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Documentation

George

Everything you need to know about how giltedge works — tax engine, methodology, your rights, and the small print.

giltedge takes tax seriously — because getting it broadly right matters more than ignoring it entirely. Here's what we model, how we model it, and where we've made simplifications.

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Income Tax

What we do
  • ✓UK Income Tax using the personal allowance (£12,570), basic rate (20%), higher rate (40%) and additional rate (45%).
  • ✓Your tax band is worked out from your actual income in each tax year, so it changes as your income does — it is not a setting you choose once.
  • ✓The personal allowance is tapered away above £100,000, at £1 for every £2 of income, and reaches nil at £125,140.
  • ✓Income is taxed in the correct order: earnings, pensions and rent first, then savings interest, then dividends — which is what determines the rate each slice pays.
  • ✓The personal savings allowance (£1,000, £500 or nil depending on your band) and the dividend allowance are both applied.
  • ✓Employment income taxed via a PAYE-style calculation running monthly throughout the projection.
  • ✓Pension drawdown tax withheld at basic rate at source. Any higher or additional rate liability is caught in an annual true-up the following January — matching how pension providers actually operate.
What we simplify
  • ~The January true-up is a reconciliation of the year's liability against tax already paid. It is not a full self-assessment return.
  • ~Marriage allowance is not modelled.
  • ~The starting rate for savings, which can apply on very low incomes, is not modelled.
  • ~We model England, Wales, Scotland and Northern Ireland rates only.
  • ~Rates and thresholds are those in force now. Future changes are not projected.
NI

National Insurance

What we do
  • ✓Class 1 employee NI contributions are calculated on employment income at the primary threshold and main rate.
  • ✓NI stops when employment income ends — for example, at retirement.
  • ✓There is no NI on pension income, investment income or property income. That is not a simplification — NI genuinely does not apply to these.
  • ✓Income you enter as net of tax carries no NI, because it has already been deducted at source.
What we simplify
  • ~We do not model Class 2 or Class 4 NI for self-employed users.
  • ~We use current NI thresholds and rates. Future rate changes are not projected.
⚙

Pension Drawdown Tax

What we do
  • ✓Uncrystallised SIPPs and workplace pensions: 25% tax-free / 75% taxable split on drawdown, with basic rate withheld on the taxable portion.
  • ✓Crystallised pensions — where there is no remaining tax-free entitlement — are modelled as 100% taxable. Flag a pension as crystallised when entering it.
  • ✓The taxable slice joins the rest of your income for the year, so drawdown that pushes you into a higher band is taxed at that band in the January true-up.
  • ✓Drawdown appears as income on the Income chart at the net amount that actually reaches your cash.
What we simplify
  • ~UFPLS (Uncrystallised Funds Pension Lump Sum) is modelled correctly — 25% of each withdrawal is tax-free, the remainder taxed as income. Set a crystallisation date on the pot under Assets to switch to fully-taxable treatment from that date.
  • ~PCLS (Pension Commencement Lump Sum) is modelled as a one-off income row of type PCLS — the full amount comes out tax-free up to your remaining Lump Sum Allowance. The check uses the pot's projected balance at the withdrawal date as a proxy for its value at the crystallisation date; for best results, set both dates to the same month.
  • ~The Lump Sum Allowance (£268,275 lifetime) is tracked across UFPLS and PCLS withdrawals. Enter any allowance already used before your projection starts under Settings → Profile.
  • ~The 25% cap on the PCLS — the amount cannot exceed 25% of the pot's value at crystallisation — is not yet enforced. The pot lookahead warns if the request exceeds the projected pot balance, but does not compute 25% of that balance as a ceiling.
  • ~Annuity income is modelled as a regular income stream without annuity-specific tax treatment.
  • ~Defined benefit pensions are modelled as income streams without the underlying pension liability calculation.
%

Capital Gains Tax

What we do
  • ✓CGT is charged at 18% if you are a basic rate taxpayer and 24% if you are a higher or additional rate taxpayer, using your band for that tax year.
  • ✓The annual exempt amount (£3,000) is applied per person, per tax year, and refreshes each 6 April.
  • ✓Selling an asset uses what you actually paid for it as the cost basis. For something you already held when you started, that is its value at the point you entered it.
  • ✓CGT is settled the following January, matching Self Assessment — not deducted at the point of sale.
  • ✓Second homes, buy-to-lets and other chargeable property produce a gain on disposal. Your main residence does not.
  • ✓Investments held in an ISA produce no gain. Neither does anything else inside a tax-free wrapper.
What we simplify
  • ~Withdrawals from investments use a "gain proportion" assumption — the share of the withdrawal treated as gain rather than returned capital. Actual disposals of an asset use the real cost basis instead.
  • ~Assets exempt for their own reasons — a classic car or a boat as a wasting asset, or chattels below £6,000 — are not yet distinguished, so a gain on them would be treated as chargeable.
  • ~Bed and ISA / Bed and SIPP strategies are not modelled.
⟳

Inheritance Tax

What we do
  • ✓Your projected estate is compared against the nil rate band (£325,000 per person) and the residence nil rate band (£175,000 per person).
  • ✓The residence band is tapered away above £2m, at £1 for every £2 over — so it is lost entirely at £2.35m for one person, or £2.7m for a couple.
  • ✓The residence band requires a residence. With no property in the estate, it does not apply.
  • ✓Both bands double where you are planning jointly.
  • ✓Pension funds are included in the estate, reflecting the change taking effect from 6 April 2027.
  • ✓The How Much? card shows the position on your current plan and after any extra spending you model.
What we simplify
  • ~The residence band should be capped at the value of the residence being passed on. We apply the full band regardless, so a modest home attracts more relief than it should.
  • ~Business property relief, agricultural relief and the seven-year gifting rule are not modelled.
  • ~Gifts you make reduce your estate as spending, but we do not model whether a gift is exempt, a potentially exempt transfer, or immediately chargeable.
  • ~A married couple may nominate only one main residence between them. We do not currently enforce that.
  • ~Trusts and complex estate structures are outside scope.
✓

ISAs & Tax-Free Wrappers

What we do
  • ✓Stocks & Shares ISA investments grow tax-free — no income tax on dividends, no CGT on disposal.
  • ✓Cash ISAs modelled without tax on interest.
  • ✓Premium Bonds, VCTs and pension wrappers are treated the same way: growth and withdrawals inside them are not taxed.
What we simplify
  • ~We do not enforce the annual ISA subscription limit within the projection.
  • ~Junior ISAs, Lifetime ISAs and Innovative Finance ISAs are not specifically modelled.
  • ~Premium Bond prizes are modelled as a rate of return rather than as a lottery.

What we don't model (yet)

  • –Self-employed tax — Class 2/4 NI, overlap profits and transitional year adjustments
  • –International tax — non-UK income, foreign pensions, double tax treaties
  • –Marriage allowance and the starting rate for savings
  • –Student loan repayments, which are deducted as a proportion of income above a threshold
A note on accuracy

Tax law changes. Rates change. Your circumstances change. We update the engine when significant changes occur, but we can't guarantee the model reflects every budget announcement in real time.

giltedge is a planning tool, not a tax return. Use it to understand the shape of your financial future. For specific tax advice, speak to a qualified tax adviser.