Osbourne's tax relief changes in the March budget

kidmugsy

AlanP wrote: »

In the public sector jobs are graded and assigned to a salary scale and you get whatever benefits are on offer and whatever pay rise the organisation offers.

This would be a chance for a genuinely reforming government (ha, ha) to tell the unions that it's all for flexibility, and that it's going to start by scrapping national pay scales.

zagfles

DaveMcG wrote: »

I can't understand how employer contributions are going to be taxed. If the position is unchanged, then salary sacrifice or new terms and conditions could make all schemes non contributory.

If employer contributions are non-relievable, then there would be a mass closure of private sector schemes and possibly legal action taken due to the preferential treatment of the public sector.

What do you mean "non-relievable"? Deductible as a business expense against corporation tax? I can't see any reason this would change. It would make no sense at all. All employee remuneration is deductible as a business expenses whether taxable on the employee or not.

The only thing I can see changing here is employers possibly having to pay class 1A NI on pension contributions, something they don't now.

If employer contributions are relievable but deemed to be taxable on the employee, many of these would be sent into higher rate tax by contributions

Yes although this may be mitigated by raising the HRT threshold, the govt have already promised a £50k HRT threshold.

(the valuation of which in the case of defined benefit would be a can of worms).

Yes which we've discussed in some depth earlier in the thread.

gadgetmind

zagfles wrote: »

The only thing I can see changing here is employers possibly having to pay class 1A NI on pension contributions, something they don't now.

Bringing that in would be yet another nail in the coffin of DC pensions, and again, how do you maintain "fairness" between DC and DB?

I still don't understand what was wrong with the £255kpa annual allowance, the £1.75m lifetime allowance, and then leaving it down to individual/employer choice?

I don't see any political gain from all of this meddling, and it certainly won't raise any more in tax, so why not just pack it in?

hugheskevi

I don't see any political gain from all of this meddling, and it certainly won't raise any more in tax, so why not just pack it in?

I don't think that can be stated with certainty.

A little over £10bn of National Insurance relief is applied to employer pension contributions (source here). I can envisage a change whereby a flat rate of relief is set that is calculated to be income-tax neutral, and the Exchequer picks up as much of the £10bn National Insurance as it can (very unlikely it can get all of it, due to behavioural change), which most folk on the street won't really understand. The policy can be spun as limiting tax avoidance from higher earners whilst rewarding lower earning hard working families. It is of course far more complicated than that, but it is the headlines that matter, not the detail

gadgetmind

hugheskevi wrote: »

(very unlikely it can get all of it, due to behavioural change)

Understatement.

which most folk on the street won't really understand.

And another.

MARTYM8`

chiefie wrote: »

Lots of articles about this around at the moment with a belief that Ozzie will do it with immediate effect from March 16th - can't see it myself but I didn't see pension freedom coming

I would think doing this immediately would create all sorts of complications for businesses in terms of payroll deductions for employee contributions - given most people get paid mid month or later.

Perhaps it might be kept but with limits on the sums eligible for 40% relief to allow time for consultation and implementation with the industry.

gadgetmind

MARTYM8` wrote: »

Perhaps it might be kept but with limits on the sums eligible for 40% relief

Already coming in, and this limit can be as low as £10k for some people. How much lower do people think it should be?

kidmugsy

MARTYM8` wrote: »

but with limits on the sums eligible for 40% relief

That would be a particularly simple form of anti-forestalling legislation. Sounds plausible to me.

AlanP_2

kidmugsy wrote: »

This would be a chance for a genuinely reforming government (ha, ha) to tell the unions that it's all for flexibility, and that it's going to start by scrapping national pay scales.

Some local authorities have opted out of national bargaining and are ploughing their own furrow.

Local terms & conditions although in essence the core elements are the same like the pension scheme and a transparent pay / grade assessment process and structure.

A higher number have done it for senior staff as opposed to all staff but the writing is on the wall for nationally negotiated "one size fits all" pay I think.

RickyB2000

I find it interesting that a lot of people say that the extra tax relief HRT payers get is unfair. This assumes that it is fair these people pay a higher % of tax in the first place. In the current system, if you earn £1000 gross you get to keep that if you put into a pension - regardless of your tax rate. You don't earn anything extra. Looked at a certain way, this seems fair. The only people who earn extra are non earners and those who contribute from personal allowance income.

Though the usual counter argument to all this is that these people can afford to pay the extra tax, so why not (someone has to pay for everything).....