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"Rachel Reeves says she would not "pre-empt" any downgrade (0.1-0.2%) by the OBR, and "determined that we don't simply accept the forecasts but we defy them". With reported more businesses closing than opening and rising unemployment (increase from 4.1% to 4.8%), what pro business policies can we expect: Vat cut Business rates cut Tax incentives on big ticket purchases and investment Personal tax cuts to promote spending in the economy "  | |||
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" Abolish higher rate pension contributions allowance and have a flat rate." So pensions will be taxed both going in and coming out? | |||
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" Abolish higher rate pension contributions allowance and have a flat rate. So pensions will be taxed both going in and coming out?" Emm ... no 🧐 | |||
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" Abolish higher rate pension contributions allowance and have a flat rate. So pensions will be taxed both going in and coming out? Emm ... no 🧐" So someone in the 40+% bracket will potentially pay both income tax on money before putting it into a pension, then pay income tax upon withdrawing it as income after retirement? | |||
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" Abolish higher rate pension contributions allowance and have a flat rate. So pensions will be taxed both going in and coming out? Emm ... no 🧐 So someone in the 40+% bracket will potentially pay both income tax on money before putting it into a pension, then pay income tax upon withdrawing it as income after retirement?" Who does this nonsense? If you're earning enough to be a higher rate tax payer surely there must be salary sacrifice options available? Unless this is a self employed thing? (We aren't self employed). | |||
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" Abolish higher rate pension contributions allowance and have a flat rate. So pensions will be taxed both going in and coming out? Emm ... no 🧐 So someone in the 40+% bracket will potentially pay both income tax on money before putting it into a pension, then pay income tax upon withdrawing it as income after retirement? Who does this nonsense? If you're earning enough to be a higher rate tax payer surely there must be salary sacrifice options available? Unless this is a self employed thing? (We aren't self employed)." Firstly, salary sacrifice also benefits from higher rate relief, it's simply applied "at source" (so it's invisible). Secondly, not all companies will support higher rates of sacrifice, for whatever reason. | |||
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" Abolish higher rate pension contributions allowance and have a flat rate. So pensions will be taxed both going in and coming out? Emm ... no 🧐 So someone in the 40+% bracket will potentially pay both income tax on money before putting it into a pension, then pay income tax upon withdrawing it as income after retirement?" Erm .. no They will get tax relief at a lower flat rate so those below the 40% date will get more allowance and those that earn more will get less. At present 25% of pension withdrawals are untaxed and the personal allowances apply 🤷♂️ | |||
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" Abolish higher rate pension contributions allowance and have a flat rate. So pensions will be taxed both going in and coming out? Emm ... no 🧐 So someone in the 40+% bracket will potentially pay both income tax on money before putting it into a pension, then pay income tax upon withdrawing it as income after retirement? Who does this nonsense? If you're earning enough to be a higher rate tax payer surely there must be salary sacrifice options available? Unless this is a self employed thing? (We aren't self employed). Firstly, salary sacrifice also benefits from higher rate relief, it's simply applied "at source" (so it's invisible). Secondly, not all companies will support higher rates of sacrifice, for whatever reason." You can pay up to annual salary into a pension scheme annually, payments made outside of PAYE will have the basic rate allowance added and 40% rebates are not automatic in most cases. | |||
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"Pension savings for HRT payers may further be disincentivised if the tax free cash withdrawal limit is reduced (currently £250k) and rumours of reduction to £40k. Exposing more funds to the lifetime limit which has already been reduced from £1.7m to £1.037m, with tax penalty in excess of limit. " It may discourage saving into pension funds and divert some of that money into spending and into other investments, there has been talk of incentives for investing in UK based funds to boost growth | |||
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"Rachel Reeves says she would not "pre-empt" any downgrade (0.1-0.2%) by the OBR, and "determined that we don't simply accept the forecasts but we defy them". With reported more businesses closing than opening and rising unemployment (increase from 4.1% to 4.8%), what pro business policies can we expect: Vat cut Business rates cut Tax incentives on big ticket purchases and investment Personal tax cuts to promote spending in the economy " At the end of her statement I wonder if she will repeat her lube from last year where she said this is a one off and she won't be back for more. Apparently Starmer would not repeat the pre election manifesto pledge not to increase income tax, NI and VAT | |||
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" Abolish higher rate pension contributions allowance and have a flat rate. So pensions will be taxed both going in and coming out? Emm ... no 🧐 So someone in the 40+% bracket will potentially pay both income tax on money before putting it into a pension, then pay income tax upon withdrawing it as income after retirement? Erm .. no They will get tax relief at a lower flat rate so those below the 40% date will get more allowance and those that earn more will get less. " So they will pay some tax on the money going in. Income tax less reduced relief. " At present 25% of pension withdrawals are untaxed and the personal allowances apply 🤷♂️ " But over that (assuming the 25% remains), they will be taxed on withdrawal. Ergo "potentially pay both income tax on money before putting it into a pension, then pay income tax upon withdrawing"? | |||
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" Abolish higher rate pension contributions allowance and have a flat rate. So pensions will be taxed both going in and coming out? Emm ... no 🧐 So someone in the 40+% bracket will potentially pay both income tax on money before putting it into a pension, then pay income tax upon withdrawing it as income after retirement? Erm .. no They will get tax relief at a lower flat rate so those below the 40% date will get more allowance and those that earn more will get less. So they will pay some tax on the money going in. Income tax less reduced relief. At present 25% of pension withdrawals are untaxed and the personal allowances apply 🤷♂️ But over that (assuming the 25% remains), they will be taxed on withdrawal. Ergo "potentially pay both income tax on money before putting it into a pension, then pay income tax upon withdrawing"?" The same as the current system but a change to the upper limit of relief 🤷♂️ Regardless of income everyone would still get a flat rate of relief but lower paid would get more and higher paid a little less so nobody will be taxed on money they pay in and will have a tax free amount on withdrawals 🤷♂️ Would you prefer the 25% to be capped ? Something has to change | |||
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" The same as the current system but a change to the upper limit of relief 🤷♂️ " In the current system, income is taxed, then paid into a pension, tax is effectively refunded, then that money is taxed upon withdrawal as income (except a 25% lump sum). If higher rate relief is removed, money will be taxed before going in, not all will be refunded, then more tax will apply upon withdrawal. So... Effectively... Money will be taxed twice. " Regardless of income everyone would still get a flat rate of relief but lower paid would get more and higher paid a little less so nobody will be taxed on money they pay in and will have a tax free amount on withdrawals 🤷♂️ " Lower paid get a tiny amount of free money, but higher paid will lose very significantly. Crucially, most people are at peak earning and peak contribution towards retirement. So the impact is significant, and not just "rich bastards". " Would you prefer the 25% to be capped ? Something has to change " What has to change, exactly? | |||
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" The same as the current system but a change to the upper limit of relief 🤷♂️ In the current system, income is taxed, then paid into a pension, tax is effectively refunded, then that money is taxed upon withdrawal as income (except a 25% lump sum). If higher rate relief is removed, money will be taxed before going in, not all will be refunded, then more tax will apply upon withdrawal. So... Effectively... Money will be taxed twice. Regardless of income everyone would still get a flat rate of relief but lower paid would get more and higher paid a little less so nobody will be taxed on money they pay in and will have a tax free amount on withdrawals 🤷♂️ Lower paid get a tiny amount of free money, but higher paid will lose very significantly. Crucially, most people are at peak earning and peak contribution towards retirement. So the impact is significant, and not just "rich bastards". Would you prefer the 25% to be capped ? Something has to change What has to change, exactly?" Changing tax relief will alter investment strategy for the rich. Who gets free money ? Nobody 😭😭 What's your suggestions ? Just keep borrowing ? | |||
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" Changing tax relief will alter investment strategy for the rich. Who gets free money ? Nobody 😭😭 What's your suggestions ? Just keep borrowing ?" Translation: More tax on people already paying 40%+ is the only thing left, because nobody has any ideas, least of all Labour. People paying 40% aren't necessarily rich, especially if they live within 25 miles of London. And if someone pays basic rate of tax but gets 25% "tax relief", they're getting free money. | |||
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" Changing tax relief will alter investment strategy for the rich. Who gets free money ? Nobody 😭😭 What's your suggestions ? Just keep borrowing ? Translation: More tax on people already paying 40%+ is the only thing left, because nobody has any ideas, least of all Labour. People paying 40% aren't necessarily rich, especially if they live within 25 miles of London. And if someone pays basic rate of tax but gets 25% "tax relief", they're getting free money." Who gets 25% tax relief ? Changing the pension relief isn't going to kill anyone, a balanced portfolio of investments will provide a lot more in retirement than stuffing all of it into a pension fund just to get a bit of tax relief 🤷♂️ | |||
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"She also said, "The decisions I will take at the budget don't come for free, and they are not easy - but they are the right, fair and necessary choices." Most probably an income tax raise that fucks the middle class." Now, theres an idea! | |||
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" Changing the pension relief isn't going to kill anyone, a balanced portfolio of investments will provide a lot more in retirement than stuffing all of it into a pension fund just to get a bit of tax relief 🤷♂️ " A pension is the best investment vehicle, for the average person, in which to keep a balanced portfolio of investments. It can contain stocks, bonds, commodities, property, cash, precious metals and derivatives. It encourages people to save for their retirement, which ultimately saves the government money and prevents social decline. In return, the government incentivises with tax relief. Compare it to an ISA - tax free growth on taxed income with no tax upon exit. By contrast, the pension is tax free growth on UNtaxed income, with (potentially) some tax upon exit. Removing the relief is a terrible idea. | |||
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" Changing the pension relief isn't going to kill anyone, a balanced portfolio of investments will provide a lot more in retirement than stuffing all of it into a pension fund just to get a bit of tax relief 🤷♂️ A pension is the best investment vehicle, for the average person, in which to keep a balanced portfolio of investments. It can contain stocks, bonds, commodities, property, cash, precious metals and derivatives. It encourages people to save for their retirement, which ultimately saves the government money and prevents social decline. In return, the government incentivises with tax relief. Compare it to an ISA - tax free growth on taxed income with no tax upon exit. By contrast, the pension is tax free growth on UNtaxed income, with (potentially) some tax upon exit. Removing the relief is a terrible idea." The problem with these savings plans is the government move the goalposts once you have the policy/plan/scheme Gordon brown took £5bn a year (the estimated sum when introduced in 1997) by taking the formerly tax free dividend credits, this has taken billions from these schemes (£40bn by 2004) probably in excess £250bn now. He also changed the earliest retirement date from age 50 to 55 which messed up people who had pension mortgages (using the tax free cash for mortgage repayment) The former lifetime limit that was introduced at £1.7m was dropped to £1.037m, with a tax charge of 55% on excess funds (this was abolished in 2024) From April 2027, most unused pension pots and death benefits will be included in a person's estate and become subject to Inheritance Tax currently charged at 40% and the iht threshold has not been increased since 2009, and will not be until at least 2030. Collectively big grabs from peoples pensions. Next it’s looking possible that tax relief on contributions and the amount of tax free cash may be changed. | |||
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" Collectively big grabs from peoples pensions. Next it’s looking possible that tax relief on contributions and the amount of tax free cash may be changed. " The UK is doing the opposite of what other countries are doing to make people less reliant on the state in retirement. It's like they want people to be dependent on the state and live hand-to-mouth. It's also on-track to have the highest retirement age of any country. Truly a miserable place in which to age. | |||
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"Disincentivising private pension participation is a false economy, what the government claws back will be outstripped at the other end by people not having sufficient funds in retirement and taking more out of the state in the various benefits they will be claiming. Those who don’t need to use benefits but will have a reduced pension income will simply spend less to live, therefore contributing less to the economy. " By far the biggest issue is that most people contribute the most to their pensions in their later earning years, when they're most likely to be in a higher income bracket. Take someone who is fifty, just been promoted to senior manager and had a pension pot of 100k. Kids have now left home and there's extra money to save up. Currently, they can make contributions that are effectively tax free, enabling them to retire with a modest income. Should the higher rate relief be abolished, this becomes much less attractive (in fact, in some cases, ISAs could be superior, due to their flexibility). When people see "higher rate payers" (8.3 million), they often think "wealthy". That's often not the case. And it doesn't mean that only 8.3 million Britons will be in that bracket, that's a snapshot. Many people in their 20s, 30s and even 40s will eventually achieve that. And potentially be taxed just as they want to dramatically increase their pension contributions. If the chancellor removes higher rate tax relief, it will hurt millions of non-wealthy working Britons and, ultimately, a future government and economy. | |||
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"Disincentivising private pension participation is a false economy, what the government claws back will be outstripped at the other end by people not having sufficient funds in retirement and taking more out of the state in the various benefits they will be claiming. Those who don’t need to use benefits but will have a reduced pension income will simply spend less to live, therefore contributing less to the economy. By far the biggest issue is that most people contribute the most to their pensions in their later earning years, when they're most likely to be in a higher income bracket. Take someone who is fifty, just been promoted to senior manager and had a pension pot of 100k. Kids have now left home and there's extra money to save up. Currently, they can make contributions that are effectively tax free, enabling them to retire with a modest income. Should the higher rate relief be abolished, this becomes much less attractive (in fact, in some cases, ISAs could be superior, due to their flexibility). When people see "higher rate payers" (8.3 million), they often think "wealthy". That's often not the case. And it doesn't mean that only 8.3 million Britons will be in that bracket, that's a snapshot. Many people in their 20s, 30s and even 40s will eventually achieve that. And potentially be taxed just as they want to dramatically increase their pension contributions. If the chancellor removes higher rate tax relief, it will hurt millions of non-wealthy working Britons and, ultimately, a future government and economy." Whatever they do will hurt millions or no wealthy working people. It's a matter of balance, tax and vat hurts today and for working people pension changes are deferred for another day. I'm glad I'm retired and got all the benefits of fantastic pension growth before 2020 and a great financial advisor, and yes, 40% tax relief too but times they have changed unfortunately. At the moment they don't want you to save they want you to spend to boost the economy, and are trying to devise ways to divert that spending to benefit the UK economy and not just imports, one example discussed was to try to shift savings toward inward investments maybe UK based share isas ? Getting a rebate on your pension payment is no use if there's not enough sustained growth in the fund and at present most (certainly mine) is largely invested outside the UK and towards emerging markets which doesn't help the UK. | |||
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"The biggest issue will come if the rumours regarding removing the salary sacrifice option come to fruition." I don't think they'll do away with it but it'll be capped | |||
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"Rumours say that it's going to be a 2% increase in income tax for all bands and a 2% decrease in NI. So working people will continue to pay the same tax overall. Others who don't pay NI will pay more than they used to." I can see that happening. There would be no real impact until earning over 60k so that keeps the pledge alive, in a fashion... However as you mentioned, anyone living off a pension or investments would be worse off, which keeps the politically motivated hard left happy. | |||
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"and then she sends 5 million to jamaica... so much for the 40 billion black hole eh? " Oh, come on! 5 million is hardly anything in this day and age. It is five out of nearly a hundred houses in the road behind me. A miniscule fraction of the damage done by the hurricane in Jamaica and elsewhere. Whats that phrase? "It's the least we could do" | |||
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"and then she sends 5 million to jamaica... so much for the 40 billion black hole eh? Oh, come on! 5 million is hardly anything in this day and age. It is five out of nearly a hundred houses in the road behind me. A miniscule fraction of the damage done by the hurricane in Jamaica and elsewhere. Whats that phrase? "It's the least we could do"" why is it the least we could do? We shouldnt be sending money to anyone and wasnt it Jamaica that voted to cut ties with us last year? | |||
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"Rachel Reeves says she would not "pre-empt" any downgrade (0.1-0.2%) by the OBR, and "determined that we don't simply accept the forecasts but we defy them". With reported more businesses closing than opening and rising unemployment (increase from 4.1% to 4.8%), what pro business policies can we expect: Vat cut Business rates cut Tax incentives on big ticket purchases and investment Personal tax cuts to promote spending in the economy " She's bound to defy gloomy predictions, Mrs x | |||
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