FT - Tories to raid tax relief pensions

kinger101

Paul_Herring said:

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.

My calculations work on the net pay sacrificed relative to the net pension drawn.
For basic rate non-SS, 80 p becomes 85 p as there's 15% tax on exit.  Which is only a 6.25% gain.
With SS, 68 p becomes 85 p, which is a 25 % gain.

kinger101

Thrugelmir said:

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. 

Tolls require minimal infrastructure.  A camera and ANPR.  

ffacoffipawb

Sajid Javid gone as Chancellor. Replaced by Rishi Sunak. Do we read anything to do with these potential pension changes here?

JoeCrystal

Well, from the reading of the news, Sajid Javid has been trying to reduce day to day spending like asking for cuts while the Number 10 Downing Street wants to increase the rate of the expenditure. It looks like Number 10 got much firmer control over the UK Treasury so more likely to get their way on it instead.

DairyQueen

JoeCrystal said:

Well, from the reading of the news, Sajid Javid has been trying to reduce day to day spending like asking for cuts while the Number 10 Downing Street wants to increase the rate of the expenditure. It looks like Number 10 Dominic Cummings got much firmer control over the UK Treasury so more likely to get their way on it instead.

Corrected that for you 

lisyloo

Ok, but there’s really not a great deal of time is there, especially with a new team who have to get up to speed.

there are other issues the government are dealing with. not headline news but there have been 7 suicides due to the loan charge (a restrospective task). There’s major changes going on in the freelance market that will challenge defence, oil and finance industry if many contractors leave as they can’t afford to be economically mobile under new legislation.

Mick70

should tax 2nd homes / holiday homes that people use for pensions then 

Albermarle

should tax 2nd homes / holiday homes that people use for pensions then 

The tax rules on these were tightened up a few years ago . So like buy to let , less attractive an option than they used to be . Still would be nice to have one all the same !

lisyloo

Mick70 said:

should tax 2nd homes / holiday homes that people use for pensions then 

We already have extra stamp duty, cgt and they already paid income tax, NI and possibly corporation tax/dividend tax or the income they bought the home with.
are you proposing that isn’t enough?

Personally I think the cgt and additional stamp duty is sufficiently punitive and a disincentive.

it stopped me buying a second home and rented instead.

Filo25

The unknown on this is who was driving all the talk of looking at higher rate tax relief for pensions, was it No10, No11 or both, it doesn't sound like anyone has much insight on that one yet.

If they do want to push ahead with getting rid of HRT relief then without making things hugely complex, I would guess salary sacrifice would end up having to go as well, to avoid that workaround, could  make pensions pretty pointless for a fair few basic rate tax payers as well, especially for those who have enough put away to pretty much guarantee paying tax in retirement.