Govt plan to merge income tax and NI

kuepper

I was mortified to read about this as pensioners don't pay NI, and to balance the loss of NI @ 12% pensioners would have to pay more tax, presumably 32% . Can't believe there's not more publicity from pensioners about it though I can imagine with the pensioners contribution it would be rounded down to 30% to soften the blow and sell it to the public

lvader

kuepper wrote: »

I was mortified to read about this as pensioners don't pay NI, and to balance the loss of NI @ 12% pensioners would have to pay more tax, presumably 32% . Can't believe there's not more publicity from pensioners about it though I can imagine with the pensioners contribution it would be rounded down to 30% to soften the blow and sell it to the public

I think this is one of those discussed tax changes that never happens, I'm not worried.

mjdh1957

This has been discussed off and on for years. Where have you read this particular piece of news?

richbeth

kuepper wrote: »

I was mortified to read about this as pensioners don't pay NI, and to balance the loss of NI @ 12% pensioners would have to pay more tax, presumably 32% . Can't believe there's not more publicity from pensioners about it though I can imagine with the pensioners contribution it would be rounded down to 30% to soften the blow and sell it to the public

There would no doubt be a separate band for people over state pension age.
R

kuepper

richbeth wrote: »

There would no doubt be a separate band for people over state pension age.
R

very trusting of you richbeth!

kuepper

mjdh1957 wrote: »

This has been discussed off and on for years. Where have you read this particular piece of news?

obviously deliberately leaked by the Tories to sound out opinion

http://www.theguardian.com/money/2014/jun/30/national-insurance-income-tax-merger-tories

http://www.independent.co.uk/news/uk/politics/radical-tory-tax-plan-spells-the-end-of-national-insurance-9571800.html

http://www.dailymail.co.uk/news/article-2674586/Will-Tories-merge-income-tax-national-insurance-Osborne-considering-plans-Tory-manifesto-2015-Election.html?ITO=1490&ns_mchannel=rss&ns_campaign=1490

http://www.thetimes.co.uk/tto/news/politics/article4133889.ece

zagfles

During the previous consultation on merging the operation of tax and NI they made it crystal clear time and time again that NI wouldn't be applied to pensions.

If they are going to go a stage further and merge NI into tax they will have a separate rate/band for pensions or they'll do something else like increase the pensioner's tax allowance.

Setting a tax rate at 32% for pensioners without any counteracting measure would simply be political suicide, it won't happen. It's like people who say the state pension is bound to become means tested. It won't. Pensioners are good voters and governments need to win elections.

bigadaj

We could, of course, go back to a more honest system whereby NI doesn't make up nearly 40% of the average persons marginal tax rate, so income tax of 23% and NI of 9% for example.

However that would reverse the lazy media headlines sponsored by politicians of saying they are cutting income tax when all they are doing is moving the goalposts on the exact definition of paying it.

JohnB47

kuepper wrote: »

obviously deliberately leaked by the Tories to sound out opinion

http://www.theguardian.com/money/2014/jun/30/national-insurance-income-tax-merger-tories

http://www.independent.co.uk/news/uk/politics/radical-tory-tax-plan-spells-the-end-of-national-insurance-9571800.html

http://www.dailymail.co.uk/news/article-2674586/Will-Tories-merge-income-tax-national-insurance-Osborne-considering-plans-Tory-manifesto-2015-Election.html?ITO=1490&ns_mchannel=rss&ns_campaign=1490

http://www.thetimes.co.uk/tto/news/politics/article4133889.ece

Yes but the trouble is that, like the feedback on this thread, many people will simply say (to themselves) yea, that's not going to happen. So the politians think 'hmmm, not much reaction there, perhaps we can get away with it'.

richbeth

kuepper wrote: »

very trusting of you richbeth!

Lol, quite the opposite, totally cynical! Any government which added 12% to the tax rate for pensioners would be signing their death warrant

Teaandscones

richbeth wrote: »

Lol, quite the opposite, totally cynical! Any government which added 12% to the tax rate for pensioners would be signing their death warrant

They could reduce the combined tax rate for people over SPA to 20% basic rate so no change for them. The people who would potentially be hammered would be early retirees who could have got 20% tax relief on contributions and but pay 32% on payments.