Future UK slums

wotsthat

Members are subject to a tax charge on the amount of any contribution paid (by the member, employer or 3rd party) in excess of the annual allowance each year. The tax charge will be at the member's marginal rate of tax.

http://adviser.royallondon.com/technical-central/pensions/contributions-and-tax-relief/annual-allowance/

That looks to me like a penalty tax charge on the overpayment at your marginal tax rate.

That's before any consideration of whether that payment takes you over the lifetime allowance etc.

You can't take it with you but the tax man hopes you'll try.

It's a first world problem of course but they're the best ones to have.

teddysmum

We have lots of future, in fact current slums, mainly in the London area and built by the immigrants who thought the streets were paved with gold, but ended up building their own 'town' from old tents, plastic and anything else they could lay their hands on; no washing facilities, while the streets become toilets and rubbish dumps.


In photos, these areas look worse than those in deprived regions of Asia.

Malthusian

GreatApe wrote: »

Other than that I would say learn the rules before you need them. For example I think you can put almost any amount into a pension even £1,000,000 in one go you of course wont get tax relief on that above your earned income however afaik pensions pass on outside the estate so for insistence if someone had £1m in a bank account and found out they were going to die in a few months time they could put that into a pension and get it out of their estate asap. The pension would be tax free if the person dies under 75 and marginal rate of tax if they are over that age so in theory this act could save £400,000 in tax for someone aged under 75 who sheltered £1m this way a few weeks before they passed. Or at least that is my understand of it.

You haven't learned the rules. Most of the contribution would be subject to an annual allowance charge, which would be somewhere between 40-45% (you add the excess on to your income and then pay income tax on it according to the usual thresholds), which cancels out any Inheritance Tax benefit.

On top of that, if you already had any money at all in a pension the death benefits would be hit by the Lifetime Allowance charge.

If I am not mistaken a person could pay in this years and the last 3 years wages and get tax relief on the lot.

You are again mistaken. There are two separate limits for pension tax relief, the Annual Allowance (£40,000 in this tax year if not tapered) and this year's wages. Carry forward is for the Annual Allowance only, not this year's wages.

You are correct that if someone is dying and they are under 75 they should get as much money as they can, up to their tax relievable allowances, into a pension. And in fact I know people who did so when they were on their deathbed. But usually when someone is dying they are over 75 (in which case they get no tax relief) or they have not worked in this tax year and can only put in £2,880 before tax relief, giving their heirs free money of £720.

Some people would still consider it worth the effort but they have to be very sanguine about their own mortality, and Christ knows I wouldn't ask my dying dad if he'd like to borrow £2,880 so he can stick it in a pension and bag me an extra £720.

I don't blame people for not knowing the rules, your mistake is to build a complex tax planning scenario on what someone could do with a million quid before you learned what the rules are. It's a waste of mental energy to build castles in the sky.