Osbourne's tax relief changes in the March budget

neilvw

MDMD wrote: »

Article in FT today suggests he is going for the flat rate. It acknowledges that it is going to annoy Conservative voters but that they have no other options as they can hardly defect to Corbyn.

Still doesn't really deal with the DB pension issues

http://www.ft.com/cms/s/0/abcb2a4e-bb81-11e5-b151-8e15c9a029fb.html?desktop=true#axzz3xOnU3Q6H

Steve Webb thinks salary sacrifice might be cut back or abolished, to fund a "worthwhile" flat rate of relief (he favoured 33%).

gadgetmind

neilvw wrote: »

Steve Webb thinks salary sacrifice might be cut back or abolished

That effectively eliminates employer contributions. How would this be implemented for DB pensions?

neilvw

gadgetmind wrote: »

That effectively eliminates employer contributions. How would this be implemented for DB pensions?

I have no idea, the best brains in Whitehall are working on it currently no doubt.

RickyB2000

I guess the flat rate of tax will mean the government can lower contributions for low rate tax payers in public schemes. So no pay rise but here is some more disposable. For the higher rates, an increase in contributions would probably be simplest. Maybe offset it with an increase in the higher tax rate threshold (they have promised an increase by 2020) though not to great an increase that it hurts the overall tax benefit.

neilvw

How about abolishing the 45% tax rate to soften the blow for high earners? The gap from (say) 33% to top rate doesn't seem so steep then.

neilvw

RickyB2000 wrote: »

For the higher rates, an increase in contributions would probably be simplest. Maybe offset it with an increase in the higher tax rate threshold (they have promised an increase by 2020) though not to great an increase that it hurts the overall tax benefit.

They have promised a higher-rate threshold of £50,000 by 2020, but it doesn't rise much in 2016 (£42,385 to £43,000) so it needs to go up by £1,750 on average each year from 2017/18 to 2020/21 to meet the pledge.

gadgetmind

I could be all "I'm alright Jack" because I'll be just about done with this working malarkey when these threats may manifest, but what I've seen so far does threaten to cause deep and long term damage to the UK's economy.

I know it's not "on trend" to say it, but we do actually need our high achievers in STEM subjects, and they aren't going to sit in the UK taking all the punches when they have the world at their feet.

robin61

gadgetmind wrote: »

I could be all "I'm alright Jack" because I'll be just about done with this working malarkey when these threats may manifest, but what I've seen so far does threaten to cause deep and long term damage to the UK's economy.

I know it's not "on trend" to say it, but we do actually need our high achievers in STEM subjects, and they aren't going to sit in the UK taking all the punches when they have the world at their feet.

At one time the team I work in would have all been based in the same office. Now I have colleagues spread all over the UK and several based in other countries. Technology makes this al! possible. I remember the ' braindrain' in the 1960s and 1970s. It would be a lot easier to work elsewhere now than it was then for a lot of people.

gadgetmind

My team is now across four continents, and I'd have to use my fingers and toes to work out how many countries, but it's a lot. When I want to start a new team, geography plays second fiddle to skill sets. If members of my team want to move, then they move, sometimes off their own bat, sometimes because I work to make it happen.

When it comes to skilled people, the UK seems to be all stick, whereas for the deeply unskilled, it's carrots galore.

MDMD

Personally I would be in favour of just scrapping the 25% tax free lump sum, that would then go a fair way to cutting the 'bill' and be far far simpler than any other option.

Whatever he does,he is almost certain to face a few people in similar situations to those caught by Brown's 10p tax rate fiasco, and then having to wheel out yet more clumsily worded legislation.