Budget: Hammond mulling tax cuts for young paid for by slashing pension tax reliefs

woolly_wombat

Pennywise wrote: »

Not as bad as child benefit removal for earners over £50k or personal allowance removal for earners over £100k. Now they really were stupid changes that have done far more harm as the numbers of people affected are massively higher than the very few earners over £150k. In particular the £100k threshold for loss of personal allowance has directly resulted in fewer doctors and dentists working full time as they now tend to work fewer hours to keep their income below £100k and avoid the punitive 62% tax/nic marginal rate!

Spot on Pennywise, spot on!

woolly_wombat

dunstonh wrote: »

The month before a budget sees all the think tanks come out trying to suggest various things that could be done. Usually presented by the media as something the Govt is considering. Sometimes a think tank me be on the same wavelength. Just as a broken click is right twice a day.

More often than not, they are very far from the truth.

I'm sure that's true but much of this morning's R4 Today programme was devoted to the level of indebtedness in the UK, with a particular emphasis on the effects on the young, many of whom are said to be relying on credit just to get by.

I have to say that I was surprised at just how much of the programme was devoted to this topic, with numerous different interviews scattered throughout the programme from various different contributors.

Well worth a listen.

I didn't hear pension tax relief mentioned, but I do wonder whether we are being softened up for a switch in emphasis from protecting the wealth of older members of society to helping the young.

ManofLeisure_2

Pennywise wrote: »

Why do we always get hopeless chancellors? You can go back decades and it's just one after another who havn't a clue. The only half decent one in the last 30 years was Alistair Darling, which is saying something as I'm a Tory, but he was the only one who seemed to take his job seriously and do some proper thinking/analysis about the consequences of his proposals.

I wouldn't agree. The way he handled the 'Northern Rock' crisis was absolutely crazy.

TrustyOven

JoeCrystal wrote: »

Interesting! Speaking as someone who is his thirties, I look forward just how this year budget benefit me personally. (Clue is not at all. A single childless healthy taxpayer is always the one to be shafted, no matter the age.)

Funny, but every budget I (of that demographic) end up better off.

JoeCrystal

TrustyOven wrote: »

Funny, but every budget I (of that demographic) end up better off.

Yes, along with everyone else like Personal Allowance and so on. Unless there is something I have been missing here.

Thrugelmir

Pension tax relief costs £50 billion a year. Restricting relief to high rate taxpayers in some manner seems a fair enough target. Given there's still a budget deficit that needs to be bridged.

Parking_Trouble

Being a cynical, pessimistic old git I do feel the country is on a downward spiral, irrespective of Br**it.

A GDP dominated by services, plus always trying to stimulate consumer spending doesn't feel like a solid foundation to me. Seems like a massive Ponzi scheme to me.

Taxing the "middle class" is the easiest target. My generation (and my parents) were very lucky, my kids have a tough time ahead but I'm happy to help them where I can. I don't see why I should be hammered to support the rest of an ailing country which is suffering the consequences of governments of all hues making stupid decisions.

Corbyns populist policies sound good to me, free education, affordable social housing, re-nationalisation, more manufacturing, etc.
I just wish I could believe he can deliver it. No one else has managed.

What will happen is this last golden generation will be taxed to death, then taxed again before what's left is split and diluted amongst our decedents. Future generations will be skint, can't afford housing, working until 70 and living their remaining years in relative poverty.

I'm off to buy some rose tinted specs to see if I can lift the gloom.

Pennywise

In the same way that mortgage interest tax relief for BTL is now restricted to basic rate and is a tax-reducer rather than a tax allowance, I'd suggest pension contributions tax relief follows the same rules. Given the financial situation, using pensions to reduce higher rate tax etc isn't really sensible. Just restrict it to basic rate.

economic

my dad is about to cash in his pension for an annuity at 10%. worth doing now or wait till the budget?

Malthusian

Pennywise wrote: »

In the same way that mortgage interest tax relief for BTL is now restricted to basic rate and is a tax-reducer rather than a tax allowance, I'd suggest pension contributions tax relief follows the same rules. Given the financial situation, using pensions to reduce higher rate tax etc isn't really sensible. Just restrict it to basic rate.

That is very unlikely to happen due to the number of civil servants that would have to pay tax out of their own pocket on the massive pension contributions they receive.

You can't have a situation where one higher rate taxpayer gets 20% relief because they pay contributions out of their own money while another gets 40% relief because their contributions are paid directly by their employer before tax is taken off. So people who get employer contributions would have to pay a 20% or 25% tax charge on everything the employer paid into their pension (40/45% minus 20% basic rate relief). For public sector workers whose employers could be paying 23% of their salary into the LGPS that's a huge amount of money to find.