Tax Credits

gadgetmind

kinger101 wrote: »

A cap should be placed on the extent to which pension contributions can be used to reduce pay for the purpose of tax credits.

The pension annual allowance has been on a merry dance for years, with new rules, backdated rules, unexpected rules, Alice In Wonderland Special Annual Allowance rules, and much more,

Some people are prepared to defer gratification and some aren't. Why punish the former?

Thrugelmir

Mistermeaner wrote: »

We have and George is fixing it.

This has been discussed before.... While accept we all do what's best for us and ours to a point I do think there's a place for morals in the world. I'm not perfect by any stretch but I pay my tax, if everyone was like me we'd be ok. Michael's is smart and manipulates the system to his advantage at everyone's expense - if everyone was like Michaels the country would be screwed. He is only able to do what he does because others either have better morals or aren't smart enough.

And every year the rules will modified again. Dismantling the complex welfare system was never going to be easy. Nor the tripling of the tax code under the previous Chancellor.

kinger101

gadgetmind wrote: »

The pension annual allowance has been on a merry dance for years, with new rules, backdated rules, unexpected rules, Alice In Wonderland Special Annual Allowance rules, and much more,

Some people are prepared to defer gratification and some aren't. Why punish the former?

I'm speaking specifically about the interaction with pension contributions and tax credits. I have nothing against the principle of people spreading their income over their lifetime (as a pension fund essentially defers taxation). And I do think even people on tax credits should be encouraged to provide for their own pension. I don't think people should be able to play the system for benefits though. This could be fixed by capping the amount people on tax credits are allowed to use pension contributions to reduce their income to say 10%.

Blue22

michaels wrote: »

The govt made the rules that pension contributions are not considered when calculating tax credits not me. I presume they did this on purpose as they could just as easily said that pension contributions did count as income for tax credits purposes. Upper rate tax payers making pension contributions are reducing govt income by much more than I am - is what they are doing morally worse therefore?

I would say what you are doing is morally worse as you are not just paying the government less, you are also taking money from them

I accept the government made the rules but do you really think they intended the rules to be used in the way you are using them?

And what about your new plan to reduce working hours for a few weeks so you are entitled to free school meals? Don't tell me the govt made those rules to benefit someone earning over 60k.

kinger101

Thrugelmir wrote: »

And every year the rules will modified again. Dismantling the complex welfare system was never going to be easy. Nor the tripling of the tax code under the previous Chancellor.

It's not that difficult; a mere 15,686 pages.

http://www.amazon.co.uk/Tolleys-Yellow-Handbook-2014-15-Pack/dp/1405788011

And another 5,376 if you want indirect tax as well.

http://www.amazon.co.uk/Tolleys-Orange-Handbook-2014-15-Volume/dp/1405788003/ref=pd_bxgy_14_img_2?ie=UTF8&refRID=1WHM7ENF9Z7W987BST9C


Plus case law.

Mistermeaner

Poorly implemented yes but I think everyone understand tax credits to be intended to help those on low incomes, particularly those with children

What Michaels is doing is getting the full tax relief on pension contributions (as can we all - pension will be taxed on the way out) but also getting tax credits, so a double helping from all tax payers.

Michael's does not need these tax credits, as he could put less in his pension and pay his own way but instead is fine with others going to work to pay for his family.

I would have trouble sleeping at night if that was me.

Not illegal but immoral. Does anyone think of someone as 'good' on t h e basis of adherence to the law or judge them more on their actions and treatment of others?

I hope this loop hole is closed soon and also that Michaels will at some point look at himself and question the morality of his decisions. Perhaps he may choose to give something back to the society he has taken so much from.

michaels

But millions of higher and additional rate taxpayers have had a much larger impact on govt finances with their pension contributions than I have with my 200k pension pot. Surely what matters is how much overall the your pension planning takes from your fellow taxpayers than the particular mechanism you use to achieve it? Thus people with higher incomes and more wealthy have reduced their tax, sometimes by more than a million pounds via pension contributions, surely they are more morally deficient than I am who has benefited by less than 150k? I wonder if some of those criticising me have benefited more from pension tax relief than I have?

Those who object please explain as I honestly can't see that my use of the rules as they are written is morally objectionable when millions of others have benefited using the same set of rules by much more.

Qualifying for free school meals would cost me money and help the state as the tax credits lost exceed by far the cost of the meals, the reason for doing so would be to boost my children's schools which would be shared equally over all children at those schools which sounds like a fairly magnanimous gesture to me?

Blue22

michaels wrote: »

But millions of higher and additional rate taxpayers have had a much larger impact on govt finances with their pension contributions than I have with my 200k pension pot. Surely what matters is how much overall the your pension planning takes from your fellow taxpayers than the particular mechanism you use to achieve it? Thus people with higher incomes and more wealthy have reduced their tax, sometimes by more than a million pounds via pension contributions, surely they are more morally deficient than I am who has benefited by less than 150k? I wonder if some of those criticising me have benefited more from pension tax relief than I have?

Those who object please explain as I honestly can't see that my use of the rules as they are written is morally objectionable when millions of others have benefited using the same set of rules by much more.

Qualifying for free school meals would cost me money and help the state as the tax credits lost exceed by far the cost of the meals, the reason for doing so would be to boost my children's schools which would be shared equally over all children at those schools which sounds like a fairly magnanimous gesture to me?

I'll try to reply as best I can.

Firstly as Mistermeaner pointed out you are not just benefiting in the way that other higher rate taxpayers are, you are also benefiting from tax credits. I estimate that the tax relief on your pension contributions is about 15K, then you receive another 15K in benefits and contribute nothing.

I can't accept that there are 'millions' who have benefited more than you. There are only 4-5 million higher rate taxpayers in the country and many of them will be earning around 40-60K. They won't have been able to afford to reduce their income down to the level that you have, because they won't have been receiving tax credits. These people may be reducing (or deferring) their tax liability on their pension contributions, but will still be paying some tax. (maybe 10k or so) So I reckon it's down to a few hundred thousand people benefiting more than you. That still leaves millions benefiting less than you! I do hope all those millions don't demand their share anytime soon.

Of the people who are benefiting more than you, I agree that some are using some rather aggressive tax avoidance but it's a crap argument to say I can't be doing anything wrong as others are doing worse or getting more than me. We would have a pretty awful society if we all used that as justification for any immoral behaviour.

No I'm certainly not someone who has benefited more than you. I am quite a lot older than you but have a much smaller pension pot. In fact my net worth is considerably less than your pension pot. I pay my income tax (and all other taxes) because that's what my moral compass tells me to do. I don't always agree with the way my taxes are spent but I wouldn't feel that I, or my family were entitled to state services, ie NHS, education, if I wasn't contributing what I could afford.

lisyloo

are very much castrated for many in these band

£40K per annum to me seems quite a lot.
Even for high earners of say £100K it's a pretty big chunck and for more medium earners on say £40K - £60K it's still enough.

michaels

Blue22 wrote: »

I'll try to reply as best I can.

Firstly as Mistermeaner pointed out you are not just benefiting in the way that other higher rate taxpayers are, you are also benefiting from tax credits. I estimate that the tax relief on your pension contributions is about 15K, then you receive another 15K in benefits and contribute nothing.

I can't accept that there are 'millions' who have benefited more than you. There are only 4-5 million higher rate taxpayers in the country and many of them will be earning around 40-60K. They won't have been able to afford to reduce their income down to the level that you have, because they won't have been receiving tax credits. These people may be reducing (or deferring) their tax liability on their pension contributions, but will still be paying some tax. (maybe 10k or so) So I reckon it's down to a few hundred thousand people benefiting more than you. That still leaves millions benefiting less than you! I do hope all those millions don't demand their share anytime soon.

Of the people who are benefiting more than you, I agree that some are using some rather aggressive tax avoidance but it's a crap argument to say I can't be doing anything wrong as others are doing worse or getting more than me. We would have a pretty awful society if we all used that as justification for any immoral behaviour.

No I'm certainly not someone who has benefited more than you. I am quite a lot older than you but have a much smaller pension pot. In fact my net worth is considerably less than your pension pot. I pay my income tax (and all other taxes) because that's what my moral compass tells me to do. I don't always agree with the way my taxes are spent but I wouldn't feel that I, or my family were entitled to state services, ie NHS, education, if I wasn't contributing what I could afford.

According to this:

http://www.ons.gov.uk/ons/dcp171766_305977.pdf

20% of households aged 50-64 have higher value pension pots than I do so have probably benefited from more tax releif than I have.

I know nothing of your circumstances but the reason I have a large pension pot is because I minimise my expenditure. No Sky, no iphone, holidays with relatives in the UK, value line food, cheapest mortgage rate etc as I value being financially secure over such things. Other lifestyle preferences are available and equally valid, complaining that I have more savings whilst not recognising what I have gone without to acheive them is not.