Do you think the tax free lump sum will become taxable in the near future?

jamesd

The current government is accepting no inflation-linked increases in the additional state pension accrual threshold and considering a flat single rate pension. The threshold hurts ten percent of the population, the flat rate probably more, depends on just where the level is set.

grey_gym_sock

however, once auto-enrollment has been rolled out, perhaps the next step will be to remove the option of opting out, in which case it won't matter whether ppl want to pay into a pension.

just speculation, but it's 1 way it could go.

rpc

Andy_L wrote: »

Seeing as how very few public sector workers are higher rate taxpayers how do you work that out?

They want to tax any lump sum above c£40k at 40%. Some public sector schemes had a system where as well as your annual pension you accrued a lump sum (e.g. 1/80th pension, 3/80ths lump sum). Not too hard to accrue a lump sum above the 40% tax threshold.

kidmugsy

rpc wrote: »

They want to tax any lump sum above c£40k at 40%. Some public sector schemes had a system where as well as your annual pension you accrued a lump sum (e.g. 1/80th pension, 3/80ths lump sum). Not too hard to accrue a lump sum above the 40% tax threshold.

Sorry, which "they" is that?

(I ask as someone to whom the expression "Pension Commencement Lump Sum" reads as a great big red flag.)

Andy_L

rpc wrote: »

They want to tax any lump sum above c£40k at 40%. Some public sector schemes had a system where as well as your annual pension you accrued a lump sum (e.g. 1/80th pension, 3/80ths lump sum). Not too hard to accrue a lump sum above the 40% tax threshold.

I don't see how that relates to your claim that "The tax relief permitted on pension lump sums disproportionately benefits ........ a great number of public sector workers"

System

Of course they haven't any plans. But keep talking chaps and someone will begin to get ideas.

fiesta04

ognum wrote: »

I have read in a few replies here the advice to get your tax free lump sum sooner rather than later.

Is there a genaral feeling among advisors that the TFLS will become a taxed lump sum soon?

Getting back to OPs question, I would say about as much chance as the BOE interest rate dropping to 0.5% and staying there for over 3 years.......... Take that to mean YES

F4