Osbourne's tax relief changes in the March budget

dharm999

Given the track record on tapering things, my guess is that if Osborne does anything, he will phase in the reduction in relief and may offer the carrot of increasing the relief to a flat rate, say 30%, for everyone, but not introduced for a couple of years, just before the next election,would be opportune. So he would get a couple of years of increased tax receipts, and then have to give some of that back when he increased the relief for all. He did this with the Apprentice levy, and the government seem like to like the tapering concept.

saver861

dharm999 wrote: »

Given the track record on tapering things, my guess is that if Osborne does anything, he will phase in the reduction in relief and may offer the carrot of increasing the relief to a flat rate, say 30%, for everyone, but not introduced for a couple of years, just before the next election,would be opportune.

I was thinking the other way. He introduces the 30% this year. Next year whittle it down to 25% and so on. Just slide it away in the hope nobody notices!!!

kidmugsy

saver861 wrote: »

He introduces the 30% this year. Next year whittle it down to 25% and so on. Just slide it away in the hope nobody notices!!!

Most unlikely if it's true that Mr Osborne has ambitions to be PM. How on earth could "nobody notice"?

saver861

kidmugsy wrote: »

Most unlikely if it's true that Mr Osborne has ambitions to be PM.

Oh he has ...

kidmugsy wrote: »

How on earth could "nobody notice"?

Yes people will notice, but that's largely down to the era we are in, sites such as this etc etc. In days gone by, pulling the wool was a lot easier. It still does not stop them trying though ..... but that's politicians.

gadgetmind

As the annual allowance tapering comes in this April, one might have hoped that this would be it for now.

Everything else being discussed would take a long time for employers and pensions companies to adapt to, so again, I expect we'll get plenty of notice.

BTW, as a result of the new tax and pensions rules coming into effect this April, I have made changes that will result in me paying £20kpa *less* tax as of April. As usual, rule changes designed to raise tax have back fired!

TheTracker

I don't think much will be changed.

The most likely is a further reduction in the annual allowance. When you look at the statistics, the mean contribution even for HRT payers is only about 10k. Pulling it down to 25 or 30k is likely to only scoop higher earners, and is difficult to disagree with. Maybe they could allow a carry forward for more than 3 years to sweeten the blow.

tinter

Introducing flat rate also has the opportunity to eliminate Salary Sacrifice, which should offer further receipts in terms both of employer & employee NI and increasingly Student Loan Company receipts, which are also avoided.

There is a whole cohort entering the workplace for whom salary sacrifice avoids 41% as a basic rate tax payer or 51% at higher rate thanks to student loans. This clearly isn't something the government is going to want to leave alone so I suspect salary sacrifice will be gone within the decade even if it survives this time. [EDIT] : Especially noting the further advantage in preventing people using salary sacrifice to qualify for various means tests.

With walking back Tax Credits there is pressure to find replacement savings. Its easy to talk about how these changes might be unpopular, but no change resulting in billions of receipts is going to be popular; this is probably the easiest one to make. The negative impact is on higher rate tax payers; it seems unlikely that they are going to defect to labour or the liberals in the hopes of a more favorable environment for high earners so politically there seems little reason not to go ahead.

gadgetmind

tinter wrote: »

The negative impact is on higher rate tax payers; it seems unlikely that they are going to defect to labour or the liberals in the hopes of a more favorable environment for high earners

Agreed. In many cases they will just leave the country as there are far more favourable environments elsewhere. So once again, attempts to impose draconian rates of tax will backfire.

tinter

gadgetmind wrote: »

In many cases they will just leave the country as there are far more favourable environments elsewhere.

With the lifetime allowance, pensions alone do not seem a large enough tax benefit to base your country of abode on. It seems unlikely anyone would recommend moving to the UK thanks to it, so doing the converse also makes little sense.

If one is saving so very much from higher rate tax relief as that its the only reason to stay in the UK, that would probably suggest they are too generous.

TheTracker

tinter wrote: »

With the lifetime allowance, pensions alone do not seem a large enough tax benefit to base your country of abode on. It seems unlikely anyone would recommend moving to the UK thanks to it, so doing the converse also makes little sense.

If one is saving so very much from higher rate tax relief as that its the only reason to stay in the UK, that would probably suggest they are too generous.

That's Daily Mail logic. Ie wrong. You can't invert a logical implication like that.

I'd leave the country if storm trooper death squads were introduced. The lack of them does not mean that policing is too generous and you can not assume the only reason I am here is because of the current police system.