LTA Freeze?

zagfles

Croeso69 said:

ukdw said:

If the LTA freeze was backed up by either a temporary reduction, (or flagging a future increase) in the 25%/55% LTA tax levels could potentially pull in a fairly large one off tax windfall at a time when it would be pretty useful to have it - by incentivising over 55's with big pensions to take the LTA tax hit now, rather holding off until age 75.

But there will be another test at 75 anyway.

Only on growth minus withdrawals. So you just need to drawdown at least the growth to avoid it.

molerat

And in today's news

https://www.bbc.co.uk/news/uk-scotland-56200530

dunstonh

molerat said:

And in today's news

https://www.bbc.co.uk/news/uk-scotland-56200530

But no mention of pensions in the article which is a key reason for the shortage of senior consultants.

jamjar92

I am thinking them keeping the HRT ceiling at £50,000 will effect more people the LTA freeze, more will have to decide if they are going divert more cash to a pension, to avoid extra tax, and the knock on claw back of Child Benefit via the High Income Child Benefit Charge. This could also see some pensioners moving into this bracket for the first time.

Dazed_and_C0nfused

jamjar92 said:

I am thinking them keeping the HRT celing at £50,000 will effect more people the LTA freeze, more will have to decide if they are going divert more cash to a pension, to avoid extra tax, and the knock on claw back of Child Benefit via the High Income Child Benefit Charge. This could also see some pensioners moving into this bracket for the first time.

True but why allow it to be increased to £50,270 to then revert back to £50,000?  
Almost like HMRC creating work for themselves (and the employers/pension payers who would have to implement all the new tax codes which would be needed).

molerat

dunstonh said:

molerat said:

And in today's news

https://www.bbc.co.uk/news/uk-scotland-56200530

But no mention of pensions in the article which is a key reason for the shortage of senior consultants.

Although not directly mentioned I suspect the retiring early and taxation paragraphs hint towards it but, as this report is from the medical profession representative body, putting  not being allowed to build up multi million pound pension pots as a reason would be unlikely to gather much public support

Thrugelmir

Many people have had exceptional stock market returns in recent years down to little more than good fortune. Can hardly grumble. As unlikely to be money they expected to have. 

ukdw

Dazed_and_C0nfused said:

jamjar92 said:

I am thinking them keeping the HRT celing at £50,000 will effect more people the LTA freeze, more will have to decide if they are going divert more cash to a pension, to avoid extra tax, and the knock on claw back of Child Benefit via the High Income Child Benefit Charge. This could also see some pensioners moving into this bracket for the first time.

True but why allow it to be increased to £50,270 to then revert back to £50,000?  
Almost like HMRC creating work for themselves (and the employers/pension payers who would have to implement all the new tax codes which would be needed).

For people in drawdown affected by an LTA freeze, I suspect keeping the basic rate tax level at £50k may well end up reducing the tax take - as many people with large pensions may well be pegging their drawdowns to the 20% tax band.

Mutton_Geoff

dunstonh said:

The LTA shouldn't exist but its now impossible to get rid of politically.
It was introduced because of abuse by large cap companies paying off chairman by putting their golden handshake into pensions to avoid taxation.   It initially captured between 10,000 and 20,000 people in the UK.

It was then converted into a wealth tax with a ridiculously low level set. 

Now, any attempt to raise it will be jumped on by the opposition as the Tories helping bankers.  Despite it capturing more middle class and working class people than it was designed to.

Hear hear. I started a pension scheme in my late 20's then later on saved a very large portion of my salary (50%) into a pension scheme for over two decades to provide myself with a comfortable retirement (from which taxes would be paid on my pension expenditure). The LTA was introduced and rose to £1.8m and was promised to be inflation linked. The reverse happened and now I have been caught by it to the tune of 55% which is more than the tax I saved on the way in. I wished I'd ISAd more and been one of the many ISA millionaires although I suspect a retrospective tax coming that way too.

hugheskevi

If the LTA starts to apply to ever greater numbers, it really needs to be made more equitable. If it only affects a small number of very well-off individuals they are able to deal with rough edges in the application of the policy, but when those with more normal levels of pension start to encounter LTA issues policies need to be seen as fair and equitable.

For example, I plan to commence my DB pension at age 50, at which point it should be about £20,000 p/a being put into payment and so valued at £400,000 under the LTA. I also have a DC pension of about £200,000 which is also its LTA value. So total LTA usage of £600,000 but the DB pension is massively undervalued on an LTA basis. As things are, I don't have any LTA issues, but with anything like fair valuations I should at least be concerned with the LTA position.