Pension changes under the Labour/SNP govt?

michaels

le_loup wrote: »

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.

Suppose the two amounts offset each other, the change to company taxation would impact all shareholders, the change to pension credits would only impact pensions, hence pension returns would have seen a net reduction.

Andy_L

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? 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.

But then Major & Lamont both reduced the rate of tax credit so he was just continuing a Tory policy to its logical conclusion (IIRC he also finally abolished MIRAS which had been progressively reduced by his predecessors)

marlot

Andy_L wrote: »

But then Major & Lamont both reduced the rate of tax credit so he was just continuing a Tory policy to its logical conclusion (IIRC he also finally abolished MIRAS which had been progressively reduced by his predecessors)

If they really wanted to !!!!! the housing bubble, they'd gradually remove interest rate relief on buy to let, just as they did with MIRAS.

zagfles

Spidernick wrote: »

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.

No the coalition brought that in. I remember the HOC debate and how Labour were saying how terribly unfair it is that their £250k+ annual allowance was being reduced to £50k:rotfl:Remind me again, who's the party looking after the interests of the rich?

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!

You're confusing the anti-forestalling on something Labour did try to do in the last years of their govt - which was to reduce the pension allowance for those earning over £150k.

Something which incidently the Tories are now also promising to do as well as Labour - one of the many things they have in common!

With the reduction to £50k there was an anomaly for those who had a pension input period near the start of the tax year, since even though they announced the reduction the tax year before, someone with a PIP ending eg in May may already have made contributions which would count in the next tax year not this. So there was some sort of exemption for them.

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.

As above. That's looking almost certain to happen now.

le_loup

michaels wrote: »

Suppose the two amounts offset each other, the change to company taxation would impact all shareholders, the change to pension credits would only impact pensions, hence pension returns would have seen a net reduction.

Please try to get the facts right.


It wasn't pension credits, whatever they are. It was dividend tax credit that affected ALL dividend receivers and, as mentioned above, it was a continuation of a tax simplification policy started by the very talented Norman Lamont - you remember him- he was the one who lost us billions with the ERM.


The sort of silly political posturing started by you with this thread, is pointless and unnecessary - all politicians have done good and bad things with pensions and it will ever be thus.

zagfles

le_loup wrote: »

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.

I reckon there should be a Godwin's law equivalent for anyone who accuses others of being a Mail reader :rotfl:

ACT abolision wasn't the abolision of a tax, it was the abolision of the advance payment of a tax. It didn't reduce the tax itself. The reduction in corp tax was obviously a reduction, but the loss of tax relief was the loss of 20% of the dividend value, which was only slightly offset by the 2% reduction in corp tax.

There are various credible analyses of the effect of the loss of dividend tax credits to pensions, they vary in the extent of the effect but none state there was no effect.

Linton

AIUI the abolition of the tax credit and the reduction in corporation tax was roughly tax neutral. I would see the tax credit in any case as being somewhat hard to justify as the tax to which the credit refers was never charged in the first place - it was somehow related to the fact that dividends were paid after the deduction of corporation tax and double taxation was seen as a bad thing. But that doesnt seem to apply when I pay the window cleaner out of taxed income and he has to pay tax on it again.

So ISTM that the tax credit system was in effect a subsidy. And we have the bizarre result that the Conservatives attack Labour for reducing taxes and reducing subsidies, which one would have thought would be Conservative party policy.

zagfles

Linton wrote: »

AIUI the abolition of the tax credit and the reduction in corporation tax was roughly tax neutral.

Nope. Definitely not neutral.

I would see the tax credit in any case as being somewhat hard to justify as the tax to which the credit refers was never charged in the first place - it was somehow related to the fact that dividends were paid after the deduction of corporation tax and double taxation was seen as a bad thing. But that doesnt seem to apply when I pay the window cleaner out of taxed income and he has to pay tax on it again.

That's not double taxation in the same way. If you ran a business eg a shop, you'd be able to offset the cost of the window cleaner of your shop windows against tax, ie claim it as an expense because that's what it is.

Personal spending obviously can't be offset against tax, otherwise no-one would pay any tax!

So ISTM that the tax credit system was in effect a subsidy. And we have the bizarre result that the Conservatives attack Labour for reducing taxes and reducing subsidies, which one would have thought would be Conservative party policy.

And some people still believe it's the Tories who look after the interests of the rich:rotfl:Look at the A-day rules. Massively beneficial to the rich, £250k+ annual allowance. Curtailed massively by this govt.

Linton

The tax credit, if anything, was a credit against tax paid by someone else. An interesting concept. Though it wasnt really that as it bore no relationship whatsoever to the corporation tax actually paid.

As to the tax neutrality of the decisions made at that time do you have any figures? In broad terms it would seem reasonable to believe that it was tax neutral, or even tax reducing - pensions arent particularly invested in dividend paying companies, most companies dont pay significant dividends but do pay corporation tax, most dividends arent paid into pensions.

Personally I cant see any good reason, except possibly difficulty of implementation, why dividends shouldnt simply be taxed as income. Then pensions could get a tax credit and everyone would be happy. But that's another argument.

zagfles

Linton wrote: »

As to the tax neutrality of the decisions made at that time do you have any figures? In broad terms it would seem reasonable to believe that it was tax neutral, or even tax reducing - pensions arent particularly invested in dividend paying companies, most companies dont pay significant dividends but do pay corporation tax, most dividends arent paid into pensions.

Been discussed. See https://forums.moneysavingexpert.com/discussion/5045994
Some references there.