NI and pensions

bigfreddiel

You don't make any NI contributions from a pension, but you may be liable for tax.

Now Osbourne may announce that tax and NI contributions are to be combined to make things simpler, so how may he then take into account my first statement?

Looks like it may end up being just as complicated!

fj

Loughton_Monkey

One way is simply to go ahead. Then it means all pensioners pay 32% tax on savings.

Other route is to raise pensioners' tax free limits and/or reduce savings tax to 20%. Either way, as you say, could be more complicated. And qualifying for state pension by 'residency' [however that's defined] looks to me another complication. At least you either have your stamps at the end of the year, or you don't.

zagfles

Different tax rates on different types on income isn't too complicated - we have it now (eg dividends) and in the past savings rates have often been different to earned income rates. Far less complicated than having NI in the equation.

CLAPTON

why speculate when you are going to know in a few days?

Bellabee

Yes, we'll know in a few days, but in the meantime I'm truly worried. I have a pension income of around £22,000 upon which I pay tax at 20%. I have only done a rough calculation but I fear that a rise of 12% in my tax rate would mean a drop in my net income of around £1,800 pa. This is a huge amount for anyone on a fixed income. I cannot be alone in anxiously awaiting the Chancellor's announcement.

zagfles

Bellabee wrote: »

Yes, we'll know in a few days, but in the meantime I'm truly worried. I have a pension income of around £22,000 upon which I pay tax at 20%. I have only done a rough calculation but I fear that a rise of 12% in my tax rate would mean a drop in my net income of around £1,800 pa. This is a huge amount for anyone on a fixed income. I cannot be alone in anxiously awaiting the Chancellor's announcement.

I can't believe anything rock solid will be announced - it's too big a change to just announce in a budget. Perhaps an intention to merge tax and NI in a few years' time and a consultaion over the finer details eg how pension income is handled.