A Flat Rate of Tax Relief?

edited 30 November -1 at 1:00AM in Pensions, Annuities & Retirement Planning
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  • MK62MK62 Forumite
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    Kit_Katt wrote: »
    I think if Mr Hammond tinkers with the current tax relief regulations. He will be signing on at the job centre not long afterwards!

    It may or may not be Hammond, but I think it's just a question of when now rather than if.

    Personally I suspect salary sacrifice will go.....and I don't think there will be any new flat rate either - I think higher rate relief will simply be abolished.
  • Filo25Filo25 Forumite
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    MK62 wrote: »
    It may or may not be Hammond, but I think it's just a question of when now rather than if.

    Personally I suspect salary sacrifice will go.....and I don't think there will be any new flat rate either - I think higher rate relief will simply be abolished.

    I think that would be a tough sell given how many people already aren't making nearly enough provision for retirement.

    Would be disastrous for me personally as I'm currently benefitting 60%+ relief due to the nonsensical tapering of the personal allowance, and I'm at the period now of trying to make up for my inadequate pension provision by throwing money at it for the forseeable future.

    Honestly though I don't see anything too contentious going through with the parliamentary arithmetic at present (luckily for me anyway!)
  • michaelsmichaels Forumite
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    MK62 wrote: »
    It may or may not be Hammond, but I think it's just a question of when now rather than if.

    Personally I suspect salary sacrifice will go.....and I don't think there will be any new flat rate either - I think higher rate relief will simply be abolished.

    Sal sac is just another name for employer contributions which also applies to most db, not easy to level that playing field.
    I think....
  • MK62MK62 Forumite
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    michaels wrote: »
    Sal sac is just another name for employer contributions which also applies to most db, not easy to level that playing field.

    Not that hard either though tbh....

    Removing salary sacrifice is politically easy to justify.....and being cynical, as politicians often are, the current govt might gamble that the people it's likely to effect most, who currently vote for them, aren't that likely to stomp their feet and switch to voting Labour - plus, from their perspective, even if they do, I can't see Jezza&Co restoring salary sacrifice once it's been removed (same for higher rate relief too).......so politically such measures might have little real cost.

    Something has to give though......that £20B extra for the NHS will have to come from somewhere.....and the state pension funding "problem" is only going to get gradually worse too, as the number of state pensioners is forecast to rise from the current 12 million to around 16 million over the next 20 years.......that's a big rise in cost and a lot of voters to potentially alienate....
  • zagfleszagfles Forumite
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    Filo25 wrote: »
    I think that would be a tough sell given how many people already aren't making nearly enough provision for retirement.

    Would be disastrous for me personally as I'm currently benefitting 60%+ relief due to the nonsensical tapering of the personal allowance, and I'm at the period now of trying to make up for my inadequate pension provision by throwing money at it for the forseeable future.

    Honestly though I don't see anything too contentious going through with the parliamentary arithmetic at present (luckily for me anyway!)
    I can't see it being too hard. I doubt the DUP would be bothered - median wage in NI is £26k, way below the higher rate threshold. I doubt any Tory MPs would vote against the budget, as that's basically a vote of no-confidence in the govt.

    Or if they proposed it in a stand-alone bill, they could dare Labour to vote against a bill which would be a massive transfer of wealth from higher earners to lower earners.
  • MK62MK62 Forumite
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    Filo25 wrote: »
    I think that would be a tough sell given how many people already aren't making nearly enough provision for retirement.

    Would be disastrous for me personally as I'm currently benefitting 60%+ relief due to the nonsensical tapering of the personal allowance, and I'm at the period now of trying to make up for my inadequate pension provision by throwing money at it for the forseeable future.

    Honestly though I don't see anything too contentious going through with the parliamentary arithmetic at present (luckily for me anyway!)


    It would be interesting to see Labour arguing against a measure to remove higher rate relief.......as well as salary sacrifice on pensions, the main purposes of which are to avoid NI and higher rate tax.....
  • badmemorybadmemory Forumite
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    I doubt they will do it this year. They will wait to do anything unpopular until next year when they can blame Brexit for everything. It will be their excuse to do many unpopular things, one of which will be removing the triple lock from state pensions, after all it will no longer matter that we have one of the worst state pensions in EU because we are no longer in.
  • Filo25Filo25 Forumite
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    zagfles wrote: »
    I can't see it being too hard. I doubt the DUP would be bothered - median wage in NI is £26k, way below the higher rate threshold. I doubt any Tory MPs would vote against the budget, as that's basically a vote of no-confidence in the govt.

    Or if they proposed it in a stand-alone bill, they could dare Labour to vote against a bill which would be a massive transfer of wealth from higher earners to lower earners.

    The DUP isn't the problem, the right wing of the Tory party is.

    Labour under Corbyn aren't likely to be voting through a Tory budget, and realistically Theresa May doesn't want ot get into a position where she needs Labour support to get anything through given her precarious position, keeping her backbenchers happy is a lot more improtant right now.
  • zagfleszagfles Forumite
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    badmemory wrote: »
    I doubt they will do it this year. They will wait to do anything unpopular until next year when they can blame Brexit for everything. It will be their excuse to do many unpopular things, one of which will be removing the triple lock from state pensions, after all it will no longer matter that we have one of the worst state pensions in EU because we are no longer in.
    A flat rate which benefits the lower paid and hits the higher paid is likely to be a vote winner for the Tories. The higher paid who lose out aren't likely to switch to Labour with the current lot in charge, but the lower paid might stop falling for the propaganda that the Tories only do stuff that benefits their rich mates.

    It'll take a while to implement, so announcing it now will likely mean the lower paid see the benefit in their paypackets not long before the next election.

    It increases the tax take, encourages those who most need to save for their retirement to do so, and will likely be a vote winner. It's a no brainer for the Tories. Win, win win.
  • this idea has been floating around for a while, but I don't think the Tories are going to do this just yet. Higher rate relief will go at some point though and definitely if Labour get in.

    It will totally screw up my retirement plans if it is scrapped anytime soon.
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