FT - Tories to raid tax relief pensions

Mick70

Same story being reported in Sunday telegraph (on bbc news app ) about reducing tax relief for earners above 50k

Filo25

Albermarle said:

Realistically would probably finish any chance of early retirement.

If I'm going to be working until I'm 67 I may as well see if its possible part time and get my earnings down to £100K 

If you have a salary well over £100K and can't retire until 67 ( whatever the pension tax rules are ) then you must be spending it like water, and you can't blame the government for that .

Or like many people I started earning good money later in my career, and also wasn't born with a silver spoon in my mouth and didn't have the bank of mummy and daddy to buy a house in London for me.

I earn more than double what I earned 10 years ago which is great, the downside is I am now in my late 40s, and only managed to buy a house about 4 years ago, so the heavy lifting financially was always be going to be much more compressed into my later career

It's also going to be a case of me largely finding my wife's retirement as well, as she won't have much put away. 

The loss of HRT would be painful but not completely disastrous if I was just a HRT payer, but the combination with the never indexed PA taper just makes working your backside off, and dealing with all the stress to get a bit  above £100k, seem like it might not really be worth it anymore 

Filo25

Mick70 said:

Same story being reported in Sunday telegraph (on bbc news app ) about reducing tax relief for earners above 50k

Also reporting looking at Capital Gains Tax and the Mansion Tax as well (although all items are under discussion rather than decided).

If they are going to deliver bad news to any group this is the budget to do it in, it will likely be a distant memory for many by the next time we are likely to have a GE in 2024, and with the large majority and the party pretty loyal to the man who delivered that at present they likely have the political capital to get it through, which won't necessarily be the case in a year or 2.

Tory members will hate moves like the mansion tax and higher CGT though (probably less bothered about pension though as from most photos of Tory meetings I have seen, most have moved beyond the pension accumulation phase!)

kuratowski

Albermarle said:

If you have a salary well over £100K and can't retire until 67 ( whatever the pension tax rules are ) then you must be spending it like water, and you can't blame the government for that .

The trouble is if you have a salary well over £100K your lifestyle expectations are inflated accordingly, so you eat at more expensive restaurants, go on more expensive holidays, buy better clothes, and live in a nicer house; it's all gone pretty quickly if you're not very strict -  in which case, everyone calls you tight! 

Albermarle

If they are going to deliver bad news to any group this is the budget to do it in, it will likely be a distant memory for many by the next time we are likely to have a GE in 2024, and with the large majority and the party pretty loyal to the man who delivered that at present they likely have the political capital to get it through, which won't necessarily be the case in a year or 2.

This is the correct view in my opinion. Apart from the free marketeers on the right of the Tories and tax and spend tendency on the left wing of Labour, everybody knows that public spending has to increase by a reasonable amount to improve social care etc and therefore some increased but not excessive tax increases are needed and this is the time to do it.

waveydavey48

If the TFLS is capped/reduced can we assume we will get enough notice to take it first?

kuratowski

waveydavey48 said:

If the TFLS is capped/reduced can we assume we will get enough notice to take it first?

I wouldn't count on it!

MK62

Albermarle said:

If they are going to deliver bad news to any group this is the budget to do it in, it will likely be a distant memory for many by the next time we are likely to have a GE in 2024, and with the large majority and the party pretty loyal to the man who delivered that at present they likely have the political capital to get it through, which won't necessarily be the case in a year or 2.

This is the correct view in my opinion. Apart from the free marketeers on the right of the Tories and tax and spend tendency on the left wing of Labour, everybody knows that public spending has to increase by a reasonable amount to improve social care etc and therefore some increased but not excessive tax increases are needed and this is the time to do it.

You may be right, but this is from the Conservative 2019 election manifesto.....
"We will not raise the rate of income tax, VAT or National Insurance"
I very much doubt the PM would want to be seen to be breaking this pledge almost immediately, so if more money is needed, and I don't doubt it is, then the chancellor is going to have to be more creative......and all that HR tax relief might be looking oh so juicy to him right now.....

Albermarle

You may be right, but this is from the Conservative 2019 election manifesto.....
"We will not raise the rate of income tax, VAT or National Insurance"

Yes I am sure it will not be a direct hit , but the overall % tax burden will rise . UK is below average anyway and seems to have a disproportionate number of reliefs etc for the better off compared to similar countries, like 40% tax relief on pensions.

Maybe a quick fix could be reducing the annual allowance again , although I guess that would only save a Billion or two. 

Filo25

MK62 said:

Albermarle said:

If they are going to deliver bad news to any group this is the budget to do it in, it will likely be a distant memory for many by the next time we are likely to have a GE in 2024, and with the large majority and the party pretty loyal to the man who delivered that at present they likely have the political capital to get it through, which won't necessarily be the case in a year or 2.

This is the correct view in my opinion. Apart from the free marketeers on the right of the Tories and tax and spend tendency on the left wing of Labour, everybody knows that public spending has to increase by a reasonable amount to improve social care etc and therefore some increased but not excessive tax increases are needed and this is the time to do it.

You may be right, but this is from the Conservative 2019 election manifesto.....
"We will not raise the rate of income tax, VAT or National Insurance"
I very much doubt the PM would want to be seen to be breaking this pledge almost immediately, so if more money is needed, and I don't doubt it is, then the chancellor is going to have to be more creative......and all that HR tax relief might be looking oh so juicy to him right now.....

I totally agree, I was expecting it to come under the microscope pretty much as soon as the election was over, it will also play well in the Tories newly won seats, although not nearly so well in its old traditional seats in the South East but it isn't in much danger of getting outflanked on the right in the current UK political setup, so I can see the attraction from a political point of view.

The downside economically is likely not going to show up in any significant way for over a decade, so that is a win for any govt, focussed as they are on getting re-elected in a much shorter timespan.

The concern of course is that it does leave the UK ever more dependant on its higher earners for its tax take, something which has been a growing trend for a while, as the IFS recently pointed out the UK is a pretty low tax economy for its lower and medium earners by European standards, it isn't so much for higher earners. I'm sure that can still be pushed a bit further but there is always a limit.