FT - Tories to raid tax relief pensions

kinger101

Thrugelmir said:

Be a significant saving for the Exchequer in the funding of public sector schemes. With the cost of "going green" estimated at some £700 billion for infrastructure alone. Going to require some radical thinking and reform. 

Fuel duties also currently account for about £28 billion of income.  I think the most likely replacement will be increased VEDs or road tolls.  

Paul_Herring

kinger101 said:

There is already madness from the government's introduction of the LISA as a retirement vehicle.  It's great that BR taxpayers are able to access a method of retirement saving which has much better tax incentives - i.e. 25% net benefit.  Currently, the only way BR taxpayers can get that from the pension system is if they have a salary sacrifice scheme.

No it's not. Relief-at-source gives 25% uplift - put in £80 and you get £20 (i.e. 25% of £80) tax relief.

And Salary Sacrifice also saves on NI, so for every £68 in net-pay given up, the pension gets £100; a 47% benefit.

CSL0183

Paul_Herring said:

kinger101 said:

There is already madness from the government's introduction of the LISA as a retirement vehicle.  It's great that BR taxpayers are able to access a method of retirement saving which has much better tax incentives - i.e. 25% net benefit.  Currently, the only way BR taxpayers can get that from the pension system is if they have a salary sacrifice scheme.

No it's not. Relief-at-source gives 25% uplift - put in £80 and you get £20 (i.e. 25% of £80) tax relief.

And Salary Sacrifice also saves on NI, so for every £68 in net-pay given up, the pension gets £100; a 47% benefit.

For £100 into your fund you are paying £80. The gain is 25% of £80 if topped up by the government but essentially it’s 20% of the £100 to you.

With salary sacrifice, £100 goes into the fund which has cost you £68 take home pay. You can’t say the benefit is 47% as the £100 belongs to you to begin with. You’re saving 32%, not gaining 47%. 

Semantics, 1 is 20% relief, the other is 32% relief. The gains are irrelevant. 

Paul_Herring

CSL0183 said:

For £100 into your fund you are paying £80. The gain is 25% of £80 if topped up by the government but essentially it’s 20% of the £100 to you. 

With salary sacrifice, £100 goes into the fund which has cost you £68 take home pay. You can’t say the benefit is 47% as the £100 belongs to you to begin with. You’re saving 32%, not gaining 47%. 

Meh.

I was merely using the same method of calculation that Kinger was in order to get comparable numbers.

Thrugelmir

kinger101 said:

Thrugelmir said:

Be a significant saving for the Exchequer in the funding of public sector schemes. With the cost of "going green" estimated at some £700 billion for infrastructure alone. Going to require some radical thinking and reform. 

Fuel duties also currently account for about £28 billion of income.  I think the most likely replacement will be increased VEDs or road tolls.  

Going green is going to result in a loss of fuel duty. VED has to be proportionate. Likewise the UK isn't geared up for toll roads. 

MK62

Well, with a further £5B announced this morning for bus and cycle infrastructure, on top of HS2, plus all the other spending pledges from the GE campaign.....then coupled with the pledge not to raise income tax, NI or VAT, it'll be an interesting budget coming up......has Boris grown a magic money tree?....

JoeCrystal

Well, they can always start increasing the Fuel duties which has been frozen since 2010, I believe. Also, there are a lot of other ways that the Government can raise revenues as well by new taxes/duties. Overhauling the Council Tax would be helpful as well.

Filo25

MK62 said:

Well, with a further £5B announced this morning for bus and cycle infrastructure, on top of HS2, plus all the other spending pledges from the GE campaign.....then coupled with the pledge not to raise income tax, NI or VAT, it'll be an interesting budget coming up......has Boris grown a magic money tree?....

It will be interesting,  in terms of magic money tree that is pretty much what Trump has done, just pumped up borrowing.

They can probably get away with funding a lot of infrastructure capital spend through borrowing, if they choose to, its the ongoing spending increases that they will be under more pressure to fund through revenue raising.

MarkCarnage

Sensible infrastructure spending, or investment in education/heath (ones where there is a credible, tangible pay off) make sense to fund with borrowing at current rates available to Gov't. I don't include a lot of what Boris and his lackeys spout as sensible though....
Funding increased wages for public sector employees, or increased benefit payments does not come under the category of sensible to borrow for though. 

zagfles

Paul_Herring said:

kinger101 said:

There is already madness from the government's introduction of the LISA as a retirement vehicle.  It's great that BR taxpayers are able to access a method of retirement saving which has much better tax incentives - i.e. 25% net benefit.  Currently, the only way BR taxpayers can get that from the pension system is if they have a salary sacrifice scheme.

No it's not. Relief-at-source gives 25% uplift - put in £80 and you get £20 (i.e. 25% of £80) tax relief.

And Salary Sacrifice also saves on NI, so for every £68 in net-pay given up, the pension gets £100; a 47% benefit.

LISAs aren't taxable on the way out, pensions are! So for BR taxpayers who are likely to have their PA covered in retirement by other stuff (eg state pension plus already accrured pension) LISA is better than RAS and the same as sal sac for BR taxpayers.

There are peripheral issues such as benefits, inheritance etc.