No Tax Relief on Contributions above £3,600 per Year

noh

dealsearcher wrote: »

Thanks for that. Yes that would make sense as an alternative.

I see a couple of others are apparently not bothered by Gordon Browns stealth erosion of the tax allowances over the years. People who are unemployed for a year or more are disadvantaged because if they save more than £3,600 in a pension fund they will not now get any tax relief. These people are already disadvantaged because they are temporarily unemployed and should actually be encouraged to save for their pension and not discouraged. This has changed from before April 2006 to our detriment and is another stealth erosion of benefits or tax allowances.

We are told how we should save for a pension and that the biggest risk is to the self employed, who are more likely to be temporarily unemployed for periods of time. This action shows that, as usual, the government says one thing but their actions actually demonstrate the contrary.

Can you tell us why you think the change introduced in 2006 to allow non earners to gain tax relief on pension gross contributions of £3600 pa was to your detriment?
I far as Im aware before that date you were not allowed tax relief on any amount if you had no relevant earnings.
Or am I mis-remembering!

Paul_Herring

dealsearcher wrote:

People who are unemployed for a year or more are disadvantaged because if they save more than £3,600 in a pension fund they will not now get any tax relief.

As stated before, and which you don't appear to get, the unemployed (generally) don't pay income tax, so there is no tax to relieved[1]. The contribution the unemployed get from the government for sums under the £3,600 is over and above any tax paid. This is more than the employed get for a comparable sum.

This has changed from before April 2006 to our detriment and is another stealth erosion of benefits or tax allowances.

Indeed it has changed, but not to your detriment - (assuming the date's the one I'm thinking of) - before that date, the unemployed didn't even get that extra money. Since they didn't pay tax, they didn't get any relief before then.

I'll rephrase it - how is getting £3,600 in your pension pot now for a contribution from you of only £2,880 a detriment to years ago when, in order to get that same £3,600 in your pension pot, you had to contribute £3,600?
:rolleyes:


[1] Of course, if you're unemployed, but have an (income-)taxable income of more than £3,600, then you can contribute up to that limit and still get tax relief on the lot.

cyclonebri1

[QUOTE=Paul_Herring



The last person to enter parliament with honest intentions was Guy Fawkes.[/QUOTE]


:rotfl::rotfl::rotfl::rotfl::rotfl::rotfl::rotfl::rotfl::T:T:T:T:T

dunstonh

I see a couple of others are apparently not bothered by Gordon Browns stealth erosion of the tax allowances over the years. People who are unemployed for a year or more are disadvantaged because if they save more than £3,600 in a pension fund they will not now get any tax relief.

People without income couldnt even pay into a pension until 2001. Whilst I am no fan of Gordon Brown, he is responsible for allowing the not-employed to be able to pay upto £3600 a year and get tax relief. That is £300pm. Not many unemployed could afford to put £300pm into a pension.

This has changed from before April 2006 to our detriment and is another stealth erosion of benefits or tax allowances.

There was no change in 2006 for non-earners. The only change on contributions at that level increased the number of earners that could pay into a pension and get tax relief (ie those earning over 30k a year and in defined benefit scheme. there were also adjustments at the top end which only impact on a minority).

We are told how we should save for a pension and that the biggest risk is to the self employed, who are more likely to be temporarily unemployed for periods of time. This action shows that, as usual, the government says one thing but their actions actually demonstrate the contrary.

If the self employed person is going to go a full tax year without income then they really need to decide if that is the right career for them.

DavidLaGuardia

dunstonh wrote: »

The only change on contributions at that level increased the number of earners that could pay into a pension and get tax relief (ie those earning over 30k a year and in defined benefit scheme.

Interestingly from 2001 such individuals could always use a trick to circumvent this rule. Any earnings not linked in anyway to the employment involving the final salary scheme automatically gave them the right to contribute "The higher of £3,600 or 100% of the earnings" Ergo additional earnings of £5 for mowing the neighbour's lawn (declared and tax paid on) was sufficient to permit a £3,600 contribution. Not well known, but use of this method by a few and just the fact it was plausible could possibly a reason contributing to the abandonment of the rule, who knows?

molerat

Is income from a pension considered "earned income" for this purpose ?

DavidLaGuardia

molerat wrote: »

Is income from a pension considered "earned income" for this purpose ?

No.

Only employed earnings via PAYE or Self employed earnings form a trade or profession is classed a earned income/net relevant earnings.
Income from pensions, rented property, savings dividends etc etc. are not earned income