Budget - raise more revenue?

chewmylegoff

Wild_Rover wrote: »

I don't have wages, I have an occupational pension, so I still pay income tax. I regard tax not as a "penalty" I regard it as an obligation to fund public services.

We are told that we cannot afford so many things, yet in my view we are still as a matter of tax policy allowing the already asset rich to create more assets tax free. I have no problem with the creation of assets. I just don't see why assets should create yet more assets without any tax liabilty.

So basically you have benefited from the tax relief of investing in a pension but you don't want other people to receive the (inferior) benefit of investing in an ISA.

Pension wrapper - avoid tax at your marginal rate on the contributions inwards, avoid all tax on investment gains and draw 25% tax free on retirement and pay tax at your marginal rate when drawing down the contents of the wrapper as income.

ISA wrapper - pay tax at your marginal rate before contributing and avoid tax on all investment gains and when drawing down the contents of the wrapper as 'income'.

Because your marginal rate is likely to be higher when you are working, and because of the tax free lump sum from a pension, pensions are more tax efficient. If you are a basic rate taxpayer at both 'ends' and you don't utilise the tax free lump sum then there is no difference either way.

So basically it seems that you are being quite hypocritical.

BillJones

Wild_Rover wrote: »

When so many areas of public expenditure are under scrutiny, to have, effectively, a taxpayer subsidy to those with such substantial assets seems a tad "generous".

WR

But what you don't seem to get is that the people who you are suggesting should pay more have already paid vastly more than you do, both in relative and absolute terms.

If you are looking to take more from people, why do you want it to come from them, and not from you?

You do understand, don't you, that people's investment money tends to come from taxed wages?

Fundamentally, you want me to pay yet more, despite the fact that I likely already pay 10-50 times what you do. Why is this?

[Deleted User]

Just come back in - thanks for the replies.

On the pensions issue, I'd only agree with it if the income from my pension was as tax free as the income from an ISA. The income from my pension "investment" is taxable, except for the lump sum. ISA returns are not.

I am not suggesting that the capital in an ISA, if withdrawn, should be liable to tax, but I think that drawing from an ISA income larger than many people's wages, at a time of such alleged austerity, without tax, can not be afforded, when you look at the situation that the less well of find themselves in.

Others disagree and I accept that. However I also accept that the already wealthy will fight to enforce austerity for some and resist it for themselves. I have a pension income and I pay income tax on it - I see no hypocrisy in having the gall to suggest that other people's income should be taxed as well! I am happy to pay income tax on my income above the tax threshold. I don't think that in these times it is acceptable for some income above the threshold to be tax free. Maybe when the finances are healthy, yes, but not now.

Sorry, knackered. Off to bed.

Night all.....

WR

grizzly1911

Wild_Rover wrote: »

Just come back in - thanks for the replies.

On the pensions issue, I'd only agree with it if the income from my pension was as tax free as the income from an ISA. The income from my pension "investment" is taxable, except for the lump sum. ISA returns are not.

Did you receive tax relief on your pension contributions as they were being accrued?

Someone contributing to an ISA is doing it, usually, from taxed income at some point.

The pension got the relief on the way in, the ISA (just another tax saving incentive wrapper like the pension after all) gets it on the way out.

A BLT landlord gets tax relief on the mortgage interest as his wealth is accruing too.

CLAPTON

Wild_Rover wrote: »

Just come back in - thanks for the replies.

On the pensions issue, I'd only agree with it if the income from my pension was as tax free as the income from an ISA. The income from my pension "investment" is taxable, except for the lump sum. ISA returns are not.

I am not suggesting that the capital in an ISA, if withdrawn, should be liable to tax, but I think that drawing from an ISA income larger than many people's wages, at a time of such alleged austerity, without tax, can not be afforded, when you look at the situation that the less well of find themselves in.

Others disagree and I accept that. However I also accept that the already wealthy will fight to enforce austerity for some and resist it for themselves. I have a pension income and I pay income tax on it - I see no hypocrisy in having the gall to suggest that other people's income should be taxed as well! I am happy to pay income tax on my income above the tax threshold. I don't think that in these times it is acceptable for some income above the threshold to be tax free. Maybe when the finances are healthy, yes, but not now.

Sorry, knackered. Off to bed.

Night all.....

WR

the money you pay into a pension is tax free
the money paid into an ISA has tax paid on it

the money taken out of a pension scheme is partly tax free (lump) sum and some taxed (the monthly payments)

the money taken out of a ISA is tax free

overall this balances out

so why do you support tax free money into a pension?

'fairness' would indicate that pension should be taxed the same as ISAs

both taxed on input and tax free on output
or both tax free on input and taxed on output

or maybe not?

chewmylegoff

Wild_Rover wrote: »

Just come back in - thanks for the replies.

On the pensions issue, I'd only agree with it if the income from my pension was as tax free as the income from an ISA. The income from my pension "investment" is taxable, except for the lump sum. ISA returns are not.

I am not suggesting that the capital in an ISA, if withdrawn, should be liable to tax, but I think that drawing from an ISA income larger than many people's wages, at a time of such alleged austerity, without tax, can not be afforded, when you look at the situation that the less well of find themselves in.

Others disagree and I accept that. However I also accept that the already wealthy will fight to enforce austerity for some and resist it for themselves. I have a pension income and I pay income tax on it - I see no hypocrisy in having the gall to suggest that other people's income should be taxed as well! I am happy to pay income tax on my income above the tax threshold. I don't think that in these times it is acceptable for some income above the threshold to be tax free. Maybe when the finances are healthy, yes, but not now.

Sorry, knackered. Off to bed.

Night all.....

WR

so, if you don't pay tax when you contribute into the wrapper, but you do pay tax when you draw the money out, that's fine, because you're paying tax once.

but, if you pay tax before you contribute money into the wrapper, but not when you draw the money out, that's not fine, because you're paying tax...once?

let's do the maths.

Mr A - let's call him the "goodie" receives £100 in income. He puts it all into a pension so pays no tax. His investment grows by 10% (tax free), so he has £110. He then retires, pays no tax on those investment gains. Then he retires and draws 25% as tax free income £27.50 then paying 20% tax, so pays £16.50 in tax and receives a further £66 (so he receives a total of £93.50 and pays £16.50 in tax).

Mr B - let's call him the "baddie" receives £100 in income. He pays £20 in tax and puts the remaining £80 into his ISA. His investment also increases by 10% so he now has £88 and has paid a total of £20 in tax.

Oh dear, the ISA baddie has paid more tax than the pension goodie. Your argument doesn't work.

Thrugelmir

grizzly1911 wrote: »

The pension got the relief on the way in, the ISA (just another tax saving incentive wrapper like the pension after all) gets it on the way out.

Average tax payer will receive no tax benefit from investing in a strocks and shares ISA as they don't invest in the right things.

BillJones

Wild_Rover wrote: »

I am not suggesting that the capital in an ISA, if withdrawn, should be liable to tax, but I think that drawing from an ISA income larger than many people's wages, at a time of such alleged austerity, without tax, can not be afforded

It clearly can be afforded, though, as we are currently affording it.

I know that in all issues of tax it is popular (and populist) to look at the very highest earners, but there are really not that many of them, and they are already each (on average) paying an awful lot of tax.

If you think that you want to find more new taxes, why not start closer to home? Why not look at what you but that is currently under taxed, and suggest higher taxes on that?

chewmylegoff

Thrugelmir wrote: »

Average tax payer will receive no tax benefit from investing in a strocks and shares ISA as they don't invest in the right things.

Well they will still receive a tax benefit versus investing in exactly the same thing which is not held in a tax wrapper (unless they make a loss of course).

CLAPTON

Thrugelmir wrote: »

Average tax payer will receive no tax benefit from investing in a strocks and shares ISA as they don't invest in the right things.

the range of investment available to S&S ISA is pretty much the same as for pensions.