Will savers take a hit with the 30% flat tax..

Perelandra

Forgive me if this is a silly question, but-

One of the key benefits if paying into a private pension is the tax benefit- i.e. if you're a HR taxpayer whilst working, but on a lower tax rate while drawing your pension, paying into a pension reduces the overall tax you pay.

If you face the same marginal tax rate while employed and drawing your pension, then what's the point, other than the (for now) 25% tax-free lump sum figure. (assuming, of course, that anyone who has that private pension is exceeding their personal allowance whilst retired).

michaels

I guess even for a standard rate taxpayer if you spread 1 years income over 2 years you benefit from 2 lots of personal allowance. If the basic tax rate were to be 30%@ then earn 20k inh 1 year and pay tax and you get 17k after personal allowance, earn 20k but put 10k in to a penson and pay no tax on the income year and none on the pension year saving 3k tax so still a valuable tax break....

...but thinking further if you has already had a big enough pension to use up all your personal allowance after retirement then (beyond the 25% lump sum) further pension saving would not benefit from additional tax advantages untill you became a higher rate taxpayer.

The-Joker

coastline wrote: »

A proposal thats been in the press in the last few days...
Simplify our system...NI...VAT...CG...Income tax...
Our savings are taxed at 20% now so we may be in for another bad day...any views..

http://www.telegraph.co.uk/finance/personalfinance/consumertips/tax/9202370/Osborne-urged-to-introduce-30pc-income-tax-for-all.html

http://www.myfinances.co.uk/savings/2012/05/21/tax-commission-calls-for-30-flat-tax-rate-on-income-and-capi

Its not like its worth saving in fiat currency anyway with such low interest rates for so long now.

This will just encourage people to save in silver bullion privately with no paper trail.