Budget

robin61

Snakey wrote: »

I don't think there was ever any suggestion from George Osborne or anybody else, that everybody under 40 should stop paying into their workplace pension and start paying into a LISA, or that doing so will make them better off. My impression was that LISAs are being squarely marketed as an alternative to a standard ISA for anybody who would otherwise be using a standard ISA to save for a first home or for their retirement. Did I miss a speech or a press release?

Agreed but I think there is a good chance that the water is being tested with this LISA. So who knows where it will end up ? We all know that a lot of people are not ' pension smart'. This now provides another option they need to get their heads around and there has to be a chance that some will make the wrong choice.

zagfles

Rich2808 wrote: »

Yes - but it always of course ignores the elephant in the room - high house prices!

If young people didn't have to spend so much of their earnings servicing a mortgage - or rent - they would be able to save an awful lot more towards their pensions and retire earlier.

But the over 40s run the system - and could never admit what the problem is as if it was addressed they would lose out!

A bit like that woman complaining about losing tax credits on question time. No one noted her comment she barely had enough money to pay her rent - maybe her tax credits aren't too low but her housing costs are too high.

Solve housing - solve pensions.

Politicians are far too cowardly to put in place real policies to tackle the housing problem. They come up with silly "help to buy" schemes which do nothing of the sort - since by increasing the affordability for some people, they push up prices negating the "help" they supposedly give!

Real policies would be high capital gains tax on housing, even owner occupied, but with the ability to carry forwards gains, so you only pay when moving downmarket/abroad etc. Or high property tax but with an "allowance" like income tax. Take the perceived "investment" element out of housing so people just buy what the need, not what they think will be a good investment.

It's rubbish anyway. My house has probably tripled in value since I bought it, but I don't care, I have no intention of moving so couldn't give a t0ss what its price is. Housing is a cost of living as well as an asset, so as your asset increases in value so does your cost of living. Making it neutral for an owner occupier who has no desire to sell up and move downmarket or live in a cardboard box.

robin61

zagfles wrote: »

It's rubbish anyway. My house has probably tripled in value since I bought it, but I don't care, I have no intention of moving so couldn't give a t0ss what its price is. Housing is a cost of living as well as an asset, so as your asset increases in value so does your cost of living. Making it neutral for an owner occupier who has no desire to sell up and move downmarket or live in a cardboard box.

The estate agents and the tax man do well out of higher house prices so do the banks and building societies when we have to borrow more to move up the ladder. This is all extra money we need to find. As you say the only time you really benefit is if you downsize or inherit I suppose but even then you have the spectre of inheritance tax. So that is good for the tax man again.

beanie414

zagfles wrote: »

Do you mean £50k is your pay after the AVC has come out? In which case yes you'll be better off as you're already paying 40% tax, so you'll pay 40% tax on less of your pay because of the HRT threshold rise. You'll pay more NI but extra 10% NI compared to a 20% tax saving on the rise in threshold.

No, my pay is just under £50k before the AVC goes out. Only the managers have sal sac at my work.

zagfles

beanie414 wrote: »

No, my pay is just under £50k before the AVC goes out. Only the managers have sal sac at my work.

How much is the AVC?

beanie414

zagfles wrote: »

How much is the AVC?

It's under £400 a month.

zagfles

beanie414 wrote: »

It's under £400 a month.

So your net pay is about £45k, so you'll benefit from the increase in the HRT threshold to £45k as above.

GunJack

RickyB2000 wrote: »

To bring it back on the topic of the budget, one thing I have noticed is how complex it appears to be. There are allowances coming out of the woodwork for everything. It is going to take for ever to sort out finances. Maybe a boon to accountants? What do we have now

Personal allowance
Capital gains tax allowance
Dividend allowance
Savings allowance
Online selling allowance
Renting a Room allowance
Seperate rent something allowance
Annual Pension allowance
Lifetime pension allowance
ISA allowance

Then there are a multitude of ISAs

Cash
Stocks
Help to buy
Lifetime ISA
Financial ISA

It starts to get to the point where there is so many confusing and different products that I would rather just spend my money than try and navigate it all

What all this complexity does is:-
1. make work for many people in the accountancy/financial services sectors.
2. make it easier for people with more already to stash more away from HMRC, usually via 1. above.
3. make it harder for low or ordinary (in terms of earnings and/or intellect) people to take advantage of these measures, as they can't afford to engage 1. above
4. reduce the revenue the exchequer will raise, leading to
5. even lower levels of public services and
6. even more cuts to those who can least afford them...

Cynical? maybe, time will tell
4.

d70cw6

ok so. Im an accountant and have a maths degree but am crap at sums.

I earn £56k, have 6% of my salary paid into ee scheme with 12% er contribution under salary sacrifice scheme.

How much will i need to AVC into the scheme to avoid 40% tax??

GunJack

d70cw6 wrote: »

ok so. Im an accountant and have a maths degree but am crap at sums.

I earn £56k, have 6% of my salary paid into ee scheme with 12% er contribution under salary sacrifice scheme.

How much will i need to AVC into the scheme to avoid 40% tax??

about £10k-ish, probably slightly less, but more than £8k

56k-11.6k-3360=£41k is your current taxable, the threshold for 40% is about £32-£33k, so would need to put £8-9k into AVC (if avc contributions are before tax) to avoid 40%