Diverting £50k of salary into pension fund to claim welfare benefits

brasso · 8 December 2011 at 11:24AM

thistledome wrote: »

So now we have a situation where the rest of us are paying OP's way in life when he has £65,000 a year coming in and will be retiring 12 years before the rest of us on the money he's "saved" by letting us taxpayers pay for his children. Nice.

If OP was planning to save for his massive early pension and living within his means to do so, I'd be the first to applaud him, but living on benefits whilst sitting on a pile of millions is sheer greed.

No wonder the country is bankrupt - with state benefits being paid to the rich! :T

I don't think it's "sheer greed" at all. It seems like quite a creative and courageous attempt to do the best for him and his family by looking at the rules, and the law, and then taking some beneficial action. As I said earlier, one man's "greed" or selfishness is another man's self interest.

Look at the bigger picture. The OP will still be paying some tax, and he will have such a good pension when he eventually retires, we won't have to subsidise him -- unlike the large numbers of people we bankroll through their indolence, and who are making no pension contributions, paying no tax or NI etc.

The OP is also doing something socially useful by working, rather than sitting around at home. His comfortable retirement will also give him a decent income which he will then be spending on goods and services i.e. the money will be going back into the economy.

xylophone · 8 December 2011 at 2:01PM

jamesd wrote: »

The salient part of that is this from the employment income section:

"Gross contributions to an occupational pension scheme are deducted"

Pension contributions is not notional or any other form of income, it's a specific permitted itemised deductible amount.

When salary sacrifice is available this from the employment income section is relevant:

"Employment income, again, broadly follows employment income for tax purposes, so that most employees can use the entries on form P60 or P45"

A salary sacrifice arrangement reduces the P60 and paycheck income.

Now look at the worksheet on page 12 of the notes to help people fill out form tc600, under the "Now enter your deductions" subheading:

"Personal pension contributions you paid into a registered scheme. Include Free-Standing Additional Voluntary Contributions and payments to Stakeholder pensions. Enter the gross amount. Don't include contributions you paid through your employer."

So just like occupational pensions you can deduct personal pension contributions from your income for tax credit calculations.

You might also consider that at I least actually called the Working Tax Credit helpline to discuss this a couple of years ago and know it's entirely legitimate to do it. No need at all to hide anything or do anything else underhand. It's simply the way the law and public policy to encourage pension contributions is written.

If anyone has questions about this they should simply do what I did and call the well informed and helpful people at the tax credit helpline to get the correct answers.

I think that there are cases where there's sometimes some ability to change once in some schemes but I didn't have as much reason as you to check or worry about it because I'm not close enough to £50k.

James D Yes - I understand the rules regarding pensions! I just don't quite see however how the following doesn't apply to the proposal: (from http://taxcredits.hmrc.gov.uk/ntchelp/Content/English/Glossary.htm#notionalincome)

Income that you are treated as having received

Notional income also includes income that you are treated as having received, even though you may not have.

It may include

• Income that you have deprived yourself of to get tax credits or more tax credits

As HMRC administer the pension regime and tax credits, wouldn't there be an investigation into what is proposed, particularly if the OP only starts doing it after (I assume) years of completing his SA returns showing his old arrangements?
I don't know - perhaps somebody familiar with the system does?

2sides2everystory · 8 December 2011 at 2:49PM

Sapphire wrote: »

There was a time not so long ago when it was a matter of deep shame for a man not to be employed. There has been a huge change of attitude in many people in society – today there is a massive sense of entitlement among much of the population. This attitude has to be cured – and fast – otherwise we will sink very deeply. Taxpayers simply cannot afford to support so many claims on them.:cool:

There are taxpayers and there are taxpayers. There are still hoards of job for life (or nearly so) public sector workers with dubiously justified positions in the big society and there are private sector workers who every day practice attitudes that aid them as collectors of wealth (and payers of ordinary tax) but which often rely upon morally corrupt attitudes i.e. keeping heads down, practising unfair sales tactics on customers because they get paid to and because they rationalise that this means it is not their problem, turning away when outspoken colleagues speak out for public good and are sacked or 'eased out', providing false witness to such proceedings again because they are paid to, even disrespecting the elderly some of whom still make special journeys to the high street to try to solve problems.

They believe that if no rule to the contrary has yet been precedented then it's a fair game.

All these people believe they are the great exploited taxpayer, exploited by those that rely on one state benefit or another. Their thinking is flawed.

This thread is about unbridled greed by clever individuals. Just look at the types of MSE'er that it has attracted. It has nothing to do with contributing to a fair society.

brasso · 8 December 2011 at 3:15PM

2sides2everystory wrote: »

There are still hoards of job for life (or nearly so) public sector workers with dubiously justified positions in the big society and there are private sector workers who every day practice attitudes that aid them as collectors of wealth (and payers of ordinary tax) but which often rely upon morally corrupt attitudes i.e. keeping heads down, practising unfair sales tactics on customers because they get paid to and because they rationalise that this means it is not their problem, turning away when outspoken colleagues speak out for public good and are sacked or 'eased out', providing false witness to such proceedings again because they are paid to, even disrespecting the elderly some of whom still make special journeys to the high street to try to solve problems.

Wow.

That sentence is 128 words long.

I have no idea what point you're making.

These two facts are closely related.

2sides2everystory · 8 December 2011 at 3:19PM

Yes and you are the clever one right?

brasso · 8 December 2011 at 3:51PM

2sides2everystory wrote: »

They believe that if no rule to the contrary has yet been precedented then it's a fair game.

All these people believe they are the great exploited taxpayer, exploited by those that rely on one state benefit or another. Their thinking is flawed.

This thread is about unbridled greed by clever individuals. Just look at the types of MSE'er that it has attracted. It has nothing to do with contributing to a fair society.

I've paid hundreds of thousands of pounds in tax to the Exchequer. That is the fee I have paid for the right to express an opinion.

My opinion is that the system is not "fair" and doesn't even try to be fair. It is widely exploited, both by those with money and those without. But the trouble with any vision of a "fair society" (to use your phrase) is that it's unlikely to be matched by anyone else's vision of a fair society. You seem to be hinting that your idea of fairness is better than mine. Needless to say, I prefer my own.

As for "This thread..... has nothing to do with contributing to a fair society", yes you are right. That is not what the thread is about. It's an exploration of the rules about pension investment.

"Unbridled greed"? Again, you have to define greed vs seeking to further your self interest using legal means. If there are rules that allow a person to pay an unusually high proportion of his income into a pension fund, then why not? It will reduce the need for the taxpayer to subsidise his retirement. So the cost to the taxpayer, not to mention the morality or otherwise, isn't as clear cut as you think.

The "why not?" there is an invitation to join the debate rather than sloganising.

gadgetmind · 8 December 2011 at 3:55PM

thistledome wrote: »

No wonder the country is bankrupt - with state benefits being paid[STRIKE] to the rich[/STRIKE]!

There, fixed that for you.

tartanterra · 8 December 2011 at 3:57PM

2sides2everystory wrote: »

This thread is about unbridled greed by clever individuals. Just look at the types of MSE'er that it has attracted.

Hmmm....
The retort is so obvious, I can't bring myself to do it........:D

brasso · 8 December 2011 at 3:59PM

2sides2everystory wrote: »

Yes and you are the clever one right?

I almost never comment on people's writing styles. I've no information about their education, or whether they are non-native English speakers etc.

But here's a tip: keep your sentences short, or your argument will be lost. I read your sentence three times, and I don't know what you were trying to say.

That was all. Instead of sarcasm, you should be thanking me for the tip.

2sides2everystory · 8 December 2011 at 4:03PM

brasso wrote: »

It will reduce the need for the taxpayer to subsidise his retirement.

Oh I see. And why would his retirement need to be subsidised in the first place? Let me give you a clue - many retired people live off less in a year than said taxpayer thinks is fair to spend on week's skiing.

That's even after said taxpayer has arranged said taxpayer's finances and attire to make said taxpayer look humble enough to join the line up at the soup kitchen after said taxpayer returns from Davos.

tartanterra wrote: »

Hmmm....
The retort is so obvious, I can't bring myself to do it........:D

Birds of a feather? My flock is over this side.

Diverting £50k of salary into pension fund to claim welfare benefits

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