Pension Stealth Taxes

Malthusian

If the Chancellor does do anything at all, in what way is it (whatever it is) "a stealth tax"?

It's a means for the government to raise money. It's a means of doing it without the public noticing or protesting, in the way they would an equivalent increase in income tax or VAT. It's a stealth tax.

kidmugsy

Malthusian wrote: »

Blimey, a few people got out of bed on the wrong side this morning.

Maybe they think it's pretty dim or dishonest to use "stealth tax" to describe a measure which, if it does happen, will be widely publicised and discussed as nauseam.

They may even think there's a public interest argument for the supposed reform.

greenglide

The have not the word "tax" in it (like excise duties etc) but in my book they are still taxes, the difference is between direct and indirect in most cases.

If it walks like a tax, quacks like a tax .............

dunstonh

Given the way GO completely stumped media predictions last time around and the lack of any leaked information this time around, I would not be surprised to see a completely opposite outcome to what is predicted.

We know the 25% tax free cash entitlement doesn't cost the treasury much. So, it would not be a surprise to see him actually increase it to 30% or 33%. Whilst at the same time moving to single rate tax relief and removing pension contributions as a means to reduce your income. Whatever you think of GO, he is a very clever politician and has a record of making unexpected decisions.

Petitions against the Government making changes that have not only not been announced but not even hinted at are just silly.

Malthusian

I fear you may be right Dunston, that's exactly the kind of politically clever move that Osborne will love.

Increasing the tax free lump sum to 33% sounds terrific but it would cost the Government peanuts to allow a bit extra tax free on pensions that nobody saves into anymore (other than Joe Soap and his auto-enrolment contributions). I can see him announcing it at the despatch box now. A victory for the common man. Making pensions work harder for the squeezed middle. Pensions for the many, not the few. I'm going to have to stop, otherwise I will genuinely make myself vomit.

Osborne is so fond of rabbits in hats I'm surprised the RSPCA hasn't investigated him for hoarding.

bigfreddiel

This is a wind up, ignore

[Deleted User]

Malthusian wrote: »

A victory for the common man. Making pensions work harder for the squeezed middle. Pensions for the many, not the few.

Are you sure you're not writing GO's speech??

zagfles

dunstonh wrote: »

Given the way GO completely stumped media predictions last time around and the lack of any leaked information this time around, I would not be surprised to see a completely opposite outcome to what is predicted.

Yes quite likely

We know the 25% tax free cash entitlement doesn't cost the treasury much.

Doesn't it? I suspect the only reason a lot of people put money into pensions is because of the PCLS. For someone who's likely to be paying the same marginal tax rate in retirement as when they're earning, there would be no tax advantage to a pension over an ISA without the PCLS.

Getting rid of the PCLS (for future conts, I doubt they'd do it for past conts) could result in people choosing to invest in ISAs over pensions, so giving the govt a short term tax boost as well as increasing the tax on pensions by a third.

So, it would not be a surprise to see him actually increase it to 30% or 33%. Whilst at the same time moving to single rate tax relief and removing pension contributions as a means to reduce your income. Whatever you think of GO, he is a very clever politician and has a record of making unexpected decisions.

But this wouldn't likely result in much of a saving to the treasury. And it would make recycling even more worthwhile so need an increase in complicated rules to prevent it.

Malthusian

Sleazy wrote: »

Are you sure you're not writing GO's speech??

Writing political speeches is not a difficult skill. All you need is half a brain, and the willingness to switch it off.

zagfles wrote:

But this wouldn't likely result in much of a saving to the treasury. And it would make recycling even more worthwhile so need an increase in complicated rules to prevent it.

The removal of higher rate tax relief would be a big and crucially immediate "saving" to the Treasury, or at least it would be reported and accounted for as such. (We all know it's not a saving because tax relief is not a cost to the Treasury, it's a deferral of tax. But for the purposes of this discussion we're using their terms.)

And an increase in complicated rules? When has that ever stopped them?

Paul_Herring

zagfles wrote: »

Yes quite likelyDoesn't it? I suspect the only reason a lot of people put money into pensions is because of the PCLS. For someone who's likely to be paying the same marginal tax rate in retirement as when they're earning, there would be no tax advantage to a pension over an ISA without the PCLS.

There's the employee (12%/2%) (and employer (13.8%)) NI savings for salary sacrifice.