Over 65 year olds to pay NI?

andyroberts1967

CLAPTON wrote: »

as baby boomers are in the age range 46 to 66 I would be absolutely amazed if making the over state aged boomers subject to NI would raise 2 billion.

Does the baby boomer generation REALLY span 20 years? According to this I am one year too young to be a baby boomer, yet I was born in 1967 - 22 years after WWII ended. I would class my mum as a baby boomer as she was born in 1947.

chewmylegoff

ukcarper wrote: »

Is that 2 billion correct seems a lot to me.

they don't quote their maths - IFS is suggesting £1 billion, "treasury figures" suggest £2 billion.

£2 billion @ 12% = gross NIable income of £16.67 billion. it seems like a lot to me too, especially as I should think there are a lot of pensioners working part time on low incomes such that most of their income is not NIable.

Pennywise

Just a frightener to soften up the older workers.

The real intention should be (and hopefully is), to merge NIC and income tax at a rate of somewhere mid 20's, say 25%. So the younger workers are better off.

If they increase personal allowance for those over state pension age, to around £15k p.a., then a basic rate tax increase to 25% won't affect those with total taxable incomes under national average of say £26k.

OAPs with taxable incomes of over £26k national average will pay more, and very few people will find their unfair, so very few lost votes.

Such a change will also increase those currently under-taxed, i.e. those living on rental income, interest, dividends, foreign earnings etc that are currently exempt from NIC for no logical reason.

grizzly1911

With Pension Age increasing to 68 perhaps that will be the halfway house for the short term.

People working longer, forced due to insufficient pension provision or by choice do potentially take jobs away from the young so NI is being lost. An unforseen consequence?

I wonder how many people over pension age earn more than the NI threshold many I am sure are in part time lower paid jobs? What is the real NI that could be collected £2bn seems an awful lot?

NI is a tax associated with working doesn't much matter what it is called.

Not sure about income tax for pensioners being raised to include NI with a secondary savings rate if they are not working though. Paying a slightly higher level of tax whilst working, allowing flexibility to "earn/priotise spend" allows "for future provision"* of fixed incomes.

*Appreciate it doesn't work like that in practice not to say it couldn't.

Purely increasing tax/NI will not necessarily result in much lower taxes for younger generations as Governments aren't much cop at evening spread, there is always "waste".

I wonder what sort of income a third rate of VAT on real luxuries could generate?

chewmylegoff

Pennywise wrote: »

Just a frightener to soften up the older workers.

The real intention should be (and hopefully is), to merge NIC and income tax at a rate of somewhere mid 20's, say 25%. So the younger workers are better off.

If they increase personal allowance for those over state pension age, to around £15k p.a., then a basic rate tax increase to 25% won't affect those with total taxable incomes under national average of say £26k.

OAPs with taxable incomes of over £26k national average will pay more, and very few people will find their unfair, so very few lost votes.

Such a change will also increase those currently under-taxed, i.e. those living on rental income, interest, dividends, foreign earnings etc that are currently exempt from NIC for no logical reason.

1p on basic rate income tax is reckoned to equate to about £4.75 billion, so taking that as a rough estimate, what you propose above would leave an additional budget deficit of around £33 billion.

in fact it would be worse than that as 2% of the NI is on all income, so that's effectively cutting the higher rate band from 42% to 40% - that will cost about another £1.5 billion (1p on higher rate is reckoned to equate to around £0.75 billion).

i think it's more likely that we will see a merged NI and income tax at 32%, or even higher. perhaps two bands BR from 20 to 30% and higher rate from 40 to 45%? that would still leave a shortfall if the point at which the rates kick in changes.

if the changes are applied to all income, and investment income is not exempted, then maybe 25% would be more realistic, but i don't think there is enough 'other income' to make this work (although bringing dividend taxation into line with other income and scrapping the tax credit might be of some use). i don't know what the maths looks like but expect that the sums still wouldn't add up @25%.

StevieJ

mystic_trev wrote: »

Edit - What he said ^^^^^^^^


I've nothing against it, no reason why Pensioners should pay less tax.It'll probably happen anyway, as a simplification of the Tax system,which is all NI is.

What has this article got to do with pensioners? it seems to be aimed at workers.

CLAPTON

andyroberts1967 wrote: »

Does the baby boomer generation REALLY span 20 years? According to this I am one year too young to be a baby boomer, yet I was born in 1967 - 22 years after WWII ended. I would class my mum as a baby boomer as she was born in 1947.

baby boomers are generally considered to be those born from 1946 to 1966 ish who as we all know are the most privileged generation of all time and are generally considered to have invented sex.

SkyeKnight

If you merge income tax and NI, what happens to all the money already in pension funds? If you look at a pension as deferred salary, then I thought the reason you didn't pay NI was because NI had already been paid on that money. It's going to be really annoying to only get 20% tax relief on the money I've put into a pension and then get taxed at 32% when it comes out - definitely makes saving in an ISA much better value than in a pension. At least the current proposal is just to put NI on pensioner's earnings which seems OK.

abaxas

SkyeKnight wrote: »

If you merge income tax and NI, what happens to all the money already in pension funds? If you look at a pension as deferred salary, then I thought the reason you didn't pay NI was because NI had already been paid on that money. It's going to be really annoying to only get 20% tax relief on the money I've put into a pension and then get taxed at 32% when it comes out - definitely makes saving in an ISA much better value than in a pension. At least the current proposal is just to put NI on pensioner's earnings which seems OK.

Tax is not fair, deal with it.

StevieJ

SkyeKnight wrote: »

If you merge income tax and NI, what happens to all the money already in pension funds? If you look at a pension as deferred salary, then I thought the reason you didn't pay NI was because NI had already been paid on that money. It's going to be really annoying to only get 20% tax relief on the money I've put into a pension and then get taxed at 32% when it comes out - definitely makes saving in an ISA much better value than in a pension. At least the current proposal is just to put NI on pensioner's earnings which seems OK.

Yes they would be wary of including NI on pension income, Gordon Brown is still getting a slating for his 'raid on pension funds'

Work to bring the two taxes together would take many years and start with widespread consultation, Mr Osborne said in his Budget speech.
The move was planned to simplify, rather than raise tax, he said.
So there would not be an increase in taxes for pensioners and those who receive some forms of benefits.

http://www.bbc.co.uk/news/business-12832647