Increase in personal tax allowances.

Sapphire

StevieJ wrote: »

True, but there are many pensioners who receive income well in excess of the under 65's especially the younger members of our society, in addition it looks like the average pay awards for workers will trail well below that of the pensioner community over the next few years.

http://www.telegraph.co.uk/finance/7888729/Millions-face-four-year-fall-in-standard-of-living.html

I must admit, SteveJ, I don't know many pensioners (including my parents) whose pensions are anyway near being above the salaries of working people in our society. Do most of the people you know work in finance, the law, medicine or the public services?

There are certainly some people who have very large pensions, and who should probably not receive a state pension (those, say, above £26,000 p.a.). However, I would think there are far more people whose pensions are extremely small, so that their retirement is a worry from a financial point of view. These people may even want to work, but due to ageism in the workplace and the lack of work available, are likely to be unable to take this route.

Thrugelmir

zygurat789 wrote: »

OK for you very slowly

Increasing your tax allowances means that you will pay less tax.
Because mine stay the same I pay the same tax.
You now have more than before and I have the same.
If you now have more money than me you are richer by definition

Labours increase in employeees NIC contributions comes into effect next April. So for many the tax reduction is negified by the NIC rise. In fact with the freezing of the 40% tax band many will pay proportionality more tax.

Also we've still got a November budget will no doubt contain more reform of the tax system. So personal allowances for the over 65's could well be increased.

Mikeyorks

hugheskevi wrote: »

For anyone reading this thread who is unfamiliar with how the higher personal allowances work for those aged 65-74, here is a quick summary of what people pay now, and what they will pay in 2011/12:
.

That's not necessarily so. Whilst the £1k increase applies solely to those under 65 (also those above whose income is such they retract to this new 'basic allowance') ........ the age allowance is still, at this point, subject to indexation for 2011-12. Whereas the new basic allowance of £7475 will be specifically excluded from indexation in 2011-12.

As the indexation figures aren't available for several months (and the next and proper Budget could sideline them .. but unlikely) then any calculation is a bit premature?

Budget_Note_BN01_HMRC wrote:

4. Existing legislation requires the Government to increase personal allowances and rate limits by the annual percentage increase to the RPI for the year to September preceding the new tax year. The Government will make the Order to set the relevant amounts for 2011-12 after the relevant percentage is published in October 2010

5. The Government has announced that for 2011-12 it will over-ride the amounts that will be set in the Order for the personal allowance for those aged under 65 and the basic rate limit. Decisions on other allowances will be made at the appropriate time. The exact amounts of the basic rate limit for 2011-12 will not be known until publication of the RPI for September

hugheskevi

That's not necessarily so.

Good point - editted post accordingly.

StevieJ

Sapphire wrote: »

I must admit, SteveJ, I don't know many pensioners (including my parents) whose pensions are anyway near being above the salaries of working people in our society. Do most of the people you know work in finance, the law, medicine or the public services?

There are certainly some people who have very large pensions, and who should probably not receive a state pension (those, say, above £26,000 p.a.). However, I would think there are far more people whose pensions are extremely small, so that their retirement is a worry from a financial point of view. These people may even want to work, but due to ageism in the workplace and the lack of work available, are likely to be unable to take this route.

I know people who earn 30/40/50k in pensions and no not public sector. I was just wondering why pensioners should have tax advantages over very low paid workers, that is why I would welcome a high (equal) basic allowance for workers and pensioners alike, remember also that pensioners don't pay NI.

StevieJ

Thrugelmir wrote: »

Labours increase in employeees NIC contributions comes into effect next April. So for many the tax reduction is negified by the NIC rise. In fact with the freezing of the 40% tax band many will pay proportionality more tax.

Also we've still got a November budget will no doubt contain more reform of the tax system. So personal allowances for the over 65's could well be increased.

You mean for next tax year based on the CPI in Sept along with all other allowances, I have a feeling that won't happen.

Sapphire

StevieJ wrote: »

I know people who earn 30/40/50k in pensions and no not public sector. I was just wondering why pensioners should have tax advantages over very low paid workers, that is why I would welcome a high (equal) basic allowance for workers and pensioners alike, remember also that pensioners don't pay NI.

Well, yes, I would agree that pensioners earning more than 30k shouldn't have tax advantages over very low paid workers (they should also not receive a state pension, since they don't need it and the money could be better spent elsewhere, especially in such financially straightened times).

However, many people who have worked in professions that do not traditionally pay well, such as publishing, unless you are a director, do not receive pensions of more than 30k. They may have worked freelance for part of their working lives (while paying taxes), but have been unable to build up large private pensions on relatively low pay.

I would be very much against people with pensions of below around 25k, who have worked very hard (and publishing work can be extremely hard, with long hours without overtime pay) for more than 40 years, and who have contributed to society not the least by paying tax for all those years, having their promised benefits taken away from them. It would be morally wrong and unjustified.

With regard to NI, bear in mind that many pensioners have paid this for 40–45 years, and that when younger people retire they will also stop paying NI.

Thrugelmir

StevieJ wrote: »

You mean for next tax year based on the CPI in Sept along with all other allowances, I have a feeling that won't happen.

On a broader level I expect far more fundamental reform of the tax system in the coming years. Which will be more equitable to those on lower incomes, and provide the foundation as an incentive for everybody to save towards their later life years.

A total rethink of existing policy and a cultural change.

joebenfleet

Maybe there is justification for altering the allowance system as part of a strategy rethink but to reward only higher income pensioners (and those under 65) in this budget is akin to the 10% gaff which Gordon made but later apologised and compensated for. Worst of all, it's not transparent yet is likely to hit lower income pensioners each time the basic personal allowance is increased. I've emailed Vince Cable but had no reply.

zygurat789

Thrugelmir wrote: »

Also we've still got a November budget will no doubt contain more reform of the tax system. So personal allowances for the over 65's could well be increased.

What makes you think that. The tory half of the coalition seem to be doing everything different to labour, possibly just to be different. Budget day reverted to tuesday an was going to be at 15:30, but the football brought it forward.
All that was announced was a spending review in October.
If you have any further information I would be interested. Thanks