Osbourne's tax relief changes in the March budget

michaels

Snakey wrote: »

Indeed! There's so much stuff "on the table" that there must be no space to put the Pret platters.

I note the misleading "and" in the headline - the former restriction is only for DB schemes, and the latter is only for DC schemes. Interesting! This is the first pseudo-leak that's actually dealt with the issue of the two different types of pot. Does this mean it's less likely to be some b0ll0cks made up down the pub?

Restricting contributions is the simplest way to avoid all the problems with salary sacrifice (certainly easier than flat rate relief/post-tax contributions with an uplift), and as such would enable it to be brought in pretty quickly.

I see these proposals would also remove the LTA for DC schemes.

I am impressed that they have actually got the implications of flat-rate relief right: "This would mean every £1 paid into a pension costs a higher rate tax payer more than a basic rate tax payer". Well done.

I agree if you want to bring something in 'with immediate effect' then 'more of the same' in terms of annual and life time allowances is obviously the most straight forward.

BobQ wrote: »

If these suggestions are true, combined with all the recent changes Osbo has made, it will be very ironic that the opprobrium heaped on Gordon Brown's changes by Government supporters will be trivial compared with these changes.

The reduction in LTA would presumably be accompanied by an exemption for those who have already exceeded that limit, providing further reasons for the younger generation to claim they are being treated unfairly we their elders.

I was just thinking the same - some of what is suggested would make Brown's smash and grab look amateur in comparison.

zagfles

BobQ wrote: »

"The Government has launched a wide-ranging consultation into cutting pension tax relief.

Read more: http://www.dailymail.co.uk/news/article-3414867/Not-New-plot-raid-pension-pot-Treasury-looking-limiting-lifetime-allowance-750-000-restricting-away-year.html#ixzz3yI6GomiY
Follow us: @MailOnline on Twitter | DailyMail on Facebook "

It does not seem to be on the Government consultations pages of www.gov.uk

The consultation closed in September.
http://www.gov.uk/government/consultations/strengthening-the-incentive-to-save-a-consultation-on-pensions-tax-relief

zagfles

michaels wrote: »

I agree if you want to bring something in 'with immediate effect' then 'more of the same' in terms of annual and life time allowances is obviously the most straight forward.


I was just thinking the same - some of what is suggested would make Brown's smash and grab look amateur in comparison.

It sounds like they're just doing the usual thing of floating a few ideas to see what the reaction is, and making them quite extreme so that what they actually end up doing comes as a bit of a relief to everyone.

RuleTheWorld

Are people thinking they'll only mess with the tax deductability of employee contributions? What about employer contributions as surely messing with this would have a bigger impact?

zagfles

RuleTheWorld wrote: »

Are people thinking they'll only mess with the tax deductability of employee contributions? What about employer contributions as surely messing with this would have a bigger impact?

Discussed earlier in the thread. On a related note this article is interesting:

http://www.corporate-adviser.com/tax-shutters-down-on-march-16-mcphail/

Now obviously HL have a vested interest in always predicting the imminent end of higher rate relief, but he probably has a point about massive losses in taxes if they give people a year's notice, during which every higher rate taxpayer with any sense will get as much in while they can.

The govt could announce an immediate end to higher rate relief on personal contributions, and also a ban on any increases in salary sacrifice or employer contributions/DB benefits unless agreed before the budget date.

That would give time for employers to adjust to flat rate relief which would likely mean pension conts would be taxable on the employee eg via the P11D, with the offset of the flat rate relief.

buggy_boy

As someone of a younger generation who already has a pretty woeful employers pension scheme it will put people of my generation off investing in a pension if your a 40% tax payer which could lead to a lot of higher rate tax payers needing to be cared for by the state in old age.

RickyB2000

With all the noise and fear mongering, won't most HRT payers already be piling into pensions? So it is already costing just talking about it.

Are there any figures on cost of another year? Will there be many HRT payers sitting on piles of.cash.(after filling up this year based on these reports) to really cost that much?

EdSwippet

buggy_boy wrote: »

As someone of a younger generation who already has a pretty woeful employers pension scheme it will put people of my generation off investing in a pension if your a 40% tax payer which could lead to a lot of higher rate tax payers needing to be cared for by the state in old age.

In which case we can probably look forwards to auto-enrollment morphing into compulsory pension savings. This is already being urged by several vested interests.

michaels

RickyB2000 wrote: »

With all the noise and fear mongering, won't most HRT payers already be piling into pensions? So it is already costing just talking about it.

Are there any figures on cost of another year? Will there be many HRT payers sitting on piles of.cash.(after filling up this year based on these reports) to really cost that much?

Guilty as charged - I am putting in about 75k this year (max possible) and was planning to do the same next year. I will talk to my employer about whether the March payment can be made early before the 16th to be on the safe side.

If they cut the annual limit to 25k I am not sure if I will have enough rollover allowance to do what I want to next year. Does anyone know if you 'use up unused allowance from the previous 3 years whther it uses up the most recent year's unused allowance or the furthest back unused allowance first.

EG 11/12 unused 40k
12/13 unused 30k
13/14 unused 30k
14/15 save 70k (40k that year allowance plus 30k from previous years)

What is remaining carry forward allowance for 15/16?
Is it 60k (30k each from 12/13 and 13/14 as the extra 30k in 14/15 counts against 11/12)
Or is it 30k from 12/13 because the extra 30k in 14/15 counts against 13/14 (and 11/13 has dropped out)?

GunJack

the biggest encouragement for people to save in pensions would be to make the entire thing simpler (and with a better degree of security) than they are currently..let's face it, between pensions and the uk tax system it's way over-complex :mad: