Osbourne's tax relief changes in the March budget

gadgetmind

Snakey wrote: »

instead take a £40k drop in salary, I am not cutting my current income, I'm cutting my future income.

My drop in gross salary not only reduces my tax bill quite drastically but lets me put *more* into my pension than would otherwise be allowed. Faced with that, who's going to work that extra day?

I know a lot of skilled people such as surgeons and senior consultants who are going to react similarly.

I fully expect this measure that's intended to raise more tax will result in less tax being collected and there being a lot of collateral damage to the country in other ways.

gadgetmind

chucknorris wrote: »

It would be ridiculous for me to say that I would retire totally because of a pension tax relief change, but it might just tip the scales.

It's the primary reason for my reduced days, and as part of my request being accepted, I need to put succession planning into place.

I'm OK in that I'm close to retirement age wise and investment magnitude wise. If I were younger and hadn't been saving for so long, then I'd be carefully evaluating half a dozen countries as alternative places to live and work.

kidmugsy

gadgetmind wrote: »

Yes to both.

I think you're wrong, at least when it comes to Social Security. The benefits are an intricate tangle of effects depending on age and marital status. By comparison our NICs/State Pension are simplicity itself. Or will be after the transition to the new style pension is complete.

And then you'd have to explain property taxes to anyone going to live in the US. Good luck with that.

kidmugsy

gadgetmind wrote: »

My drop in gross salary not only reduces my tax bill quite drastically but lets me put *more* into my pension than would otherwise be allowed.

If I were Chancellor, I'd abolish the reduction in the annual allowance for people on over £150k, and I'd either abolish or increase the LTA. Such changes might even be doable in the context of a big pension reform such as flat rate tax relief.

But I repeat: what on earth is to be done about DB schemes?

gadgetmind

kidmugsy wrote: »

I think you're wrong, at least when it comes to Social Security. The benefits are an intricate tangle of effects depending on age and marital status.

I know nothing of any benefits system anywhere in the world and have no intention of ever doing so.

By comparison our NICs/State Pension are simplicity itself. Or will be after the transition to the new style pension is complete.

NICs will still be very complicated, but you're right that our pensions are finally being fixed. However, my annual tax bill in retirement will be more than I get in state pension, but I suppose every little helps!

And then you'd have to explain property taxes to anyone going to live in the US. Good luck with that.

I know people who've moved in both directions and those moving to the US seem to find things easier.

Meanwhile, my wife is starting her UK tax return today and we'll probably finish it together this weekend. It's great that we can do it online and it does the calculations, but with a mix of employed income, self employed income, interest, dividend income, royalty income, foreign income, CGT, etc. it's a nightmare!

Mine is simpler as I throw it at an accountant, though I have to do all the Pension Input Period work.

gadgetmind

kidmugsy wrote: »

If I were Chancellor, I'd abolish the reduction in the annual allowance for people on over £150k, and I'd either abolish or increase the LTA.

So basically undo all the recent changes, pretty much all of which were for the worse.

Makes sense!

Snakey

kidmugsy wrote: »

But I repeat: what on earth is to be done about DB schemes?

This is the biggest problem, I think. I for one wouldn't know where to start. You've got all the complexities that people were explaining upthread, plus the political angle since DB = public sector (broad sweeping generalisation there, but you know).

So no matter what you do to the DC guys and gals in isolation, and we're having enough trouble getting consensus on that even with only the couple of dozen of us who are posting in this thread, you also have to decide what to do about the DB crew and then consider the fairness (or the appearance thereof) of the two sets of changes/end results in comparison with one another.

robin61

kidmugsy wrote: »

But I repeat: what on earth is to be done about DB schemes?

I don't think they could do much quickly. Some of the recent changes only applied to DC schemes so I wonder if futher changes to be announced will be restricted to those ? That may not be vary fair but since when did that stop them ?

kidmugsy

To partly answer my own question: maybe the biggest useful single advance for DB schemes would be to replace the multiplier of 20 (for annual allowance calculations) by 35. But that would probably require a bigger majority in the Commons than this government has got.

Teaandscones

kidmugsy wrote: »

To partly answer my own question: maybe the biggest useful single advance for DB schemes would be to replace the multiplier of 20 (for annual allowance calculations) by 35. But that would probably require a bigger majority in the Commons than this government has got.

Which would then put me as a lifelong basic rate taxpayer over the LTA retrospectively subject to 55% tax