Suggestions

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Add UK income tax estimates, and tax credits for rentals interests and SIPP

First, thank you really much for developing Projection Lab which I think is a fantastic tool with a massive potential.

Many people pursuing FI in the UK have a combination of investments in property rentals, company pensions (defined contribution and/or defined benefit); and invest additionally in SIPP (Self Invested Pension Plan up to £40k year of annual pension contribution per year), and stock ISA (up to £20k per year).

To compute the income tax, the rental income is added to the salary income and taxed with brackets: Band Taxable income Tax rate Personal Allowance Up to £12,570 0% Basic rate £12,571 to £50,270 20% Higher rate £50,271 to £150,000 40% Additional rate over £150,000 45% (If you earn over £100,000, the figure of £12,570 will be reduced by £1 for every £2 earned over the £100,000 limit.)

So income from salary and rental is not very difficult to estimate and it would be great if you could consider to include it in a next release.

It would also be great to include the effect of tax credits available on rental incomes and SIPP investments as they can be material in the pursuit of FI: 1/ Rental interests tax credit: to compute your rental income you cannot deduct the interests from your mortgage as expense; but you get a 20% tax credit on your interest expenses. 2/ SIPP: When you contribute to a SIPP (i.e. contribution to self invested pension outside of your company pension - capped at the lower of your salary income and £40k a year), you get a tax credit from the government of 20% of your invested amount directly paid to the SIPP provider; and, if you are a higher/additional tax payer, you can also claim 20%/25% more from the government as tax credit. Having the capacity to know how much you can invest in a SIPP (taking into account the tax credits) to max out the £40k allowance would be awesome.

I know you can add all sorts of incomes/expenses in Projection Lab to manually replicate such tax calculations - but it would mean creating on the side an excel sheet to do the calcs and it would make running various scenarios laborious.

Many thanks in advance for considering my suggestions hoping that it will get some traction with other UK users! All the best

5 votes

Tagged as Suggestion

Suggested 12 December 2022 by user Seb

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  • 12 December 2022 Seb suggested this task

  • 12 December 2022 Kyle Nolan approved this task

  • avatar

    Agreed, I think this is quite an important addition for UK users. I’m just getting started with ProjectionLab and seeing talks of ‘Withholding Tax’ when I entered my income made me realise this isn’t really a UK version and I’d have to manually calculate things.

    Also the UK Pensions Annual Allowance has been increased to £60,000 and the Lifetime Allowance Charge Scrapped (for the moment).

    Thanks, for all the work on what looks to be an amazing product. I’m enjoying playing and figuring it all out!

    09 April 2023
  • avatar

    It’d also be great for UK users if you could model SIPP drawdown to maximise tax efficiency.

    23 April