Early Retirement Tax Hike?

StevieJ

This was posted on the savings board but it looks like the main potential losers could be early retirees.

Income tax and national insurance could be merged as part of a drive to simplify the tax system by the Coalition Government.

http://www.independent.co.uk/money/tax/osbornes-secret-plan-to-raise-tax-ndash-and-scrap-national-insurance-2244091.html

Loughton_Monkey

I don't understand your reference to 'early' retirees [of which I am one].

Surely this affects (or would) affect all retirees - the vast bulk of whom pay tax?

StevieJ

Loughton_Monkey wrote: »

I don't understand your reference to 'early' retirees [of which I am one].

Surely this affects (or would) affect all retirees - the vast bulk of whom pay tax?

True but they are more likely to make allowances for official retirees, i.e. those in receipt of a state pension, as they do now with the age allowance, which could be increased to compensate. Early retirees could be simple passed off as collateral damage.

dunstonh

Chances are that there will be some mechanism with personal allowances, tax bands and investment income/interest tax levels to compensate. For example, you can tax savings and investments at one rate and earned income at another.

Or maybe a system that taxes income equally is fairer? Especially if coupled with ISA allowances and the use of capital withdrawals for income or other tax wrappers. Something that people already do now to reduce income tax.

Loughton_Monkey

Well as long as it takes at least 4 years to implement, then I'm all right, Jack.

The article alludes to raising the BR tax from 20% to 32%. But then goes on to saying higher rate would go from 40% to 52%, when higher rate tax payers (broadly speaking) pay only 2% NI on their top rate earnings?

With any luck, this is designed to bring extra revenue to give us 'poor' pensioners a personal allowance of, say, £20K, and a 10% rate of tax on interest earnings. Help us pay the enormous increases in fuel prices because our Jags guzzle quite a bit you know.....

StevieJ

dunstonh wrote: »

Chances are that there will be some mechanism with personal allowances, tax bands and investment income/interest tax levels to compensate. For example, you can tax savings and investments at one rate and earned income at another.

Or maybe a system that taxes income equally is fairer? Especially if coupled with ISA allowances and the use of capital withdrawals for income or other tax wrappers. Something that people already do now to reduce income tax.

I agree, I have never really understood the tax breaks and benefits given to some reasonably well off pensioners compared to those younger workers earning minimum wage.