Pension tax relief
Pension tax relief
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Discussion

Count897

Original Poster:

496 posts

9 months

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 October theft 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?



Mr Squarekins

1,356 posts

78 months

Err, won't that money that he borrows already have been taxed? So putting into pension makes no sense, or am I missing something?

Count897

Original Poster:

496 posts

9 months

Mr Squarekins said:
Err, won't that money that he borrows already have been taxed? So putting into pension makes no sense, or am I missing something?
If you pay into a SIPP the provider will add 20% basic rate relief and you can reclaim the rest via your tax return..

Mr Squarekins

1,356 posts

78 months

Got it.

SunsetZed

2,678 posts

186 months

Logically yes makes sense to do it before October but even Reeves must realise that changing this part way through a tax year would result in trouble for hmrc and more complicated tax returns.

fat80b

2,896 posts

237 months

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 ?

LeoSayer

7,560 posts

260 months

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 ps off millions of private sector workers.

Panamax

6,653 posts

50 months

Broadly speaking, income related taxes only change on 6 April.

Capital taxes tend to change immediately on budget day to prevent people "rearranging their affairs" before 5 April.

911hope

3,719 posts

42 months

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..

Count897

Original Poster:

496 posts

9 months

911hope

3,719 posts

42 months

Tuesday
quotequote all
Count897 said:
Telegraph has similar conjecture on the run up to every budget.