Pension changes under the Labour/SNP govt?

michaels

Labour obviously intend to bring in double taxation of pensions (taxed when you put it in, taxed when you draw it out), will the changes they bring in to do so in the June budget impact this tax year or only 16/17 onwards?

le_loup

"I am sad enough to think gives me status even though in fact it just shows that I am easily ripped off and a bit inadequate"


A bit like your post above!

michaels

le_loup wrote: »

"I am sad enough to think gives me status even though in fact it just shows that I am easily ripped off and a bit inadequate"


A bit like your post above!

Thanks for your insight.

However with Labour almost certain to reduce the tax relief available of pension contributions via lower lifetime limit and possibly basic rate only relief it would seem sensible to maximise pension investment this year if possible if the rules will change from 16/17 onwards whereas if they will change for this year then it is already too late.

Daniel54

Both main parties have said they will reduce the lifetime allowance and limit tax relief for top rate tax payers

The rest is your speculation.

http://election2015.ifs.org.uk/article/conservative-and-labour-proposals-to-cut-pensions-tax-relief-for-those-with-an-income-above-150-000

michaels

Daniel54 wrote: »

Both main parties have said they will reduce the lifetime allowance and limit tax relief for top rate tax payers

The rest is your speculation.

http://election2015.ifs.org.uk/article/conservative-and-labour-proposals-to-cut-pensions-tax-relief-for-those-with-an-income-above-150-000

Labour do have form for increasing pension taxation as soon as they come to power in ways not in their manifesto. Anyhting that detered higher rate taxpayers from saving into their pensions and instead taking more of total renumeration as income would have an instant positive impact on tax take as well.

Spidernick

I'm glad you seem to think Labour is going to win - I am anything but convinced at present.


I think retrospective changes would be a little underhand, but not out of the question, so you would hope 16/17 would be the first year. Perhaps a good guide would be with the last major change that Labour brought in (I think) with the annual drop to £50K. There the change was from the next year, but you could only use the full amount for the year the change was announced if you regularly made contributions at that level in any case. If the same applied here, and you'd contributed £10K a year for the last few years to 14/15, if you paid in £40K in 15/16 the excess might be disallowed. Saying that, how they would know about salary sacrifice schemes, for example, is another matter!


Also, I thought there was an anomaly whereby 40% taxpayers would still get 40% relief, whereas 45% (50%) taxpayers will just get the basic 20%? I could see VCT and EIS schemes becoming more popular over time if these changes come into effect.

michaels

I'm hoping to take advantage of the unused roll-forward allowance form the past 3 years and make a one of contribution probably of my whole 15/16 salary with the majority as salary sacrifice down to NMW and the rest as AVC, it also needs to be done prior to full UC rollout as otherwise savings will kill off the tax credits perk of this approach.

Daniel54

In 2009/10 the lifetime allowance was £1.75m and the annual allowance was £250k

When did Labour change the taxation of pensions immediately after winning an election ? I can't recall it myself

I am not a Labour supporter per se, but please support your statements

michaels

I beleive in his first budget Gordon Brown removed the 'dividend tax credit' so that pension dividend income was no longer tax free? Widely refereed to at the time as a multi-billiion pound raid on pensions that continues to net the treasury billions of pounds every year that previously resulted in pension pots growing more quickly.

kidmugsy

An emergency budget might contain anti-forestalling legislation, so you may want to act beforehand.

The two obvious cases I can remember of actual retrospective legislation occurred a long time ago: Jenkins and Healey were the Chancellors. Maybe those are the eras Mr Moribund wants to take us back to. That's assuming that he would be PM in a Labour coalition, which won't necessarily be true. Who knows?

le_loup

michaels wrote: »

I beleive in his first budget Gordon Brown removed the 'dividend tax credit' so that pension dividend income was no longer tax free?

He did.
....... however you seem to have not remembered that at the same time he abolished Advance Corporation Tax and reduced Corporation Tax by 2%. All of which contributed to net profit increases in the companies that your pension was invested in.
You really must stop taking Daily Mail stories as the Gospel.