General Election 2015 – Tax Implications?

chucknorris

Cyberman60 wrote: »

The answer is not to put all of your money in one pot but have a mixture of investments. Have a modest pension but also own a house and a lot of ISAs. Pensions for some wealthy have been used in the past for extreme tax avoidance and that is why governments are cracking down, perfectly reasonably IMO.

It isn't all in pensions, it is mostly in property, then shares after that, fixed pension income will only be about 10% of my portfolio, the diversity doesn't change the fact though that I would have to pay 40% tax taking pension out but only get 20% tax relief going in. The max lifetime and annual allowances address the extreme tax avoidance issues.

EDIT: I have maxed out on ISA's for years, currently have about £250k in ISA's, my current wealth is stored as:

2% cash
10% fixed pension (excl. state pension, I'm 'only' 57)
19% shares
20% home
49% investment property


What's your portfolio/wealth mix?

antrobus

chucknorris wrote: »

......EDIT: Wait a moment, hold the retirement! How would they stop me getting 40% tax relief on it? If my salary is reduced by the pension contribution, surely that means that I would actually get 40% relief?! Because my income would be dropping out of the higher rate tax. I can see how they could do it for lump sum contributions, but how would they do it for payments coming out of your gross salary?

By changing the code for every payroll program in the UK.

antrobus

Ending higher rate tax relief on pensions is a kite that has been flown so many times in the past few years, that I have quite lost count.

My personal theory is that, somewhere in the vaults in Whitehall, there is a civil service brief that explains why this is a stupid idea, and every time the idea is proposed, the brief gets dragged out again to put the kybosh on the idea.

wotsthat

antrobus wrote: »

Ending higher rate tax relief on pensions is a kite that has been flown so many times in the past few years, that I have quite lost count.

My personal theory is that, somewhere in the vaults in Whitehall, there is a civil service brief that explains why this is a stupid idea, and every time the idea is proposed, the brief gets dragged out again to put the kybosh on the idea.

My personal theory is the pension companies perpetuate the myth that it's a serious proposal.

It would explain the emails I get just before every budget reminding me I should top up my contributions 'just in case'.

michaels

antrobus wrote: »

Ending higher rate tax relief on pensions is a kite that has been flown so many times in the past few years, that I have quite lost count.

My personal theory is that, somewhere in the vaults in Whitehall, there is a civil service brief that explains why this is a stupid idea, and every time the idea is proposed, the brief gets dragged out again to put the kybosh on the idea.

Hmm - something that is clearly a stupid idea long term but which could bring in a lot of tax short term that could be used to reward ones own supporters in the unions....there is obviously no chance that any politician would be stupid enough to do it.....

chucknorris

antrobus wrote: »

By changing the code for every payroll program in the UK.

I don't think that they would do it (but I reckon you were joking anyway?), I think it would just affect lump sum pension payments.

chucknorris

wotsthat wrote: »

My personal theory is the pension companies perpetuate the myth that it's a serious proposal.

It would explain the emails I get just before every budget reminding me I should top up my contributions 'just in case'.

I certainly think that they use it to drum up business.

Generali

chucknorris wrote: »

I certainly think that they use it to drum up business.

Now I have hopped the fence to the asset management side of things I can say that we definitely use potential and probable legislative changes to drum up business as an industry. One of the obligations we have to our clients is to see which way the wind is blowing

Spidernick

How would they restrict the higher-rate tax relief for salary sacrifice schemes? Changing someone's tax code wouldn't work in that instance. Would they restrict the tax you have to pay to basic rate when you draw the pension? If not, then hardly equitable.

Are they also proposing to abolish NI relief on these? I don't think employers suddenly having an additional 13.8% on these lumped onto their costs in one fell swoop will go down at all well!

This would open up such a can of worms that I really cannot see it happening (tax or NI restriction).

michaels

Generali wrote: »

Now I have hopped the fence to the asset management side of things I can say that we definitely use potential and probable legislative changes to drum up business as an industry. One of the obligations we have to our clients is to see which way the wind is blowing

Presumably managing your affairs so as to take avantage of changes in tax regimes is more of that imroal avoidance we hear so much about. Apparently we now not only have to follow the letter of the law but also have to have a full understanding of the law makes intent to make sure we don't inadvertently so something that whilst completely legal turns out to be imoral because it circumvented the intent....

Spidernick wrote: »

How would they restrict the higher-rate tax relief for salary sacrifice schemes? Changing someone's tax code wouldn't work in that instance. Would they restrict the tax you have to pay to basic rate when you draw the pension? If not, then hardly equitable.

Are they also proposing to abolish NI relief on these? I don't think employers suddenly having an additional 13.8% on these lumped onto their costs in one fell swoop will go down at all well!

This would open up such a can of worms that I really cannot see it happening (tax or NI restriction).

I would guess that they woud simply decalre that all pension contributions whether by the individual or employer were taxable at the individuals marginal tax rate less 20%. Probably subject them to NI at the same time.....