Flat rate pension tax relief question
Discussion
Afternoon folks.
There has been lots of articles the media about ways to pay for Covid-19. The latest proposal is to cut pension tax relief for people paying higher rates of income tax.
I am a 41% tax payer (I'm based in Scotland) and I pay money into my company pension scheme every month from my PAYE salary. I receive tax relief at source at my highest tax rate.
My question is, if pension tax relief is reduced from 41% to say 25% as a flat rate for everyone will that apply to both my contributions AND my employers contributions?
Thanks in advance.
There has been lots of articles the media about ways to pay for Covid-19. The latest proposal is to cut pension tax relief for people paying higher rates of income tax.
I am a 41% tax payer (I'm based in Scotland) and I pay money into my company pension scheme every month from my PAYE salary. I receive tax relief at source at my highest tax rate.
My question is, if pension tax relief is reduced from 41% to say 25% as a flat rate for everyone will that apply to both my contributions AND my employers contributions?
Thanks in advance.
Many employers operate a salary sacrifice pension contribution anyway (so the employee technically doesn't make a contribution and has a 'lower' basic salary and the employer pays what the employee would have paid - saves on NICs). So if the policy you mention were to be introduced it would be too easy to work around and avoid unless employer contributions were also subject to the same.
Anyway - all speculation and guesswork just now
Anyway - all speculation and guesswork just now
As above - it’s not really worth speculating on until / if it happens. This has Been leaked to the media for years to gauge public reaction, it would be much fairer, IMO. Pension tax relief overwhelmingly favours the better off.
As for your question - your employers contributions aren’t taxed anyway, they’re part of your remuneration package but don’t form part of your taxable salary.
In a situation where a flat rate of tax relief was applied, I would imagine rules around Salary sacrifice would have to be altered - as it’s an easy side step around pension tax relief
As for your question - your employers contributions aren’t taxed anyway, they’re part of your remuneration package but don’t form part of your taxable salary.
In a situation where a flat rate of tax relief was applied, I would imagine rules around Salary sacrifice would have to be altered - as it’s an easy side step around pension tax relief
I would stop paying additional contributions. If I only received 20% relief from any additional voluntary contribution, I would pay tax on the remaining 20% when I draw my pension, in effect, wiping out any benefit to paying into a avc..
Where as currently, I receive 40% relief, when I draw my pension I’ll pay 20% tax.
There’s no benefit, other than increasing my pension pot size, which would have to return a bigger percentage than my costs, which is unlikely.
Personally, I think it’s a stupid idea.
Where as currently, I receive 40% relief, when I draw my pension I’ll pay 20% tax.
There’s no benefit, other than increasing my pension pot size, which would have to return a bigger percentage than my costs, which is unlikely.
Personally, I think it’s a stupid idea.
Edited by Tlandcruiser on Sunday 22 November 08:54
Stay in Bed Instead said:
Welshbeef said:
I think it would be labelled “levelling up” ....
Oh, you mean take from the perceived rich and give to the perceived poor.Are you happy for income tax to go up say 5% on all tiers plus the clap for NHS higher NI (or when you clapped that was as far as you were willing to go.
Welshbeef said:
Yes but overall it raises tax - we have £2trillion to pay off and building.
Are you happy for income tax to go up say 5% on all tiers plus the clap for NHS higher NI (or when you clapped that was as far as you were willing to go.
Does a flat rate of 25% tax relief equate to a net tax receipt for the exchequer?Are you happy for income tax to go up say 5% on all tiers plus the clap for NHS higher NI (or when you clapped that was as far as you were willing to go.
Yes, I would prefer that everybody contributes to all the money the government have spaffed up the wall rather than a select category of them disproportionately.
I have never clapped the NHS and don't intend to start now.
Stay in Bed Instead said:
Does a flat rate of 25% tax relief equate to a net tax receipt for the exchequer?
Yes, I would prefer that everybody contributes to all the money the government have spaffed up the wall rather than a select category of them disproportionately.
I have never clapped the NHS and don't intend to start now.
You seem to suspect 25% is net neutral to the govt what makes you think that? Yes, I would prefer that everybody contributes to all the money the government have spaffed up the wall rather than a select category of them disproportionately.
I have never clapped the NHS and don't intend to start now.
Fair enough you didn’t clap for them but hopefully you want them to be paid more\ a reward for life at risk on the front line
Welshbeef said:
You seem to suspect 25% is net neutral to the govt what makes you think that?
Fair enough you didn’t clap for them but hopefully you want them to be paid more\ a reward for life at risk on the front line
I don't suspect anything, I asked you to prove your claim.Fair enough you didn’t clap for them but hopefully you want them to be paid more\ a reward for life at risk on the front line
No, I don't want them specifically rewarded for doing the job they are paid to do. The virus is not deadly to 99.5% of people.
Stay in Bed Instead said:
I don't suspect anything, I asked you to prove your claim.
No, I don't want them specifically rewarded for doing the job they are paid to do. The virus is not deadly to 99.5% of people.
https://www.google.co.uk/amp/s/www.thisismoney.co.uk/money/pensions/article-7987173/amp/Will-pension-tax-relief-slashed-20-all.htmlNo, I don't want them specifically rewarded for doing the job they are paid to do. The virus is not deadly to 99.5% of people.
Well this source for 20% stated a £10billion raid on pensions/tax rose of £10billon.
Not interested in your beliefs or concerns on the virus but you seem to think the BHS workers are well paid.... are you a comedian? If it was so well paid why are there tens of thousands of vacancies for Nurses and GPS are exiting left right and centre oh and to fill gaps we as the U.K. have been taking qualified staff from countries who themselves desperately need medical people + they have funded their education.
Welshbeef said:
https://www.google.co.uk/amp/s/www.thisismoney.co....
Well this source for 20% stated a £10billion raid on pensions/tax rose of £10billon.
Not interested in your beliefs or concerns on the virus but you seem to think the BHS workers are well paid.... are you a comedian? If it was so well paid why are there tens of thousands of vacancies for Nurses and GPS are exiting left right and centre oh and to fill gaps we as the U.K. have been taking qualified staff from countries who themselves desperately need medical people + they have funded their education.
Yes, but how does giving an extra 5% to basic rate tax payers affect that?Well this source for 20% stated a £10billion raid on pensions/tax rose of £10billon.
Not interested in your beliefs or concerns on the virus but you seem to think the BHS workers are well paid.... are you a comedian? If it was so well paid why are there tens of thousands of vacancies for Nurses and GPS are exiting left right and centre oh and to fill gaps we as the U.K. have been taking qualified staff from countries who themselves desperately need medical people + they have funded their education.
I'm sure an interesting thread can be had on NHS pay. NP&E would probably be best.
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