National Insurance and Pensions

jamesd

NedS said:

The NI loophole for salary sacrifice really needs to be closed. That would help raise more NI receipts.

In the short term.

In the long term you only get the break by putting the money into a pension where it reduces your chance of needing means tested benefits and you are likely to pay income tax on most of it on the way out of the pension.

It's also a policy objective to try to decrease the percentage of benefit to higher rate tax payers and salary sacrifice delivers on that objective by giving a higher NI saving at lower income levels.

Madrick

Thinking about it

Not only have we had 1% Added to NI

We also had the smeaky freeze on tax free allowance
That'll end up costing us far more than the NI increase, probrably around £250pa by the end of the 4-5 years freeze. 


I'm not a polititian of financial analyst 
But.... 

In my basic down to earth viewpoint.. 

Wouldn't it have been easier (or better) to raise the NI % for people earning in excess of £50k from 2% to 3%? 

Then people on a lower income would be unaffected and those earning £££ would just have a1% payment to make

ussdave

Madrick said:

Thinking about it

Not only have we had 1% Added to NI

We also had the smeaky freeze on tax free allowance
That'll end up costing us far more than the NI increase, probrably around £250pa by the end of the 4-5 years freeze. 


I'm not a polititian of financial analyst 
But.... 

In my basic down to earth viewpoint.. 

Wouldn't it have been easier (or better) to raise the NI % for people earning in excess of £50k from 2% to 3%? 

Then people on a lower income would be unaffected and those earning £££ would just have a1% payment to make

The targets of the tax increase will have been chosen carefully to deliver the least impact to the Conservative base rather than anything progressive.  

RoadToRiches

Next to go will be the salary sacrifice option - mark my words.

Notepad_Phil

Madrick said:

Wouldn't it have been easier (or better) to raise the NI % for people earning in excess of £50k from 2% to 3%? 

Then people on a lower income would be unaffected and those earning £££ would just have a1% payment to make

So a family of two people each earning £49,999 (i.e. a family income of £99,998) would pay nothing - not sure how that's better.

Not sure of the exact amount, but I seem to remember hearing that half of the new money would come from the top 15% (or so) of incomes, so the narrative that the low paid is going to pay all of the money is a bit wide of the mark.

The Labour idea of a landlord tax as reported in the news this morning seems as though no idea as been put into that at all. Do they think the landlord is going to just keep the rent the same, or maybe, just maybe, they'll increase the rent which is going to hit a lot more of low income families than higher income families who own their homes.

Prism

RoadToRiches said:

Next to go will be the salary sacrifice option - mark my words.

Wouldn't the option be to then actually lower the salary and then the company contributes more to the pension.

Madrick

Notepad_Phil said:

Madrick said:

Wouldn't it have been easier (or better) to raise the NI % for people earning in excess of £50k from 2% to 3%? 

Then people on a lower income would be unaffected and those earning £££ would just have a1% payment to make

So a family of two people each earning £49,999 (i.e. a family income of £99,998) would pay nothing - not sure how that's better.

Not sure of the exact amount, but I seem to remember hearing that half of the new money would come from the top 15% (or so) of incomes, so the narrative that the low paid is going to pay all of the money is a bit wide of the mark.

The Labour idea of a landlord tax as reported in the news this morning seems as though no idea as been put into that at all. Do they think the landlord is going to just keep the rent the same, or maybe, just maybe, they'll increase the rent which is going to hit a lot more of low income families than higher income families who own their homes.

So basically everyone pays the extra %, but only on their earnings up to £50k...
Anyone earning more than £50k will pay the same amount as they have always paid on the proportion of earnings above £50k

Why not increase the 2% NI on earnings above £50k as well.....

Albermarle

So a family of two people each earning £49,999 (i.e. a family income of £99,998) would pay nothing - not sure how that's better.

Dual good income families are always in a good position tax wise , compared to just one higher earner.

They can often also keep their child benefit , which a family with  one higher earner will lose . People who salary sacrifice down to < £50K also get to keep their child benefit . Another reason the salsac loophole will probably get closed one day .

It's also a policy objective to try to decrease the percentage of benefit to higher rate tax payers and salary sacrifice delivers on that objective by giving a higher NI saving at lower income levels.

It does that, but only for employees in companies that operate it, so not fair at all . Also it means that companies ( including rich multinational ones ) reduce their own NI bill , so needlessly reducing income to the Exchequer.