pension tax relief plans reversed

bendix

I'm amazed noone else has picked up on this yet,but Darling's plans to limit tax relief on pensions contributions for high income earners was reversed in yesterday's Emergency Budget. It was due to come into effect from April 2011 but it's been scrapped.

Instead, Osborne has pledged to start a consultation process with a view to getting the same about of revenue (£3bn) by limiting the annual allowance at which people get the highest rate tax relief to anywhere between £39-£45,000.

Fantastic news for pension savers, although personally I'd prefer it if the tax-free allowance for contributions was slightly higher. On the other hand, limiting it will encourage those who are serious about saving for their pension to rely not only on their pension fund, and build up a balancing cash sum also, ideally through ISAs.

I am very very very pleased. Well done George.

Old_Slaphead

Why don't they just revert back to the previous method whereby you can contribute a varying % of NRE (think it was from 15% upwards) dependant upon age.

It was Labour who changed the rules to up to 100% of earnings then carped on about how much it was costing !!!

goRt

The detail's in here 1.118 (2.5mb download)

http://www.direct.gov.uk/prod_consum_dg/groups/dg_digitalassets/@dg/@en/documents/digitalasset/dg_188581.pdf


Old_slaphead - you're correct, like CGT there was nothing wrong with the pre-communist method

feesarefare

bendix wrote: »

I'm amazed noone else has picked up on this yet,but Darling's plans to limit tax relief on pensions contributions for high income earners was reversed in yesterday's Emergency Budget. It was due to come into effect from April 2011 but it's been scrapped.

Instead, Osborne has pledged to start a consultation process with a view to getting the same about of revenue (£3bn) by limiting the annual allowance at which people get the highest rate tax relief to anywhere between £39-£45,000.

So he's going to carry out an expensive "consultation" to look at how the people that can afford to pay instead pass the burden on the the middle income families.

Fantastic news for pension savers

How? the reversal will only benefit the top 1% of earners in the UK

I am very very very pleased. Well done George

Thats easy to say for someone who plans to spend their "retirement" in the Far East !:D

Interested to see from the Thankyous that we have so many of the top 1% on these forums. These changes must be great news for the retired

goRt

feesarefare wrote: »

Interested to see from the Thankyous that we have so many of the top 1% on these forums.

Four at the current count

bendix

feesarefare wrote: »

bendix wrote: »

So he's going to carry out an expensive "consultation" to look at how the people that can afford to pay instead pass the burden on the the middle income families.




How? the reversal will only benefit the top 1% of earners in the UK





Thats easy to say for someone who plans to spend their "retirement" in the Far East !:D

Interested to see from the Thankyous that we have so many of the top 1% on these forums. These changes must be great news for the retired

I don't see why you are so churlish. Surely anything which encourages people to save for their retirement is good for you in your job, irregardless of what income bracket they are in

The bottom line is that that move was ridiculous. Overly complicated and - according to many sources - as expensive to administer and implement as it was planning to generate in revenue.

Simply limiting contributions which get tax relief to £40-£50k per annum is much simpler, there is no administrative burden and it has the same 'political' impact of stopping the truly wealthy avoiding tax on hundreds of thousands of pounds of income by diverting it into pensions.

feesarefare

bendix wrote: »

feesarefare wrote: »

I don't see why you are so churlish.

because I cant see how another (no doubt long) consultation period to eventually move the tax burden from the group that can most afford it is "fantastic news for pension savers"

Fantastic news for you Ive no doubt, but not for the bulk of pension savers.

bendix

Lol. There will be no consultation period. Get real. It's already done and dusted, otherwise they wouldn't have announced their strong intentions.

It might be good news for high earners, yes. But the corollary is not the case in this instance in that it is not bad news for anyone else either.

feesarefare

bendix wrote: »

Lol. There will be no consultation period. Get real. It's already done and dusted, otherwise they wouldn't have announced their strong intentions.

my apologies I misinterpreted your OP when you you said "Osborne has pledged to start a consultation process":o

But the corollary is not the case in this instance in that it is not bad news for anyone else either

I get it- not bad = fantastatic

Therefore I look forward to a fantastic nil nil draw for England this afternoon!

Andy_Davies

I'd prefer to see the tax relief of pension contributions replaced with a matching contribution system

For example the Government match the first £3,000 of personal contributions (figure plucked out of the air) and the fund maintains it's tax free growth status.

While welcome, tax relief has always been a bit of a fraud in my view as you've still paid tax on the earnings in the form of National Insurance and this affects standard rate payers far more than higher rate ones.

goRt

Andy_Davies wrote: »

While welcome, tax relief has always been a bit of a fraud in my view as you've still paid tax on the earnings in the form of National Insurance and this affects standard rate payers far more than higher rate ones.

I think "salary sacrifice" avoids that and makes things more attractive for 'lower' earners where NI is more than 1%