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

ukjoel

boglehead wrote: »

This makes me sick... i pay a marginal tax rate of 47% and the government (along with 99% of the population) openly say i am the enemy, and want to raise that tax rate to 52% to be able to pay benefits to the unfortunate people out there who aren't as lucky as me...
Cut the lazy, loopholes exploiters and fraudsters of this ineffective benefit system - trust me, our deficit will jsut be a bad memory!

You are a disgrace to the people that claim benefits and actually really need them!

No he isnt - He is merely investing in his pension scheme as encouraged to do so by the govt. This money will be taxed later as pension and over his lifetime. I did a similar thing for 3 years in order to reduce my childcare costs, and millions of people are overpaying into pensions now to maintain their child benefit.

These people are all tax payers, all workers, all changing their earnings and investment strategy to make their money stretch as far as they can.

This question simply asked how far you could take this and the answer is pretty much to the extreme. The reality is that very few people would give up their holidays, nice cars, and Iphones to make this work.

boglehead

ukjoel wrote: »

No he isnt - He is merely investing in his pension scheme as encouraged to do so by the govt. This money will be taxed later as pension and over his lifetime. I did a similar thing for 3 years in order to reduce my childcare costs, and millions of people are overpaying into pensions now to maintain their child benefit.

These people are all tax payers, all workers, all changing their earnings and investment strategy to make their money stretch as far as they can.

This question simply asked how far you could take this and the answer is pretty much to the extreme. The reality is that very few people would give up their holidays, nice cars, and Iphones to make this work.

We will agree to disagree on this. The spirit of benefits was not to be handed over to the tax payer earning over £60k a year...
Claiming so is clearly bad faith. I sure hope this will be cracked down.

bigadaj

boglehead wrote: »

We will agree to disagree on this. The spirit of benefits was not to be handed over to the tax payer earning over £60k a year...
Claiming so is clearly bad faith. I sure hope this will be cracked down.

I don't disagree with you but there's no problem with people gaming the system, that's the way the world works.

The problem is the system which needs to be tightened up to close loopholes, and ultimately the uk has the most complicated tax system in the world, with the possible exception of the us, and the benefits system is obviously far wider than anything available in the us.

You will get hard luck stories about people caught out but no system is perfect and the current one is too complicated and often generous or at least anomalous.

The grey area is massive, I've just made a large pension payment to reduce tax for the year, and am waiting to start another job so am in receipt of jsa. The problem is endemic at all levels of society, just look at multi millionaires avoiding tax by totally unethical methods or people sub letting council or ha properties, they both amount to the same thing.

p00hsticks

The original post on this thread is over two years old now, as are the majority of the follow up posts.

I'm not sure why someone has suddenly decided to resurrect the discussion but I think all the arguments have been done to death over the last 17 pages.....

atush

boglehead wrote: »

We will agree to disagree on this. The spirit of benefits was not to be handed over to the tax payer earning over £60k a year...
Claiming so is clearly bad faith. I sure hope this will be cracked down.

Feel free to send a link of this thread to HMRC, IDS and the boffins who write the white papers.

Triumph13

p00hsticks wrote: »

The original post on this thread is over two years old now, as are the majority of the follow up posts.

I'm not sure why someone has suddenly decided to resurrect the discussion but I think all the arguments have been done to death over the last 17 pages.....

I agree, but it has been interesting to see everyone's conflicting viewpoints. What would be really interesting would be a poll of what people think is acceptable (but I have no idea how to create one)


I would suggest the options should be:

• You should never attempt to game the system
• It's okay to do so to reduce the tax you pay, but not to claim benefits
• It's okay to do so to reduce your tax bill or to retain entitlement to what used to be universal benefits such as child benefit and student grants, but not for the relatively wealthy to get benefits designed to help the poor
• If the loophole is there to exploit then you have every right to exploit it.