32% tax on savings interest?

ScarletBea

Higher rate tax paying people who are silly/honest enough to tell the HRMC actually pay 40% on savings interest...

Milarky

jimjames wrote: »

That may be true but I think the likelihood of existing ISAs being stripped of their tax free status is very very low especially as one of the aims of government is to increase long term savings. What is more likely to happen is that new ISAs are stopped at some point but the latest proposal is for child ISAs which would actually extend them further.

You're assuming that what government does is actually joined-up and one policy fits neatly into another. When they start hunting for cash cows all bets are off!

tofu

I guess I'm one of those people who, despite trying to get the best deal for myself in the current system, does not think that it is particularly fair. Instead, I believe taxing income from work and from capital gains in the same way is much fairer, with ISA allowances as an incentive for people to make modest savings. However, the tone of the article does not suggest to me that those proposed changes are very likely to be implemented.

pqrdef

chewmylegoff wrote: »

even if savings tax was aligned with the proposed 32% basic rate, just stick the personal allowance up for anyone over 65. job done.

Er no, the early-retired don't pay NI either.

pqrdef

Arthurian wrote: »

First, those early-retired folk who topped up their NI contributions are now mugs, because those who didn't will get a new universal pension just the same as everyone else.

Are you sure? Removing the contributions link from the state pension looks like a step towards means-testing the pension.

Arthurian

pqrdef wrote: »

Are you sure? Removing the contributions link from the state pension looks like a step towards means-testing the pension.

Just what I gather from newspapers - eg, Telegraph at http://www.telegraph.co.uk/finance/personalfinance/pensions/8367466/State-pension-reform-140-a-week-for-everyone.html says

"Means-tested retirement rules punish private saving and should be scrapped, Mr Duncan Smith will say in a speech to Age UK."

But perhaps this is off-topic...

chewmylegoff

pqrdef wrote: »

Er no, the early-retired don't pay NI either.

yeah, and they should, because NI is just another word for tax now. people who retire early don't suddenly stop using the NHS for example, which is supposedly funded out of NI.

zagfles

pqrdef wrote: »

Are you sure? Removing the contributions link from the state pension looks like a step towards means-testing the pension.

No it doesn't. Means testing it would mean it would be pointless anyone on below average income saving for their retirement. The government are trying the encourage people to save for their retirement, not discourage it. Nobody of any consequence is seriously suggesting more means testing in state pension - quite the opposite, they are talking about a higher state pension so we don't need the means tested pension credit.

zagfles

chewmylegoff wrote: »

yeah, and they should, because NI is just another word for tax now. people who retire early don't suddenly stop using the NHS for example, which is supposedly funded out of NI.

But for most people who've paid into a workplace or private pension, they've already paid NI on that money because pension contributions generally don't get NI relief.

So if they pay NI on the pension income they are paying NI on the same money twice.

StevieJ

chewmylegoff wrote: »

yeah, and they should, because NI is just another word for tax now. people who retire early don't suddenly stop using the NHS for example, which is supposedly funded out of NI.

It is making it difficult for people to plan for retirement if the rules are arbitrarily changed on a whim.