Election campaign kicks off

IveSeenTheLight

George Osborne to cut 55% pension 'death tax'

From the above link, we can see that the Conservative election campaign has kicked off.

Whilst I broadly agree that the current percentage applied is wrong, can the government really suggest these tax cuts whilst further austerity is planned and we still have a huge deficit?

Thrugelmir

IveSeenTheLight wrote: »

Whilst I broadly agree that the current percentage applied is wrong, can the government really suggest these tax cuts whilst further austerity is planned and we still have a huge deficit?

This announcement most likely forms part of the far wider pension liberalism coming in 2015. Saving for retirement via a pension is something to be encouraged. Given the cap of contributions that can be made to a scheme. The cost to the exchequer is probaly minimal by dispensing with the 55% rate.

One side effect may be to diminish the attractiveness of BTL as a source of retirement income.

Scotland may decide to impose different tax rates. As of course there's the power to vary income tax rates.

IveSeenTheLight

Thrugelmir wrote: »

This announcement most likely forms part of the far wider pension liberalism coming in 2015. Saving for retirement via a pension is something to be encouraged. Given the cap of contributions that can be made to a scheme. The cost to the exchequer is probaly minimal by dispensing with the 55% rate.

A 15% - 35% reduction in this rate may be questionable as to whether it is a minimal cost to the exchequer.

Don't get me wrong, I think it's the right thing to do, I'm just questioning the timing which there is further austerity measures to come in.

Thrugelmir wrote: »

One side effect may be to diminish the attractiveness of BTL as a source of retirement income.

Explain this further, why?
How does this factor into the Capital Gains formula?
Surely this benefits estates which are inherited? This sounds like a meme which has no impact into the announcement

Thrugelmir wrote: »

Scotland may decide to impose different tax rates. As of course there's the power to vary income tax rates.

Another meme.
Does Scotland have the powers to alter inheritance tax? Maybe they will come next year, let's see.

Income tax has nothing to do with this announcement

Generali

IveSeenTheLight wrote: »

George Osborne to cut 55% pension 'death tax'

From the above link, we can see that the Conservative election campaign has kicked off.

Whilst I broadly agree that the current percentage applied is wrong, can the government really suggest these tax cuts whilst further austerity is planned and we still have a huge deficit?

According to your link the cost is expected to be £150,000,000 which should be a lot to the Government but sadly isn't.

IveSeenTheLight

Generali wrote: »

According to your link the cost is expected to be £150,000,000 which should be a lot to the Government but sadly isn't.

That's fine.
I'm sure that it's another £150Million that could have been utilised elsewhere until we get the who budget in order.

purch

IveSeenTheLight wrote: »

I'm sure that it's another £150Million that could have been utilised elsewhere until we get the who budget in order.

I very much doubt that the current Government are advocating reducing the overall Tax take. In fact it is likely to be the opposite.

It is a case of shifting the Tax take more fairly.

I can't see how this could be seen as a bad idea.

Cyberman60

55% tax is in no way fair and is a disincentive to save for retirement when you take into account pension administration fees over the lifetime of that investment. This wouldn't necessarily all be tax free anyway as there is an inheritance tax band of around 350K methinks.

Graham_Devon

IveSeenTheLight wrote: »

George Osborne to cut 55% pension 'death tax'

From the above link, we can see that the Conservative election campaign has kicked off.

Whilst I broadly agree that the current percentage applied is wrong, can the government really suggest these tax cuts whilst further austerity is planned and we still have a huge deficit?

And on the very same day announce that benefits for working age people (that includes in work benefits) will be frozen, in order to save money.

Pensioners won't see any of their benefits frozen.

I would normally agree with freezing benefits in order to save money. But when all of that money is then given away in a tax cut to the wealthy, it just seems rather silly.

CLAPTON

the new pension freedom that will allow pensioners to withdraw funds from the pension pot


without this measure most people, upon reaching 75 would withdraw their money anyway to avoid the 55% tax when they die


so in reality it isn't going to make much difference : whilst it might cost 150 million compared to today's pension laws, it won't cost much under the post 2015 rules

N1AK

Graham_Devon wrote: »

I would normally agree with freezing benefits in order to save money. But when all of that money is then given away in a tax cut to the wealthy, it just seems rather silly.

This is exactly what has pushed me from supporting the current government to being fed up with conservative politics. The blatant focus on buying the loyalty of their core voters while being ruthless in changes to the young is unacceptable to me.

Are you a couple living in a 3 bed council house, in an area with no smaller council properties available? Tough luck scrounger, we're taking some benefits back!

Are you a very wealthy pensioner? Congratulations, we'll improve your pension in relative terms, give you additional tax breaks like bigger ISA allowances, make it easier to pay less tax when passing money on and make sure you keep that free bus pass!

People have dismissed this pension change as being a drop in the ocean and it isn't, but even if it was spending it on a benefit for the wealthy while putting the poor through further austerity is unfeeling even by conservative standards.

N1AK

CLAPTON wrote: »

so in reality it isn't going to make much difference : whilst it might cost 150 million compared to today's pension laws, it won't cost much under the post 2015 rules

My understanding is this will continue to make a considerable difference for wealthy individuals? If my estate was sufficient to be covered by inheritance tax then leaving money in my pension would avoid inheritance tax, and the person(s) inheriting would pay income tax which would be lower.

If I'm right then the only people really benefiting from this change are those with large enough estates to pay inheritance tax. Obviously the group we should be giving tax breaks to while bringing in more austerity.