Budget Autumn 2017 Pension Tax Relief

Retyre

Thanks everyone for your replies. I guess it would have been helpful for me to identify the possible areas where the "rebalance" could take place:

1) Removal of 40/45% grossing
2) Removal of all grossing
3) Rationalisation of grossing to x%
4) 1), 2) or 3) applied at x age
5) Reduction of the Lifetime Allowance (LTA)
6) Reduction of the Annual Allowance (AA)
7) Removal/limiting of the 25% Tax Free Lump Sum (TFLS)
8) Reduction of the £10,000 AA for those with crystallised funds
9) A higher tax rate for pensioners aged x+ (ouch!)

There will be more I'm sure, my primary interest I must admit is not missing out on engrossment on this years contributions if its removed or rationalised at a higher level for basic rate payers.

robin61

bigadaj wrote: »

The majority of people with pensions probably don't realise there is a tfls, certainly if a few years away from retirement.

I'm sure you are right. Its surprising how little knowledge some people have about their pensions. But there would be one heck of a stink kicked up about this and they will soon be made aware what's just been taken.

Linton

I can’t see any tax being age related. If the chancellor wants to shift some of the tax burden from the working young to richer pensioners how about a simple change like:

Reduce NI by say 2% and increase basic and higher rate income tax and CGT by 2%. This would have the general benefit of reducing the extent to which unearned income is taxed less heavily than earned income, a major issue in my view, so spreading the load more fairly between the rich vs the poor and pensioner vs the young. It would also reduce the effect of the very uneven rates of NI.

Anonymous101

This is the most important issue of the whole budget for me.
As a higher rate tax payer aged 36 saving 25% of my annual salary into a pension with the hope of retiring age 55 at the latest my vote will be swayed to either party depending on their stance on this.

Certainly looking on slightly nervously hoping things remain the same.

michaels

Linton wrote: »

I can’t see any tax being age related. If the chancellor wants to shift some of the tax burden from the working young to richer pensioners how about a simple change like:

Reduce NI by say 2% and increase basic and higher rate income tax and CGT by 2%. This would have the general benefit of reducing the extent to which unearned income is taxed less heavily than earned income, a major issue in my view, so spreading the load more fairly between the rich vs the poor and pensioner vs the young. It would also reduce the effect of the very uneven rates of NI.

Whilst that all makes sense the problem is tax rates are the 'live rail' of policy and govts will try and tweak almost everything else in-order not to change the headline rate - hence the move from income tax to NI over the last few decades. Personally I think they should be combined with transitional relief for those impacted but it will never happen as politically it is too difficult.

michaels

westv wrote: »

I am 100% certain no change to 25% lump sum.

But the TFLS is a huge benefit as it moves income from 20%, 40% or even 45% tax to zero tax. I wonder if it might be possible in some way to limit the benefit of the TFLS to only saving basic rate tax.

An alternative might be to cap the TFLS at for example 100k so that those with the biggest pots don't get the biggest benefit....

Seabee42

It is ironic that an increase in national insurance gets less complaints than an income rate tax increase no doubt because not everyone has to pay NI and everyone thinks its for the NHS so good. It makes much more sense to increase income tax so those receiving more (pensioners) pay for it.

marlot

Retyre wrote: »

Thanks everyone for your replies. I guess it would have been helpful for me to identify the possible areas where the "rebalance" could take place:

1) Removal of 40/45% grossing
2) Removal of all grossing
3) Rationalisation of grossing to x%
4) 1), 2) or 3) applied at x age
5) Reduction of the Lifetime Allowance (LTA)
6) Reduction of the Annual Allowance (AA)
7) Removal/limiting of the 25% Tax Free Lump Sum (TFLS)
8) Reduction of the £10,000 AA for those with crystallised funds
9) A higher tax rate for pensioners aged x+ (ouch!)

There will be more I'm sure, my primary interest I must admit is not missing out on engrossment on this years contributions if its removed or rationalised at a higher level for basic rate payers.

You missed the big one. Applying NI to pension income. Or merging NI and income tax, which comes to much the same thing.

westv

michaels wrote: »

But the TFLS is a huge benefit as it moves income from 20%, 40% or even 45% tax to zero tax. I wonder if it might be possible in some way to limit the benefit of the TFLS to only saving basic rate tax.

An alternative might be to cap the TFLS at for example 100k so that those with the biggest pots don't get the biggest benefit....

No, still won't happen.

I don't envisage any changes to:-

TFLS
Tax relief
Nil NI on retirement income
Tax relief of pension contributions

Retyre

marlot wrote: »

You missed the big one. Applying NI to pension income. Or merging NI and income tax, which comes to much the same thing.

Indeed! Thank you.