Diverting £50k of salary into pension fund to claim welfare benefits

dazza.mk

Chick_Loves_Thrift wrote: »

I've only read page one but anyway.. If you were to do this OP It wouldn't be fair those who are on benefits for real, genuine reasons. You have that huge salary, asking for any more from the government is despicable. It's screwing the system even if it IS legal.

Presumably then making contributions to a pension scheme to reduce your taxable income is also despicable?

drc

dazza.mk wrote: »

Presumably then making contributions to a pension scheme to reduce your taxable income is also despicable?

Or saving into an ISA. Or if you are an MP, flipping your second home and claiming generous allowances. Or putting your wife down as the director of your billion pound company and then paying her from the profits because she is based in Monaco and avoids paying tax. Or buying a £10 million pound property in the UK through an offshore company so you don't have to pay stamp duty. All totally legal in the UK.

dazza.mk

Gracchus_Babeuf wrote: »

I would be amazed if he gets away with it. I'm sure they will check his full, pensionable salary, not just his taxable one.

And how would they do that? (assuming they had a legal way of doing so) as P60 and other documentation going to HMRC would have his taxable salary, unless you are proposing another massively unwieldly means test for all benefits?

gadgetmind

dazza.mk wrote: »

And how would they do that? (assuming they had a legal way of doing so) as P60 and other documentation going to HMRC would have his taxable salary, unless you are proposing another massively unwieldly means test for all benefits?

I use sal sac, and my payslips do show this, but I'm not sure about my p60 and tax return. I'll check.

dazza.mk

gadgetmind wrote: »

I use sal sac, and my payslips do show this, but I'm not sure about my p60 and tax return. I'll check.

Your payslips would do, but your P60 won't, hence the comment massively unwieldly means testing if they are going to want to see xx months pay slips etc.

chris_m

dazza.mk wrote: »

Presumably then making contributions to a pension scheme to reduce your taxable income is also despicable?

Not really, because it'll get taxed when it's his pension in payment.

The despicable thing is, IMO, hiving away a large sum each year into the pension, then expecting the state benefits system to help keep him and his family.

dazza.mk

chris_m wrote: »

Not really, because it'll get taxed when it's his pension in payment.

The despicable thing is, IMO, hiving away a large sum each year into the pension, then expecting the state benefits system to help keep him and his family.

What about someone who uses more of the options mentioned by drc to significantly reduce their tax bill?

What is the difference between someone who (legally) reduces their tax bill by (say) £30k and someone who (legally) gains £30k through a reduction in tax and increase in benefits?

Either way the state is out os pocket by £30k.......... So either both options are despicable or neither (legal) options are.

shop-to-drop

This is so wrong that it is allowed but is a consequence of punitive taxing of a traditional single income family and over generous benefits to low income families. Also how much more immoral is it than someone who won't work an hour more than they need to get top up benefits? Or a self employed person who pays themselves an income at the rate to get maximum benefits and leaves any other profit in the business. The couples who don't officially live together so that the taxpayer support the children. Or the numerous other ways people make sure they claim as much from the state as they can rather than through temporary need.

On the radio today they quoted a survey which said that 8 out of 10 people do not consider themselves to be a traditional family and feel unrepresented by government I would disagree and state that the opposite is true and that the traditional family is the one least represented by government. If our family split up we would almost double our income and this would especially be worthwhile when the children start to go into higher ed.

shadydaz

Any higher rate tax payers pension contributions should be limited to the rate band cut off anyway.

If you earn £65k pa, then you can only sacrific up to £21k pa, as the limit is current £44k pa. It would stop this kind of loophole from occuring for a start.

shadydaz

shadydaz wrote: »

Any higher rate tax payers pension contributions should be limited to the rate band cut off anyway.

If you earn £65k pa, then you can only sacrific up to £21k pa, as the limit is current £44k pa. It would stop this kind of loophole from occuring for a start.

Or indeed a combination of any tax deductable benifits.