensible crew neck described as ideal for layering. neither quite warm enough to be reassuring, nor thin enough to be flattering, in a fabric blend focused on durability rather than joy. Tragically, even though you've sensibly waited, when you go to pay, the retailer refuses, saying the gift card has expired. In that case, what are your legal rights? So you got it, gift cards expired. Yeah, got it. A, if you've got the original receipt, you can contact it and ask for a full refund as gift cards shouldn't expire.

38:11B, if you've got the original receipt, you can contact it and ask for a refund, but it is allowed to take legitimate reasonable administration and card costs off the refund, or C, it's expired, you have no legal rights.

38:30I think it's two. You do get it, but they've got to take a bit off you for being slow. You know, providing you've got your receipt, you can go back and they can take a fiver off for the card and£7 for admin of sorting it on your£100 gift card. I can tell. I can tell. You can't tell anything by my voice. I can tell by the relish with which you repeat what I've just said or summarise what I've just said. You can't just clarify it. No, no. I think because I know I've got it wrong by the relish with which you said prove me wrong. Well, if you've got an opportunity to change your answer. No, no, I'm going with it.

39:05No, I'll stick with my convictions. Play the utter. There we go. You were right, you were wrong. And yeah, you can't buy relish on a gift card either. The correct answer is it's expired. You have no legal rights. It's one of the reasons why I am anti-gift card and gift vouchers. Not just the fact that if they go bust, if the firm goes bust, they're worthless. But many of them have expiry dates now. Now, the information about expiry dates should have been given before the purchase. and it is good practice from the companies to have it printed on the card or the voucher on the email that you get.

39:43If expiry is based on clear terms and conditions, that is fine. When the date starts, also need to be clear. Is it from activation or is it from gift? Now, a couple of tricks for you. If you've got gift cards and you've not used them, try spending a little on them before they expire. They then often give you a new gift card for the remainder and that should hopefully have a longer expiry date. If yours has expired, well, with bigger stores, I'd ask them for an extension, particularly if it's a big brand. But finally, if it was unclear about an expiry date, then you could complain to your consumer rights.

40:14Then they may have been in breach of the law for lack of transparency about the expiry date and you might get your money back. OK, we're now into the pod extra bit and I'm delighted that both Carrie and Rebecca are staying on board with us. We're going to move next to your questions on inheritance tax. and before we get to that I want to do my basics of the five key rules for inheritance tax so you can understand it. So inheritance tax is of course a tax that the estate pays after you've died for passing assets on to those people that you have decided to leave it to or if you are intestate without a will that the state decides you should leave it to.

40:55So the first rule is that if you leave anything to your spouse or civil partner, there is no inheritance tax payable on that. It is a total exemption. You can leave all your worldly goods, however valuable they are, to your spouse or civil partner and it's fine. But note my language. Spouse means someone you are married to. Civil partner means someone you have gone through a civil partnership with. If you are cohabiting, so you're what's commonly known as a common law partner, you do not get this exemption. It is one of the biggest benefits of married life that you can pass the money across. And I've in fact now had hundreds of people who've got married after hearing me talk about this because it's just such an important financial protection.

41:38And it's not just as an exemption. Wait till I get to another point in a moment. My second point is inheritance tax on money that you've left to other people, not your spouse or civil partner, is paid above £325 ,000. Now this includes property, vehicles, bank accounts, investments and insurance policies that you leave. But you can leave£500 ,000 if you're leaving your home to your descendants because on top of the£325 ,000 allowance there's also the residence nil rate band of£175 ,000 pounds combined that's 500 ,000 so if you're leaving your home your main home to your children grandchildren or adopted children foster children stepchildren they are covered by this allowance though it does start to reduce if the estate is worth over two million pounds now we get to that next big boon big benefit of marriage or civil partnership and the important bit about civil partnership is if you're one of those anti-marriage types and there are many people out there for whatever your reason, that's up to you, that you don't like marriage.

42:42Civil partnership confers the same legal rights as marriage, but without the baggage. You don't need a big ceremony. You just go and do it. You pay for the civil partnership, whatever it is, a couple hundred quid. You get it, and that's the legal document you need. And this is the crucial bit. Your unused allowances can be passed to your spouse or civil partner. The best way I can explain this is, let's say you're worth a million pounds all in, including your property. You leave everything because you pass away to your spouse. Your spouse inherits everything because it's your spouse. It's inheritance tax free.

43:20When your spouse leaves everything to your children, well, they've got your£500 ,000 and their£500 ,000. That's a million pounds. So that's a million pounds of assets that can be left tax free to the children, no inheritance tax to pay. That's the power. If you weren't married, when your partner left you everything, you would have used their£500 ,000 allowance, and therefore, when you go and leave it on, you've only got£500 ,000. Now, as inheritance tax is 40%, 40 % of£500 ,000 is£200 ,000. In that circumstance, being married would have saved you£200 ,000. Final rule, gifting can help to reduce inheritance tax.

44:02If you live three to four years then the amount of inheritance tax you pay on anything that you've gifted would reduce after seven years there's no inheritance tax to pay on things that you have given away without reservation also gifts from your income are fine though defining income we haven't got time to go into that today and exactly how you do that it needs to be regular gifts from income that's provable and there are lots of other gift rules too but that is my basics the big change to come on inheritance tax is pensions are soon going to be subject to inheritance tax in a year or two so that will count for your estate too.

44:35How did I do, Carrie? That nicely summarises everything. And if I could maybe just add one point. It's not so much on inheritance tax, it's on spouses and wills. So if you have a married couple and they do not have wills in place, lots of people assume that because you're married, your spouse will automatically inherit everything and so the spousal IHT exemption will apply. Well, that's not the case. If you do not have a will, your spouse will only be entitled to the first£322 ,000 of your estate and half of anything over that. So if you have a large estate, maybe of a million pounds, there could be inheritance tax on first day, even though you're married because you don't have a will.

45:23Although, just as a tiny note, that's in England and Wales, the intestate rules. It's slightly different in every UK nation. and you can go on gov.uk to see where your money would go if you died without a will in each of the UK nations. Yeah, that's correct. Time for some questions then. I've got Elizabeth saying, inheritance tax, please, I don't understand the£500 ,000 limit and saying if a house is worth£350 ,000 and the rest of the estate is worth£100 ,000, is there inheritance tax to be paid? You only get the house value if it's lower than£175 ,000. So in that example of a house worth£100 ,000 and cash worth£350 ,000, there would be inheritance tax to pay.

46:05That's worth knowing. And then we've got, hmm, Rebecca, we'll do this one with you. Most people are aware of the£3 ,000 a year free gift amount. I think I'm correct in saying that if the estate isn't subject to inheritance tax, then gifts above£3 ,000 are still tax-free, assuming the estate plus gifts is still under the inheritance tax allowance. So let me try and make sure I get this right in my head. You're allowed to give away£3 ,000 in total per year, separate from it coming from income, separate from everything else, separate from the seven-year rule. That's an exemption that you have. But the point of giving it away is it doesn't count towards your estate.

46:44That's what it means, isn't it? Yes. So therefore, just working this through, if your estate wasn't going to pay tax anyway, the fact that you've given that gift is irrelevant because your estate isn't being taxable. What this would do is if you had a million pounds and you've given away£3 ,000 in a tax year, then your estate would only be£997 ,000. Yes, it would. OK, I hope that makes sense. So, hmm, which is your name, hmm, I think you are right in the way you're understanding it. Let's get a bit more complicated now. Inheritance tax and capital gains question. Property gifted in 2018, then renovated and valued after renovations.

47:25My mother-in-law was supposed to live in it or part of it as there were fewer stairs. But due to ill health, she moved into a nursing home in 2021. She mainly lived with her children between 2019 and 2021, but still paid council tax, water, gas, electrical bills for her property. When will the inheritance tax start from? When does the CGT start from if she wants to sell? It was for her forever home bought in 1963 for£1 ,000, now worth much more, but under the maximum property tax threshold. So I think what's being asked is, is this inheritance tax? Is this capital gains tax? And if she hasn't lived in it, does it count as her main property, Carrie?

48:05Well, it's an interesting question. If the mother-in-law has given away the property, because Leonard does start by saying property gifted, then that's when capital gains tax could be applicable because she has disposed of it. But if it was her main residence from when she bought it in 1963 until when she gave it away in 2018 then she should be able to claim main residence relief and there wouldn't be any CGT up to that date. For inheritance tax purposes then if she's gifted it in 2018 that was more than seven years ago and providing she didn't go back to the property, which it doesn't appear that she did, that gift has now fallen outside of her estate for HT purposes.

48:49So I've just re-read it and you're absolutely right and I was wrong in the way I phrased it. Provided she hasn't gone back to the property, this is about a gift with reservation, isn't it? Yes, it is. So you can't give your children your property and continue to live in it as if it's yours, rent-free. You'd have to pay a market rate type thing to count it as being a real gift. and market rate rate. That's correct, yes. And the gift with the reservation rules will apply forever on a gift, not just the seven years after a gift. Right. So if the mother moved back into the property, maybe 12 years after she's gifted it, that gift is pulled back into her estate, even though she made it more than seven years ago.

49:28Yeah, I mean, when you're giving it, you have to, I get, and I'm sure you see it all the time, people ask all these questions, but if I do this, and I think the general answer is, if you're trying to find a workaround, it's a gift with reservation? Yes, it's got to be a complete gift, no strings attached, and you do not expect or hope to get anything from that gifted asset in the future. Okay, we'll move on to capital gains tax now. Capital gains tax is the tax on profits if you sell an asset. So if you buy something for£10 ,000 and you sell it for£20 ,000, you've made£10 ,000 on it and that£10 ,000 is taxable.

50:09It's important to note that£10 ,000 is taxable in the year that you sold it. So you would pay the same tax. Hopefully I'm right here, Carrie. If I bought something 10 years ago for£10 ,000 and sold it for£20 ,000, I would pay the same tax as if I bought it two days ago for£10 ,000 and sold it for£20 ,000. Yes, that's correct. There's no allowance for inflation or time held. Okay, so that's important to understand. Although you do have a£3 ,000 a year limit that you can make of capital gains tax without paying tax on it, above that the rates depend on your taxpaying rate. So let's get on to Blake's question.

50:46Carrying capital losses from previous years. If I have a capital gain in the current year, can I use my allowance first or are carried losses applied before using in the year's allowance? Carrie, I think this is probably you again? The rule is that if you have brought forward capital losses from a previous year, they are offset against your current year capital gain after you have deducted your annual exemption of£3 ,000. However, if you realise the loss in the current year, current year losses come off your capital gain before the annual exemption is applied. Do you want me to give an example?

51:24The carry forward, it's worth noting, Martin, and that carry forward is actually forever, provided you've notified HMRC that you made a loss. That's always there. Right. I think I understand this. So this is about, there is a strict order of what it counts. A loss in previous years will always come after your annual exemption. A loss in the current year will come before your annual exemption. Yes. I presume that you don't have any choice in the order of which the losses are used. Will a loss in the current year come ahead of a loss from a previous year? Yes. Right. OK, I think I've got that structure.

52:00So it's loss from the current year, annual exemption, loss from previous years. That's the order, is it? Yes. We got there. Tony, with capital gains tax, there are two rates, higher rate taxpayers and basic rate taxpayer rates. Do they count the capital gains as part of your income to determine whether you're a higher rate taxpayer? I think the answer is no, isn't it, Rebecca? Becca? They're not part of your income, but in determining which rate of tax you pay, the terminology I use is they sit on top of your income. So if, for example, your income is £20 ,000, then the capital gain of£10 ,000, if that was on top of your income, that would only take you up to£30 ,000.

52:40You'd be a basic rate taxpayer on the gain. So although they're not actually income, they sit on top of the pile of income and that determines which rates you're going to pay. Okay, so let's just do this in a little bit more detail. Somebody earns£45 ,000, so they're roughly£5 ,000 short of the higher rate threshold. They make a capital gain in that year of£20 ,000. So that means if you add the capital gain, that's£65 ,000. Are they a basic rate taxpayer because their income is at the basic rate or are they a higher rate taxpayer because their income plus the capital gain is in the higher rate?

53:19So the income plus the capital gain takes them into higher rates. So the first, say,£5 ,000,£5 ,270 of the gain will be taxed at the basic rate of capital gains tax. And then the remainder, just under£15 ,000, that will be taxed at the higher rate of capital gains tax. Great. I understand. So it does total on top of each other. So if you earn nothing and you make a capital gain of a million pounds, you're going to be paying the higher rate of capital gains on most of that million pound profit. Almost a bit, yeah. Yeah. OK. And then the last one in this, Lindsay. I used inheritance to buy a bungalow when I was starting to struggle with the stairs.

54:00I moved out of the property in December 2023. It was my home for 40 years since 1983. Due to health problems, I was only able to get it on the market in August 2025. The property is just sold in January 26. Will I have to pay capital gains? I'd read somewhere that I may not have to. So it was her primary residence until December 2023, but she hasn't sold until January 26. So what is the point at which she left it for the capital gains exemption for her primary residence? Carrie? Well, she left in December 2023. So her actual occupation ceased then. Because it's been her main residence, she gets a bonus last nine months.

54:45But that would still leave some time between December 23 and the sale in January 26. And so I presume what happens in that case is any capital gains between those two periods would be taxable. Yes, I would suspect most likely. There are a few things that you would need to double check just in case there are any reliefs available. So if Lindsay is disabled or has gone into long term residential care, that last nine month bonus is actually extended to 36 months. in which case if she qualified for that the whole period of ownership would be covered by main residential relief and there would be no capital gains tax to pay.

55:30I think that's what she's read somewhere, isn't it? I think potentially yes. But again, it's very clear in the legislation Lindsay would have to be disabled or have gone into a residential care home on a long-term basis. If she doesn't fit either of those categories she would not get that extra concession. And I don't know if you know what counts as being disabled in this case. Not off the top of my head, I'm afraid. Fair enough. I think it was a brilliant answer anyway. Lindsay, that gives you something to research. Can I just add one other point there? Sorry, Martin. It's to do with the timing.

56:03She says she sold the property in January 26. If she doesn't qualify for the extra 36 months and she only gets the normal nine months, she will have made a gain on that property that might be more than her annual exemption of£3 ,000. If it is, she has 60 days from the sale completing to report the sale to HMRC and pay the capital gains tax that's due. So she needs to talk to her conveyancing solicitor or whoever sold this property for her quite quickly about this issue and see what she can do. I would also say, Lindsay, I mean, there is a question. We're talking December 23 to January 26. house prices have not risen that, you know, astronomically during that period.

56:49So you are allowed to make£3 ,000 of capital gains. So it does just depend on, you know. So let's just do this in practical terms. How does she go about? She's going to go and have to get the property valued in December 2023. How do you do that? Because it's or nine months after December 20th, September 24. if we assume she doesn't have this extra exemption, how does she get the September 24 valuation when she sold it in January 26? Who does that valuation? Well, unfortunately, Martin, the rules don't work that way. What you look at is she owned the property for 40 years and let's say she owned it for 40 years but was out of the property for two years.

57:34She's owned it for a total of 42 years. You would take the gain and divide it by 42 give her 40 years tax-free but if you like two over 42 of the gain is what would be chargeable so yeah the 1 21st of the gain since 1983 house prices have risen astronomically in that time will actually be something significant yeah yes yeah unfortunately there's no way of taking into account the value when you left okay so lindsay you need to be speaking to your converting solicitor ASAP. Right, we're going to move on. We've got a final section on pensions and tax. Let's do that one. I've got Annie first. I have some spare income and would like to open a SIP.

58:22How do I find how much I can invest and not go over my annual allowance? So most people can put up to £60 ,000, as long as they have that much income, into a pension each year, as long as you've not taken any money out of your pension in the past, in a way, because that can reduce your allowance. So how does she go about doing this practically, Carrie? Well, you made a good point there in terms of having income to support pension contributions. So the first point Annie needs to check is what are her net relevant earnings? So earnings include employment income and profits from a furnished holiday let in previous years.

58:59So she's got to have earnings to support her pension contributions. and although the annual allowance is£60 ,000, if Annie's earnings were maybe only£30 ,000, the maximum she can receive tax relief on is the£30 ,000. Once she's checked her that she's got enough earnings, you can go on to gov.uk and they have a really good calculator that allows you to calculate what annual allowance you have in the current year and plus anything that you might have carried forward from the last three years, but you're still always subject to that cap of net relevant earnings. Thank you. Linda says, Rebecca, this one's yours, so keep your ears keen for it.

59:41My husband, who is 79 years old, has worked all his life, is constantly owing the taxman money. He paid the big stamp for years, national insurance, that means, and has a small£27 a month personal pension. They state that this puts him over the tax threshold, so he owes them every year. I'm at my wits end. We need this pension, but the debt we have to pay them is getting ridiculous. We pay£100 a month towards the back tax, but we're never going to catch it up. Help, what can we do? I wrote to our MP. He was no help. Can you give us advice? So we've had someone go to their MP. Now we're stepping it up to Rebecca Bennyworth.

1:00:21Right, Martin. Well, I am a little bit puzzled by this question, because if he's got a state pension, that's almost the personal allowance. Let's say, for argument's sake, it roughly is the personal allowance. So the only other income he's got is£27 a month, which works out at£324 a year. Now, if you're paying 20 % income tax on that, that should be just shy of£65. So how we're getting to£100 a month is beyond me, Martin. And it sounds a bit as if this is old tax debt, that it's actually nothing to do with his current financial position. Because if you're paying£100 a month, that's£1 ,200 a year.

1:01:08But you would only owe less than£65 a year on this private pension. OK, I'll just throw a wobbler in something I thought of. If he's 79, he could be on the old state pension. And if he's got the the extra secondary pension from the old state pension, it could be more than the person allowance the state pension. Right. But even so, it doesn't add up. But it doesn't add up quite as badly, if you know what I mean. No, no, you're right. You're right. If he's 79, he may well have what was called SERPs. So I think I think really, if your husband is 79 and you're on a low income, I think you should be in touch with one of the tax charities.

1:01:46because somebody should be looking at this in a lot of detail to identify what's going on. It could be a mistake. MPs are usually quite good at looking at these things, so you might have got a bit unlucky, but I would recommend... But they're not technical tax experts, just like I'm not, and you can have general knowledge. But this is that older people tax charity, isn't it, that you mentioned earlier? Yes, Tax Help for Older People. OK, so, Linda, please go to Tax Help for Older People. Jenny. Hi, my partner cashed in a private pension. He received 25 % tax free and the rest was taxed at source before he received it.

1:02:22He's just had to pay another tax bill as the money went into his account and was therefore classed as income. What? We thought you should only be taxed once on the same money. Can anyone shed any light, please? Should the money be taxed twice? Before we answer that, an important note. Before you take your pension money, many people assume that you take it and 25 % of it is tax free and the rest is taxed. It doesn't work like that. It depends on the structure. So there's some structures. I always think of this like a Swiss roll. If you're just taking your money out, let's say you take a quarter of your pension money out and you just withdraw it.

1:02:56What happens? Like a Swiss roll has some jam and lots of sponge. We'll call the jam is tax free and the sponge is taxable. You can only take a slice of the Swiss roll. So you take£10 ,000 out, 25 % of it will be tax free,£7 ,500 won't. If you just wanted to take the tax free amount first and take 25 % all tax free, then you would have to take the money out, but be buying a drawdown or an annuity with the rest of the money. It's complicated. But the great news is you can go to pension wise free one on one help. And I would strongly suggest you do that before you take any money out of your pension for the first time to understand the potential tax implications, because this can cost you thousands of pounds.

1:03:38But we'll go back to Jenny's question. This seems strange. He received 25 % tax free. The rest was taxed at source. He's just has to pay another tax bill as the money went into his account. Carrie, do you know what's going on? I suspect that the taxable sum, so ignoring the tax-free, 25 % tax-free, but maybe 75 % that's taxable has maybe only been taxed at, say, the basic rate. So it's paid 20 % tax. And if actually Jenny's partner is a higher rate taxpayer, there should be 40 % tax paid on it. So there might be another amount of tax to pay on it. So it really comes down to when you're cashing in a private pension, ask the pension provider to tell you what pay as you earn coding notice they're applying to it.

1:04:25And much of the way we've talked about earlier, checking your pay as you earn coding notices, they're just as important for pensions as they are for employment income. And this is exactly the reason I said go and get advice, because let's just make this really simple. if he has£60 ,000 in his pension and earns£20 ,000. If he takes£60 ,000 in year one, a quarter of that's£15 ,000. That leaves him£45 ,000 coming from the pension that's taxable. £45 ,000 plus his£20 ,000 income takes him as a higher rate taxpayer. So he's going to be paying higher rate tax on£15 ,000 of the pension. If he had taken£30 ,000 this year and£30 ,000 next year, then all the money because it's crystallizing in two separate tax years it all the taxable income would have been at the basic rate and that just gives you an example of quite the impact that tax can have on when you take your pension and why you should get advice first to make sure that you're not unnecessarily paying thousands of pounds on the tax bill that you wouldn't have I think there's another thing, Martin, as well that's worth mentioning, is that obviously it's clear that tax is operated on the taxable element by the pension provider.

1:05:43if you take your chunk out of your pension in let's say about the middle of April the way PAYE operates is it may well assume you're going to have that income every month of the tax year so you pay a very very high amount of tax which will be due back but given it's April you don't get it back till after the end of the tax year so you're actually much better to take that money in February or March, because then most of the tax year is gone and it won't take too long. If you are overpaying on that withdrawal, then it won't take too long to get the money back. And with that nugget of glorious information, I think it draws us to a close, which means it leaves only for me to say thank you so much, brilliant both of you, Carrie Mellon, Director of OPA's Taxes Limited, and Rebecca Bennyworth, Chartered Accountant and Tax Expert.

1:06:36but I hope that has helped everybody. Now talk about a gear change from the technicals of tax to the tactics of the traitors. Just before our show started, I was sitting in the studio, Adrian was interviewing Harriet, who's newly been released from the traitors' house. Well, in a recorded sense anyway. And as he isn't an avid viewer, they said, do you have anything you want to ask her? Of course I did. You're a published crime writer. Yes. Has this given you some ideas? Has this changed you? your whole take on humanity? I think I've been surprised by myself and quite how deep I got into it. And I think that there's definitely something to look at in that, how in the right environment, people can start to believe all sorts of things.

1:07:24And so I think that that could lead to an interesting novel. But I mean, what I do know is that people are capable, if I can imagine it, people are capable of it. Congratulations. You've certainly made an impact, Harriet. Lovely talking to you. Thank you. However scrambling you found the whole experience, doing one interview after the next about it will scramble your mind more. Harriet, I'm fascinated to know. Yes. Right. I mean, you were absolutely superb, and you gave us the moment of the series so far when you went up and you called Rachel out and she was hiding behind there and her face dropped.

1:07:57Yeah. Strategically now looking back, if you could go back and speak to yourself then, what would you tell yourself to do? because you had a very good chance of getting Rachel out if you just kept it calm, I think. I think to try and keep calm. It would be not to lose my temper. I felt very isolated at that point. And I, yeah, I lost it. I didn't keep myself under control. Do you think it was the breakfast table moment with Roxy? That, that, it shouldn't have happened. It shouldn't have happened. I shouldn't have done that. I wish I hadn't. You know, I've apologised to Roxy. I think we're good.

1:08:31I mean, we were both deep in game at that moment. But I think it did lose sympathy. And also because I had been so quiet about my suspicions of Rachel up until that point, I hadn't wanted to talk about it because I thought I would be able to keep her close. But, you know, smoke and mirrors bounced me. And it was, you know, that was game over for me from that moment. I totally get what happened because I get very into my subject too. And I'm ready and you're getting all passionate and you'd built yourself up and you had your preparation ready. you were going to give the speech and you started and someone cut you off.

1:09:04And you'd obviously been thinking about it all night. What am I going to say? How am I going to bring the breakfast table to me? And Roxy cut you off. And the narrative that you had and what you'd played out in your head was suddenly a screech to a halt. And that was what you were reacting about, wasn't it? Yeah, to be honest, yeah, I didn't take very well to being shushed. And I think that because she said we've decided, and I think I said it at the table, I'm not a collective now. people couldn't speak for me anymore and I didn't want to be spoken for anymore. And that was why I saw red. But, you know, I wish I'd sort of game planned that and had worked out how not to do it.

1:09:43But, you know, we are where we are. And that's it for this week. I would like to say that I am and I have always been 100 % faithful. If you've enjoyed this week's pod, please tell your friends you've been listening to the Martin Lewis podcast and why not subscribe? and then your pockets will be pleased with you. We tend to put out a new episode every Thursday and Mondays too in our Question Time podcast, where you can ask me absolutely anything and everything. And if you haven't enjoyed it, but for some reason you've decided to listen all the way to the end, that's your problem.

1:10:32Martin Lewis is the founder of MoneySavingExpert.com. But of course, other consumer and price comparison websites are available. You can get in touch with Martin's podcast production team by emailing martinlewispodcast at bbc.co.uk. The offers and rates mentioned in the podcast are correct at the time of recording. However, if you are listening on demand, it's worth double-checking as details can date. Remember to subscribe on BBC Sounds and leave us a review however you listen. I gotta pay.