Pension tax relief
Discussion
Being personally impacted by HMRC incompetence recently made me wonder if they plan to replace the higher reliefs with basic rate.
https://www.telegraph.co.uk/money/tax/income/hmrc-...
Presumably worth stuffing as much as possible into your pensions before the Octobertheft budget announcements…? Friend of mine is considering maxing out his credit cards in order to pay into a SIPP before Rachel starts thieving again. Possibly the only time where credit card debt can be good?
https://www.telegraph.co.uk/money/tax/income/hmrc-...
Presumably worth stuffing as much as possible into your pensions before the October
I’ve dumped some decent chunks in over the last few years (which I’m quite thankful for) and can see the benefit of doing so again if she’s really going to cut the tax saving back to basic rate.
But will she actually do it?
It seems beyond daft to disincentivise people from saving into their private pensions as well as essentially creating a double taxation situation (or even treble if you consider the recent IHT changes).
I think it’d mean that someone putting money into their pension, dying without withdrawing it but over the age of 75, and then passing it on to someone who also pays higher rate tax would essentially have >100% tax rate on it…..not very smart.
My guess is that this one won’t happen this time round but who knows ?
But will she actually do it?
It seems beyond daft to disincentivise people from saving into their private pensions as well as essentially creating a double taxation situation (or even treble if you consider the recent IHT changes).
I think it’d mean that someone putting money into their pension, dying without withdrawing it but over the age of 75, and then passing it on to someone who also pays higher rate tax would essentially have >100% tax rate on it…..not very smart.
My guess is that this one won’t happen this time round but who knows ?
George Osborne launched a consultation ten years ago which went into great detail about how changes to pension tax reliefs would work. As I recall, the plans weren't implemented because of the threat of a backbench rebellion and the difficulty of implementation.
https://www.gov.uk/government/consultations/streng...
At the time I felt there was a reasonable chance of this being implemented and I significantly increased my contributions Of course I was wrong but I'm glad I did it anyway as it spurred me into action for additional pension saving.
The Osborne proposal avoids the double taxation issue by making all withdrawals exempt from tax. I think Lifetime ISAs were born out of this proposal.
Shifting to such a scheme would involve major upheaval for the whole DC/SIPP/Master Trust pensions industry, payroll firms, accountants and for almost all employers.
On top of that you have the thorny problem of how to deal with DB schemes where there is no tax relief which would have massive impact to public sector pay. Alternatively it could be implemented on DC/SIPP schemes only which would p
s off millions of private sector workers.
https://www.gov.uk/government/consultations/streng...
At the time I felt there was a reasonable chance of this being implemented and I significantly increased my contributions Of course I was wrong but I'm glad I did it anyway as it spurred me into action for additional pension saving.
The Osborne proposal avoids the double taxation issue by making all withdrawals exempt from tax. I think Lifetime ISAs were born out of this proposal.
Shifting to such a scheme would involve major upheaval for the whole DC/SIPP/Master Trust pensions industry, payroll firms, accountants and for almost all employers.
On top of that you have the thorny problem of how to deal with DB schemes where there is no tax relief which would have massive impact to public sector pay. Alternatively it could be implemented on DC/SIPP schemes only which would p
s off millions of private sector workers.fat80b said:
I’ve dumped some decent chunks in over the last few years (which I’m quite thankful for) and can see the benefit of doing so again if she’s really going to cut the tax saving back to basic rate.
But will she actually do it?
It seems beyond daft to disincentivise people from saving into their private pensions as well as essentially creating a double taxation situation (or even treble if you consider the recent IHT changes).
I think it’d mean that someone putting money into their pension, dying without withdrawing it but over the age of 75, and then passing it on to someone who also pays higher rate tax would essentially have >100% tax rate on it…..not very smart.
My guess is that this one won’t happen this time round but who knows ?
Might want to explain how >100% tax would be payable. In detail, please..But will she actually do it?
It seems beyond daft to disincentivise people from saving into their private pensions as well as essentially creating a double taxation situation (or even treble if you consider the recent IHT changes).
I think it’d mean that someone putting money into their pension, dying without withdrawing it but over the age of 75, and then passing it on to someone who also pays higher rate tax would essentially have >100% tax rate on it…..not very smart.
My guess is that this one won’t happen this time round but who knows ?
Count897 said:
Telegraph has similar conjecture on the run up to every budget.Gassing Station | Finance | Top of Page | What's New | My Stuff