New Investment Income

New sources of investment income are taxed in a strange and confusing way. Normally, tax on investment income is due in the year after the income is received.

However, when a source of investment income ends, by law no tax can be collected after it has ceased. These two rules together would mean that a year's investment income was never taxed. So the Inland Revenue adopt a special rule and tax one of the early years twice.

The method works in this way.

In the first two years, you are normally taxed on the income in the year you receive it.

In the third year, you are normally taxed on the income received in the previous year. So you are taxed twice on the same second year's income. However, you can choose to pay tax on your third year's income instead in that year.

But if you make that choice, then in the fourth year you must be taxed on the previous year's income - that is, the third year's income.

Please remember this website is for informational purposes only and does not constitute professional financial advice.


More information - Second Or The Third Year's Income

or Income On Top Of Basic Pension

Second Or The Third Year's Income

/retirement/pensions/income/advice/second-or-the-third-years-income.php... see: Second Or The Third Year's Income