Tax relief on pensions reduced

[anonymous-user]

[redacted]

[Eric Mc]

Although the pension industry could do without another kick in teeth from government.

[Adrian W]

I wonder how many people are putting more than £50000 per year in

[RichardD]

Adrian W said:

I wonder how many people are putting more than £50000 per year in

5% of the population but 95% of Pistonheaders?

[Adrian W]

Lets hope the next move isn't the tax relief at the basic rate for 40% taxpayers that has been muted and this turns out to be just the warm up.

[Eric Mc]

Adrian W said:

Lets hope the next move isn't the tax relief at the basic rate for 40% taxpayers that has been muted and this turns out to be just the warm up.

Mooted.

[JagLover]

anonymous said:

[redacted]

Agreed as far as a normal contribution based pension scheme is concerned. Government tax relief on pensions should be to provide a 'reasonable' income in retirement, not be a means of tax planning. A £50k a year limit hekps achieve that.

The only issue I can see is with final salary pension schemes and employees who are by no means 'rich' receiving large tax liabilities as a reesult of pay rises of a few thousand.

[Digga]

RichardD said:

Adrian W said:

I wonder how many people are putting more than £50000 per year in

5% of the population but 95% of Pistonheaders?

I know of a few people who use a SIPP to buy and rent large portfolios of industrial and commercial property. If I understand it correctly, the incomming rental payments enjoy the benefit of tax relief.

Still fk em. They buy all the land that comes up for sale - first dabs because they're on this, that and the other planning or council comittee and play golf with everyone who counts - on less than 'arm's length' terms I'm sure...

Edited by Digga on Thursday 14th October 11:07

[Andy Zarse]

anonymous said:

[redacted]

I had always thought that setting aside money for your retirement was a socially responsible thing to do, rather than relying on the State. It seems that this was an incorrect assumption.

This piece of legislation is a complete kick in the teeth to ordinary people. You know, folk who work hard and build their own businesses but who often find they don't have the cash to put into a pension over a period of years, nor do they have a generous employer, you know, like MP's and civil servants. These people have for years relied on the sensible rules previously in place that allowed for those selling a business to make a large one off pension contribution. A kind of "once in a lifetime" opportunity.

Bearing in mind the average civil servant retires on a pittance (index linked) pension of £5,700pa the cost of buying this on the open market is, strangely, about £230,000. In otherwords, it's okay for a state employee to have this fund but not those who pay their bills. It seems the Govt's stupid short-sighted rules are just one more reason not to start a business in the UK.

I'm surprised by the socialist and envious attitudes posts in this thread.

[Fittster]

RichardD said:

Adrian W said:

I wonder how many people are putting more than £50000 per year in

5% of the population but 95% of Pistonheaders?

Seems awfully high percentage to me. Are there really more than 3,000,000 people saving more than 50K a year? I'd be fairly shocked if there were more than 3 million people earning more than 50K a year


And for the record, no I don't put anywhere near that amount into my pension each year.

Edited by Fittster on Thursday 14th October 12:03

[RichardD]

Fittster said:

RichardD said:

Adrian W said:

I wonder how many people are putting more than £50000 per year in

5% of the population but 95% of Pistonheaders?

Seems awfully high percentage to me. Are there really more than 3,000,000 people saving more than 50K a year? I'd be fairly shocked if there were more than 3 million people earning more than 50K a year

Well the clowny face and the question mark hinted, but it was just a totally made up figure by me from no real knowledge or research whatsoever.

I think you have pointed out though the lack of accuracy and I would therefore amend it to 1% of the population and 99% of Pistonheaders (you see the pattern there))?

Unless I've misread some posts on here - it seems people are complaining because they are missing out the yearly aspect ?

[Ozzie Osmond]

Looks like a sensible change to me.

The people who may have some small justification for squealing are those with very "lumpy" incomes. Say, moinor sportsmen or popstars whose lifetime earnings are moderate but they have a couple of very good years when they make the big bucks.

Anyway, I agree it makes no sense to give the greatest tax relief to the wealthiest people!

[deadslow]

Andy Zarse said:

I'm surprised by the socialist and envious approach of the Tory government.

EFA

Socialism is the new conservatism?

[youngsyr]

Ozzie Osmond said:

Looks like a sensible change to me.

The people who may have some small justification for squealing are those with very "lumpy" incomes. Say, moinor sportsmen or popstars whose lifetime earnings are moderate but they have a couple of very good years when they make the big bucks.

Anyway, I agree it makes no sense to give the greatest tax relief to the wealthiest people!

Most of these types of people who earn enough to put over £50K per year away in pension contributions will be paid through management companies, so wouldn't be affected anyway with a bit of planning.

[F i F]

Only jaglover and tonker on this thread have picked up on the real hit, which was done in the dying days of New Labour but carried on by Lib-cons. It's a classic piece of political spin, announcing it in such a way that Joe Public will think as so many on here have done, "Oh it's just for some few rich gits" when in reality it will hit people hard who are by no means wealthy. Middle squeezed again.

It concerns the different way that tax bills will have to be paid on pension benefits before they are received and people’s ability to top-up their savings with redundancy lump sums in the year of their retirement will be restricted.

More detail here New pension tax means HMRC will get most of some pay rises

and here Middle classes hit again with tax raid on pensions

[Andy Zarse]

anonymous said:

[redacted]

Where on earth do you get your stats from? The BBC?

100,000 people? When? Ever? Each year?

Apart from deconstructing your figures, it's the principle that wrankles as much as anything. It signals another break in the social contract between State and citizen, another little wedge telling ordinary people not to bother with a pension.

Let's say you sell your little High St retail business for £300k and had planned to chuck a couple of hundred grand into a SIPP to pay for a modest old age pension, well now you can't. So frankly, you might as well go to Spain and piss it up the wall and then get home and on the phone to the Pensions Credit people for means testing.

The whole thing is disgusting, I'm surprised people here can't see through the "fat cat" media bluster; this affects ordinary people most, not just the mega-rich.

[Victor McDade]

Re the 100k figure, this came from the government. PwC are quoted in today's Telegraph saying 500,000 will be affected.

So I guess the true figure is somewhere in between.

[Andy Zarse]

anonymous said:

[redacted]

Pay in £50k a year when you've given up work, and presumably wanting to draw a pension too? Sorry mate, can't do that. Not allowed.

The irony of your second comment is that pesnions vehicles have actually never offered better value for money than they do just now.

[Fittster]

F i F said:

Only jaglover and tonker on this thread have picked up on the real hit, which was done in the dying days of New Labour but carried on by Lib-cons. It's a classic piece of political spin, announcing it in such a way that Joe Public will think as so many on here have done, "Oh it's just for some few rich gits" when in reality it will hit people hard who are by no means wealthy. Middle squeezed again.

It concerns the different way that tax bills will have to be paid on pension benefits before they are received and people’s ability to top-up their savings with redundancy lump sums in the year of their retirement will be restricted.

More detail here New pension tax means HMRC will get most of some pay rises

and here Middle classes hit again with tax raid on pensions

The trouble is normal people (e.g. Not Eric) can't make sense of the following:

"Andrew Cawley, head of pensions at accountants KPMG, explained: “Take, for example, someone who has been a member of a final salary scheme for 25 years, earning £50,000 a year, who is promoted with a pay rise to £60,000.

“His accrued pension at the start of the year is 25 sixtieths of £50,000 or £20,833. But his accrued pension at the end of the year is 26 sixtieths of £60,000 or £26,000.

“He has therefore increased the value of his pension by £5,167 times 15 or £77,505. This is more than the annual allowance, so he will suffer tax at 40 per cent on £37,505 or £15,002. So his tax charge will exceed his gross salary increase.”

[Andy Zarse]

Fittster said:

F i F said:

Only jaglover and tonker on this thread have picked up on the real hit, which was done in the dying days of New Labour but carried on by Lib-cons. It's a classic piece of political spin, announcing it in such a way that Joe Public will think as so many on here have done, "Oh it's just for some few rich gits" when in reality it will hit people hard who are by no means wealthy. Middle squeezed again.

It concerns the different way that tax bills will have to be paid on pension benefits before they are received and people’s ability to top-up their savings with redundancy lump sums in the year of their retirement will be restricted.

More detail here New pension tax means HMRC will get most of some pay rises

and here Middle classes hit again with tax raid on pensions

The trouble is normal people (e.g. Not Eric) can't make sense of the following:

"Andrew Cawley, head of pensions at accountants KPMG, explained: “Take, for example, someone who has been a member of a final salary scheme for 25 years, earning £50,000 a year, who is promoted with a pay rise to £60,000.

“His accrued pension at the start of the year is 25 sixtieths of £50,000 or £20,833. But his accrued pension at the end of the year is 26 sixtieths of £60,000 or £26,000.

“He has therefore increased the value of his pension by £5,167 times 15 or £77,505. This is more than the annual allowance, so he will suffer tax at 40 per cent on £37,505 or £15,002. So his tax charge will exceed his gross salary increase.”

Surely that's just basic maths? An eleven year old could understand it! Ahem!

It would be interesting to see how this affects MPs suddenly being promoted to Minister... and then what happens when they get sacked and revert to a lower MP's salary?