Government Help for Private Pensions?

Bravepants

Prism said:

Anonymous101 said:

Along similar lines, I did have a bit of a rant at the TV last night as a small business owner complained that she wouldn't be getting a government hand out as she didn't qualify due to paying herself in dividends for the last 10 years.
I thought it was a little bit ironic that she had actively played the system in order to minimise income tax for years and now she was complaining that the taxes that she hadn't paid were going elsewhere.

Agreed. Small business owners and limited company contractors are unlikely to receive much in the way of help at the individual level, although there are a few options available to help with business cash flow. Choosing to pay corporation and dividend tax rather than income tax has benefited director/owners for many years - enough so that the extra from paying less tax should go a long way to have built up a cash fund to keep those dividends flowing in situations like this. If someone has been extracting every penny out of the business with little thought to events like this then I guess their option is to take a loan using the Coronavirus Business Interruption Loan Scheme.

For reference I contract through my limited company

I know a few owners of SMALL businesses who are actually BIG spenders! Pretty much living one month away from failure to finance their lavish lifestyle.

molerat

I can see this bringing the end to Class 2s, if you want something out of the system you are going to have to put more in, the self employed could not be justified in whining like last time the government tried it.

dunstonh

molerat said:

I can see this bringing the end to Class 2s, if you want something out of the system you are going to have to put more in, the self employed could not be justified in whining like last time the government tried it.

Spreadsheet Phil tried it with a small increase to class 2 following the massive increase in state pensions that self-employed would be getting under the new single state pension.    It caused an outcry and he backed down.  However, Hammond did not present it at all well and it went against a manifesto promise.

If he had presented it as "we are going to charge you some extra pennies a week to pay from now to get the extra £40 a week you will receive on the state pension even though you have never paid towards that before"; he may have got away with it.  ironically, much of the negativity came from small limited company owners who pay no NI at all and incorrectly refer to themselves as self employed.

Maybe, the bail out will make the public more open to changes going forward.

phillw

The government isn't helping people out because it was no fault of their own, they are doing it because if they don't then the economy tanks, the nhs collapses and they have bigger problems.
Your £15,000 loss over the course of your retirement isn't going to affect the long term prosperity of the country, so there is no chance they'll do anything.
The government doesn't actually have any money, they are borrowing it from future generations. Who through no fault of their own are going to be bailing us out.
They probably won't have the luxury of a private pension that they happened to get because of pure luck either.

Ceme3000

Fair_Flummoxed said:
In my case, the value of my fairly modest pension fell by £15,000 over a 12 day period at the start of this crisis (some four weeks ago).  I haven't dared look online again to see its value.  I have been contributing to a pension for 32 years and planned to begin drawing down on it in less than three years.  

A quick look at my HL app and I can see that the fund I happen to have held the longest, Jupiter European, is now 'only' up 103% following the recent correction.  Presumably OP you won't complain about all the inflation busting returns you have experienced in recent years? 
Over an investment period of 32 years, you should have done very nicely thank you very much, even with the recent drop! So certainly no 'compo' owed. Let's keep some perspective please.

dunstonh

And may we say hello to Dominic Cummings, who must be reading this forum, as the Chancellor has indicated that that class 2 NI will rise because of this.

Paul_Herring

dunstonh said:

And may we say hello to Dominic Cummings, who must be reading this forum, as the Chancellor has indicated that that class 2 NI will rise because of this.

I'd heard it had, but the person who told me didn't know by how much, and Google News is being useless - is it to parity to 25.8% up to £50K and 15.8% after? All I could find is this:

In his statement, the Chancellor also warned that following the outbreak, the self-employed would have to pay the same amount of tax and national insurance as the employed.

Which could be read as just 12% and 2%...

zagfles

Paul_Herring said:

dunstonh said:

And may we say hello to Dominic Cummings, who must be reading this forum, as the Chancellor has indicated that that class 2 NI will rise because of this.

I'd heard it had, but the person who told me didn't know by how much, and Google News is being useless - is it to parity to 25.8% up to £50K and 15.8% after? All I could find is this:

In his statement, the Chancellor also warned that following the outbreak, the self-employed would have to pay the same amount of tax and national insurance as the employed.

Which could be read as just 12% and 2%...

There were no details, just a vague warning along the lines of traeting the self employed similar to the employed if they want a similar bailout.

kuratowski

The Chancellor was asked to give more details in the press conference and he declined to do so.  He said this was "an observation" that there is an anomaly highlighted by treating everyone equally for the purposes of this income subsidy.  But if you think about it, obviously the covid-19 emergency packages are going to cost billions, and so in future taxes will have to be raised to pay for it all.  And so this should be read as a warning that they will be prepared to be more radical than hitherto when raising the money.

DairyQueen

Prism said:

Anonymous101 said:

Along similar lines, I did have a bit of a rant at the TV last night as a small business owner complained that she wouldn't be getting a government hand out as she didn't qualify due to paying herself in dividends for the last 10 years.
I thought it was a little bit ironic that she had actively played the system in order to minimise income tax for years and now she was complaining that the taxes that she hadn't paid were going elsewhere.

Agreed. Small business owners and limited company contractors are unlikely to receive much in the way of help at the individual level, although there are a few options available to help with business cash flow. Choosing to pay corporation and dividend tax rather than income tax has benefited director/owners for many years - enough so that the extra from paying less tax should go a long way to have built up a cash fund to keep those dividends flowing in situations like this. If someone has been extracting every penny out of the business with little thought to events like this then I guess their option is to take a loan using the Coronavirus Business Interruption Loan Scheme.

For reference I contract through my limited company

Happy to put our hands-up to exactly this situation. Every contractor operates exactly this way - including Mr DQ. The retained dividends in the limited company will now be used to provide income in the months ahead. The loss to us will be the extra funds we anticipated having at the beginning of Mr DQ's retirement at the end of this year.

So, no whining from us and no expectation of any government hand-out. Indeed, Mr DQ is ready and willing to pay his VAT on time but it seems that this won't be an option given that 3 months delay has been offered by the revenue .

Go figure.