Pension changes under the Labour/SNP govt?

BobQ

michaels wrote: »

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?

AS I understand it Labour and Tories have a policy of removing tax relief from top rate tax payers and both support LTA at £1m.

The Conservatives would like to reduce the annual allowance for those with taxable incomes over £150,000 so that it falls from £40,000 to £10,000 by the time income
reaches £210,000.

Labour want to reduce the rate of income tax relief from 45% (50% under their policy) to 20% for those whose gross
income including employee (but not employer) pension contributions is over £130,000 and whose gross income including employee and employer contributions is in excess of
£150,000.

I cannot see your problem. You have always had to pay tax on the way in if you exceed the limits.

kidmugsy

marlot wrote: »

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.

No; the thing that work be to remove CGT exemption on principal private residences.

BobQ

michaels wrote: »

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.

Ah. In that case well worth acting soon, I cannot imagine that they would retrospectively change things, but I suppose they might cap what you can do on say 1 June 15 and say that contributions prior to that were OK but not afterwards.

Labour are speaking of reducing LTA to £30K (although given the savings that the Conservatives are expecting to achieve maybe they ill do so too).

zagfles

kidmugsy wrote: »

No; the thing that work be to remove CGT exemption on principal private residences.

Or both. Excellent idea to remove the exemption, as long as there's an allowance to carry it forwards to a new property, so you'd only pay on moving downmarket/abroad.

michaels

zagfles wrote: »

Or both. Excellent idea to remove the exemption, as long as there's an allowance to carry it forwards to a new property, so you'd only pay on moving downmarket/abroad.

I thought I was the only one in favour of this (or be it that there should be cpi indexation as I am not too keen on taxing inflation). It also helps with the inheritance tax issue, CGT can be charged on the property gain at death instead of inheritance tax.

I also can't believe that it is hard for some others to understand that taxation of dividend payments into pensions is taxation - if a pension is invested in gilts the coupons are not taxed (oops I shouldn't give Ed ideas).

I still think Labour will look to raise more revenue from this route than just impacting top rate payers and bringing in the 30k annual cap and getting rid of the three year roll-over with immediate effect would seem to be the most revenue raising approach.

zagfles

michaels wrote: »

I thought I was the only one in favour of this (or be it that there should be cpi indexation as I am not too keen on taxing inflation). It also helps with the inheritance tax issue, CGT can be charged on the property gain at death instead of inheritance tax.

I also can't believe that it is hard for some others to understand that taxation of dividend payments into pensions is taxation - if a pension is invested in gilts the coupons are not taxed (oops I shouldn't give Ed ideas).

I still think Labour will look to raise more revenue from this route than just impacting top rate payers and bringing in the 30k annual cap and getting rid of the three year roll-over with immediate effect would seem to be the most revenue raising approach.

I doubt they'd get rid of the 3 year roll-over, as that would impact those with public sector DB schemes.

Flat rate relief on pensions is a possibility, they could disguise it as a rise in relief for most people by giving 25-30% relief, this could be tax neutral or even save tax as currently basic rate tax payers paying by salary sacrifice get over 45% tax relief including employee & employer NI.

It would complicate employer pension contributions, which would have to be a taxable benefit, but they might simplify the rules on how employer conts are valued for tax purposes, eg a 1/60th DB scheme = 25% tax year pensionable salary, without the current big spikes when you get a payrise.

The other thing they've spoken about is limiting the TFLS, perhaps to around £36k or so.

hyubh

zagfles wrote: »

I doubt they'd get rid of the 3 year roll-over, as that would impact those with public sector DB schemes.

What makes you give that rationale... The last Labour government's record on public sector pensions was arguably rather better than the outgoing Coalition's, which has been mostly bluster and in some cases made things worse, e.g. in its expropriation of the the Royal Mail final salary scheme's assets and conversion of the scheme into an unfunded statutory one.

kidmugsy

zagfles wrote: »

Excellent idea to remove the exemption, as long as there's an allowance to carry it forwards to a new property, so you'd only pay on moving downmarket/abroad.

Oh no, the only allowance would be to start with valuations assigned for (say) 1st January 2017. If all capital gains were index-linked to, say, the CPI (as they really ought to be) then that would apply to houses too. And then you're exposed to CGT every time you move house. That'd sort out the housing bubble, make Mansion Tax and the like redundant, and generally raise a fair bit of tax. Still, say it's all for the NHS and every mug in the country will believe you, so that's good.

zagfles

hyubh wrote: »

What makes you give that rationale... The last Labour government's record on public sector pensions was arguably rather better than the outgoing Coalition's, which has been mostly bluster and in some cases made things worse, e.g. in its expropriation of the the Royal Mail final salary scheme's assets and conversion of the scheme into an unfunded statutory one.

I can't see how the above has anything to do with the post of mine you quoted.

Besides, I don't think we need worry about a Labour govt any more, by the looks of it!

zagfles

kidmugsy wrote: »

Oh no, the only allowance would be to start with valuations assigned for (say) 1st January 2017. If all capital gains were index-linked to, say, the CPI (as they really ought to be) then that would apply to houses too. And then you're exposed to CGT every time you move house. That'd sort out the housing bubble, make Mansion Tax and the like redundant, and generally raise a fair bit of tax. Still, say it's all for the NHS and every mug in the country will believe you, so that's good.

It wouldn't be fair to expose people to CGT just because they move house, eg they might have to move somewhere with similar or higher price houses for work, and so get double hit through no fault of their own.

The idea should be to tax housing profit, so only apply it when moving downmarket/abroad etc. So eg if you buy for £100k, sell for £150k, buy a new house for £200k - you pay no tax but roll forwards the £50k gain to the new house.

If you then eventually sell for £300k and move abroad, you pay tax on £150k, ie the total gain.

If you sell for £300k and move downmarket to a £200k house, you pay tax on £50k, ie the proportion of housing gain you've cashed in.