MSE News: Budget 2012 - £3.3 billion tax blow for pensioners

gadgetmind

thelawnet wrote: »

But anyone earning £100k-£150k will pay more tax due to the reduction in the size of the basic rate band, fiscal drag on the £100k PA limit, and the fact that they don't get a Personal Allowance.

Correct. Larger personal allowances are great, other than for those with £0 personal allowances!

Also it's not clear that people earning over £150k will pay less tax, as the total tax relief from all sources is now limited to 25% of income.

Err, no. Tax relief from *uncapped* sources is now capped, but all tax relief that's currently capped is unaffected.

As the press seem to be doing their usual, shoddy job of reporting the facts, with far too much misunderstanding, distortion, and rhetoric, I suggest that people read the actual document.

http://cdn.hm-treasury.gov.uk/budget2012_complete.pdf

I now totally ignore the media's budget outpourings, wait for the above document to come out, read it cover to cover, and then update my personal financial models based on the content. Sometimes I have to wait for the wording of the actual acts, but I can usually get into the right ballpark based on the outline intentions.

sue_a_3

As pensioners or soon to be pensioners we need to act together to get the government to reverse this. Surely it cant get passed in parliament and become law. We have worked all our lives and budgeted for our expected income only to pipped at the post by these changes. I retire May 2013 and my husband late April 2013 - so he misses out on the tax allowance for over 65's and I have had to work longer and will lose the tax allowance and therefore have to pay tax on a modest income and savings, which I thought would be out of tax. Unlike younger people we cant work to get extra income. Where can we protest?

amiehall

I'm a bit confused. I wasn't particularly aware that pensioners had a higher allowance until I heard it announced that it would be brought in line with normal allowance over the next few years. I struggle to understand what the rational behind a difference in allowance would have been in the first place? I've lived on £12k a year while studying part-time. It shocks me to learn that if I were 65 and on a pension of £12k a year, I'd have an extra £600 in my pocket (with my NI contributions on top) from a different tax allowance. I genuinely can't understand the rationale. What was the original thinking?

While obviously I study with an aim to better my situation in the future and I see a pension income is fixed, there's no way I will be granted a pay rise seeing as my employer knows I'm studying and will likely leave once I've finished. My student loan has not increased one penny for inflation and I still face the same expenses right now today to support myself as someone in their 60's as far as I can see.

gadgetmind

sue_a wrote: »

he misses out on the tax allowance for over 65's and I have had to work longer and will lose the tax allowance

Perhaps you've misunderstand what's actually being implemented? The two allowances are converging, mainly by moving the under-65 allowance upwards rather rapidly.

Optimist

Those pensioners or pensioners to be, who have a Conservative or indeed Lib/dem MP and feel strongly enough about this, then write to them via the write to them web site.

Make enough noise and like Mr Brown with his 10p tax rate cut, they will probably panic. More especially if they think their cushy jobs are at risk.

mmillie

Did anyone read what saga have to say about this (on the BBC news);

Because in this economy many younger people borrowed far too much and the banks got into trouble, the government seems to believe it is right and fair to take money away from those who did do something to look after themselves, and use it bail out younger borrowers and banks
Ros Altmann, director general of Saga

I'm amazed that he had the gall to blame younger people for this. I don't believe that there is any evidence that the sub-prime mortgage lending was restricted to one demographic. There is however plenty of evidence that young people now struggle to afford a house while downsizing pensioners rake in a fortune from massively elevated house prices.

There is also evidence that employed people today are paying NI for today's pensioners to live on, but can't realistically expect the same from the next generation in 20 years time. The flow of money in this country has been disproportionately large towards the baby boomer generation, and no generation before or after will have it so good.

Don't get me wrong, I don't think these people did anything wrong at all. They are blameless beneficiaries of a nice economic period. I don't want to see any pensioner in financial trouble. However, I'm loosing all of my child support, which they got for their children. I'm paying a fortune for petrol, which they got cheaply for many years. I had loans to go to university, and my kids will pay an absolute fortune in tuition fees, which they got for free. All of this cost cutting is to keep our AAA rating, which ultimately benefits people receiving money from the government more than than people giving money to the government.

So given all the sacrifices I am making, and all of the additional costs and taxes that we are subjected to today, why is it so unfair to say that pensioners income is taxed the same as mine?

pawnbroker_2

typistretired wrote: »

Are you trying to goad us pensioners. As someone who paid contributions for over 40 years (not the 30 which is required now) and helps the economy by looking after 3 grandchildren free of charge to enable my children to work full time (and they pay high taxes etc) I find your comment very offensive :mad:

I agree I found the comments ill advised to say the least.

As a baby boomer I have been taxed and lost out all time.

People have overlooked that we lost £25 off the heating allowance last year. So that's five weeks of the next increase accounted for to stay still.

As I understand it the greatest percentage of people in fuel poverty are guess what ..pensioners.

I had to accrue 44 years of NI contributions to get my full pension now it is given away for 30.

Pensioners on low income lost out over the 10p tax nonsense and never did get the money back.

Having had a reasonable job when we had three children at University simulataneously did we get any grant..no.

Teachers, civil servants etc are up in arms about their pensions, they were remarkably quiet when those of us lost some or all of the pension with Equitable life.

We have survived 15% mortgages.

We are currently receiving 90% less on our savings than we did 5 years ago.

Energy and car fuel are the same price for us, as is food.

Osborne and politicians once again have confirmed how detached they are from REAL life.

So whilst he endeavours to get more tax out of pensioners his government ladles increasing money into India,Kenya,Pakistan Somalia and any other open hand that wants money in deference to pensioners.

Boy are they going to suffer at the next election.

bbexpo

Request Martin to organise a government e-petition to endeavour to have this blow recinded.

DenThePensioner

The next step will be to remove our Winter Fuel Allowance and Free Bus Passes. I voted Tory at the last General Election but will certainly not be voting for them again. Unfortunately Labour are not a viable alternative so I will abstain completely next time.

thelawnet

gadgetmind wrote: »

Err, no. Tax relief from *uncapped* sources is now capped, but all tax relief that's currently capped is unaffected.

As the press seem to be doing their usual, shoddy job of reporting the facts, with far too much misunderstanding, distortion, and rhetoric, I suggest that people read the actual document.

http://cdn.hm-treasury.gov.uk/budget2012_complete.pdf

I now totally ignore the media's budget outpourings, wait for the above document to come out, read it cover to cover, and then update my personal financial models based on the content. Sometimes I have to wait for the wording of the actual acts, but I can usually get into the right ballpark based on the outline intentions.

I didn't read any of the media waffle actually, only the document above, but as I said I don't really understand what the tax reliefs are and how they are (ab)used, so I'm not really probably representing it properly.

Anyway:

To curtail this excessive use of reliefs the Government will introduce a limit on all uncapped income tax reliefs. For anyone seeking to claim more than £50,000 of reliefs, a cap will be set at 25 per cent of income. This will increase effective tax rates and help ensure that those with the highest incomes pay a fairer share. This will not be extended to those reliefs that are already capped, as to do so would reduce the amount of support the tax system gives, for example, to enterprise and pension contributions.

It remains to be seen exactly how this will be implemented but it does look like you can put in the existing £50k pension max, on top of 25% of your income in the form of other reliefs, whatever these are.

Of course even 25% tax relief on a 45% rate results in a tax rate of 33.75%, lower still after you take into account pension contributions.

So those involved will still pay a lower effective rate of tax than lower income workers....