Potential New flat rate relief and Salary Sacrafice

michaels

chucknorris wrote: »

I don't see the point in only getting 30% pension tax relief when I will have to pay 40% tax taking it out (I realise that it would be the same 30% when taking into account the tax free lump sum, but there is no guarantee that will still be available in the future).

Although we are going to take a look at the Isle of Man (IOM) as a potential retirement place, so with a IOM max tax rate of 20% and a 30% tax free lump sum, it would still be worth it.

You mean the 25% tax free lump sum that is slated for abolition :eek:
If it does get canned will it be entirely or only for new contributions?

dunstonh wrote: »

As most non taxpayers and basic rate taxpayers will be better off through the proposed changes and most higher rate worse off, I don't see Osborne being viewed badly by the majority. However, highest rate taxpayers are not going to be happy at all and those that are borderline who used the pension to get benefits wont be pleased with the change.

Yes we are talking a change that would make me on about 60k gross about 20k net worse off in 16/17 than 15/16. Would that be the largest proportionate tax change anyone has ever suffered?!

greenglide

The government is allowed to do pretty much what it wants but in practice they wouldn't really do as big a change as scrapping the 25% PCLS without putting in some kind of transitional protection. Scrapping it for all future contributions is possible.

The bigger the change the less likely it can apply from April this year because of the impact on pension providers, employers and HMRC and all their IT changes.

Snakey

The PCLS has been rumoured to be up for abolition since I can remember i.e. early 90's.

Triumph13 wrote: »

I hate to break it to you Snakey, but you're not unique. I've got a sacrifice taking me over the AA and relying on brought forward relief too. Just to add complexity I'm also due an age-related increase in employer contributions at my next birthday!

We should start a club! Once I've got over the disappointment at not being a special snowflake anyway.

All the talk in the media, and by officials, about how the AA and the LTA are only a problem for a few thousand "very wealthy" people, had made me think that I - with my £75k employment income before salsac - was a rare beast. After all, the real high earners on hundreds of thousands plus non-contributory pension wouldn't have any brought forward relief. Nice to know there's at least two of us.

[ETA: and as you say, anybody on a less favourable benefit package than "we'll contribute the maximum on your behalf each year" is going to run into age-related increases from time to time.]

Snakey

I almost had to eat my words when I saw this headline in the Telegraph: http://www.telegraph.co.uk/news/politics/georgeosborne/12167084/George-Osborne-will-abolish-pension-perk-in-tax-bombshell-claims-former-minister.html but luckily it was doing no more than pointing out that if we changed pensions to an ISA-style system it would get rid of the PCLS by the back door (since all of the money going in would have been taxed, not just 75% of it).

As far as I know nobody was seriously expecting that we'd move to Pension ISAs, although perhaps the joke's going to be on us, who knows.

Presumably existing entitlements would be grandfathered within "old rules" pots that were funded with tax relief and would therefore still be taxed on the way out.

GunJack

michaels wrote: »

Yes we are talking a change that would make me on about 60k gross about 20k net worse off in 16/17 than 15/16. Would that be the largest proportionate tax change anyone has ever suffered?!

aww come on, you're well-known in this forum for playing the system to the max, totally against the spirit of what the rules were intended for..... would it really harm for you to be more in-line with the rest??

westv

greenglide wrote: »

The government is allowed to do pretty much what it wants.

(cough) poll tax (cough)

michaels

GunJack wrote: »

aww come on, you're well-known in this forum for playing the system to the max, totally against the spirit of what the rules were intended for..... would it really harm for you to be more in-line with the rest??

Well as long as they aren't changing the rules just to stop my kids having piano lessons.

Triumph13

The more I look at this, the more it seems that if you want to introduce a flat rate of relief then it's much easier to do it via a pensions ISA than within the current system...

jamesd

michaels wrote: »

Yes we are talking a change that would make me on about 60k gross about 20k net worse off in 16/17 than 15/16. Would that be the largest proportionate tax change anyone has ever suffered?!

Not even close. The largest I know of in the UK system is a parent who goes from £100,000 to £100,000.01 and loses childcare-related benefits. They need an increase of around £12,000 just to get back all they lose from going over the threshold.

AnotherJoe

greenglide wrote: »

The bigger the change the less likely it can apply from April this year because of the impact on pension providers, employers and HMRC and all their IT changes.

This ^^^^^^