Scottish income tax on pension contributions.

Dazed_and_confused

My reading of the link above is that the providers are to be given the information so that they can apply the correct rate - which would imply taking account of the 21% rate


Surely the 21% rate is irrelevant for pension providers?

I thought they were required to give basic rate tax relief at source and both the UK and Scottish basic rate is 20%.

Some individuals might be entitled to an additional 1% if they pay the new intermediate tax rate but I don't see what that has got to do with the pension providers?

Any tax relief over and above the basic rate (on a relief at source pension) has always had to be claimed through HMRC and I don't see anything in the link (or anywhere else) which suggests this will change.

It seems to me that the information in the link will be much more relevant if the Scottish government ever choose to change the basic rate from 20%.

Apodemus

D&C, thanks, you are quite right. I was getting a bit dazed and confused, myself on this! I was getting confused between the old tax-varying powers and the new tax-raising powers, so assumed that 21% was proposed to legally be the basic rate - with the others as reduced rate bands.

Dazed_and_confused

I have no doubt the rest of Scotland will soon be suitably confused as well when they start getting their tax code and calculations for 2018:19!!

Especially for anyone who has savings or dividend income which are still governed by the UK tax rates and rate bands.

So we really have about a dozen different rates to figure out not just the five trumpeted in the Scottish budget

ewaste

Apodemus wrote: »

Unfortunately the added cost of managing all this falls to others, rather than the SG themselves, so there was no incentive to them to retain a simple system.

Incorrect...

"HM Revenue & Customs continues to administer and collect Scottish income tax as part of the UK tax system. The Scottish Government pays the administration costs incurred by HMRC. In 2016-17 these were £6.3 million."

https://www.nao.org.uk/report/scottish-rate-of-income-tax-2016-17/

The only thing I'm wondering is if I will still get 20% relief for contributions within my personal allowance, or will it be a maddening case of 21% on some contributions, 20% on another chunk and 19% on the rest.

Apodemus

ewaste wrote: »

Incorrect...

"HM Revenue & Customs continues to administer and collect Scottish income tax as part of the UK tax system. The Scottish Government pays the administration costs incurred by HMRC. In 2016-17 these were £6.3 million."

No, I’m suggesting that most of the costs of working out and applying the various rates are not on the HMRC/Governmental side of things at all. Many of the additional costs in terms of time and money for sorting out all the payroll, accounting, pensions and personal tax aspects will fall to private individuals and employers.

AgentOso_2

So some of us Scots are paying a fair whack more tax now. Are there any good calculators to model impact of the increase and importantly tweaks that can be made to pension contributions to dampen the blow a bit?

xj650t

uktaxcalculators.co.uk and click on the wee Sottish Flag, best I've seen so far.

Dark_Sunday

I also live in the "people's socialist republic of SNP held to ransom by Greens" divided nation. The impending income tax proposals are basically a tax on the "just getting by families". The SNP dog wagged by Greens tail party have made the taxation system complex & unfair.

I'm well into the 40% tax band, but have minimised this in the past year by significantly increasing salary sacrifice company pension contributions.

I'm not paying any 41% income tax & shall further increase salary sacrifice contributions.

Scot4Moneysaving

I felt like i had a relatively good grasp on my work pension scheme before i read this thread.

My employer gives 2 options when it comes to pay rise time, either take the cash, or increase the company contribution to pension.

Our scheme is non-contributory at 9%. Over the last 3 years i've used my pay rise to increase the company contribution which is now at 15% but I do not contribute myself (I did for a short while then swapped it out for company contribution. When i thought it through, i believed it wouldn't matter either way as say I moved over 1%, it would be either 1% direct from my employer, or 1% pre-tax from me.

I have 2 questions - firstly is my understanding above correct and therefore it doesn't matter whether i move pay rise over into pension or take the money and contribute it myself. And secondly, do the income tax changes in Scotland change any of that?

I should probably explain the bit that's confusing me above is salary sacrifice. Is that different to my scheme where i can increase the employer contributions or pay it in myself?

Thanks in advance for any help, or if you think i need to create a new thread, just let me know.

Scot4Moneysaving

Can anyone help with my above questions?