Will MSE lobby the government to raise either PSA or ISA allowance?

pecunianonolet

dunstonh said:

I am advocating that normal middle class earners have any incentive to put money aside instead of spending it, which in turn just pushes inflation. It didn't take long during Covid lockdowns to put enough aside to now get pushed into paying tax when you now fix at 4-5%.

The incentives are the pension wrapper and the ISA wrapper.

£20k a  year ISA allowance, not dependent on income along with £3600 pension allowance, not dependent on income (higher if you earn more) allow you to build tax efficient pots of very large amounts within a relatively short period.

Good shout but I am not planning to retire in UK so I am trying to put in as less as possible in any pension pot as I prefer to take care of the cash myself and invest accordingly and that has not failed me yet.

dunstonh

pecunianonolet said:

dunstonh said:

I am advocating that normal middle class earners have any incentive to put money aside instead of spending it, which in turn just pushes inflation. It didn't take long during Covid lockdowns to put enough aside to now get pushed into paying tax when you now fix at 4-5%.

The incentives are the pension wrapper and the ISA wrapper.

£20k a  year ISA allowance, not dependent on income along with £3600 pension allowance, not dependent on income (higher if you earn more) allow you to build tax efficient pots of very large amounts within a relatively short period.

Good shout but I am not planning to retire in UK so I am trying to put in as less as possible in any pension pot as I prefer to take care of the cash myself and invest accordingly and that has not failed me yet.

For 99% of the population, Pensions offer sufficient investment options (around 30,000 and able to match ISAs).   Reliefs are nearly always going to favour the majority or in place to encourage investment which benefits the UK.

If you want an investment option that is in the 1% then you have to accept that the Government is unlikely to help you.

pecunianonolet

dunstonh said:

pecunianonolet said:

dunstonh said:

I am advocating that normal middle class earners have any incentive to put money aside instead of spending it, which in turn just pushes inflation. It didn't take long during Covid lockdowns to put enough aside to now get pushed into paying tax when you now fix at 4-5%.

The incentives are the pension wrapper and the ISA wrapper.

£20k a  year ISA allowance, not dependent on income along with £3600 pension allowance, not dependent on income (higher if you earn more) allow you to build tax efficient pots of very large amounts within a relatively short period.

Good shout but I am not planning to retire in UK so I am trying to put in as less as possible in any pension pot as I prefer to take care of the cash myself and invest accordingly and that has not failed me yet.

For 99% of the population, Pensions offer sufficient investment options (around 30,000 and able to match ISAs).   Reliefs are nearly always going to favour the majority or in place to encourage investment which benefits the UK.

If you want an investment option that is in the 1% then you have to accept that the Government is unlikely to help you.

Very true that and I am probably in the 1% bracket. My pension is concrete gold through future inheritance in another country and that's where I also plan to retire as oversees is warmer and sunnier but that's likely (hopefully) a few dacades to go so util then my focus is different.

I still think that many people are screwed by tax and inflation and end up poorer in the long term

Albermarle

Would you say 50k is an above average salary, according to the figures above it would be so

Very much so.

From the ONS 

• The median average salary for all workers in the UK is £25,971.

• The mean average salary for all workers in the UK is £31,447.

• The median average salary for full-time workers in the UK is £31,285.

• The mean average salary for full-time workers in the UK is £38,131.

• The mean is higher than the median, because a small number of very highly paid people skews the figures

• The mode average is lower still than the median 

pecunianonolet

Albermarle said:

Would you say 50k is an above average salary, according to the figures above it would be so

Very much so.

From the ONS 

• The median average salary for all workers in the UK is £25,971.

• The mean average salary for all workers in the UK is £31,447.

• The median average salary for full-time workers in the UK is £31,285.

• The mean average salary for full-time workers in the UK is £38,131.

• The mean is higher than the median, because a small number of very highly paid people skews the figures

• The mode average is lower still than the median 

I was not questioning the figures itself, I was questioning the fact that they are what they are. 25k median for all workers is low, meaning many will be significantly under that and that means a lot of people are poor, although they work full time. 
The average median of full time workers should be at around 50k and not 38k so less people would require constant support or top ups. Everyone should be able to maintain a basic standard of living and I don't see this being the case.  

Dazed_and_C0nfused

intalex said:

Albermarle said:

The current tax free allowances are actually pretty generous by international standards. A saver in France, Ireland, Germany etc would love to be able to shelter £20k pa from tax !

Both the £20K and the £1K PSA, almost exclusively benefit the Top 20% and are of zero benefit to more than 50% of the population. So no chance they will get increased, just be glad they exist at all.

Sorry if it's a silly question, but how is it 20k?

https://www.gov.uk/individual-savings-accounts/how-isas-work

Albermarle

pecunianonolet said:

Albermarle said:

Would you say 50k is an above average salary, according to the figures above it would be so

Very much so.

From the ONS 

• The median average salary for all workers in the UK is £25,971.

• The mean average salary for all workers in the UK is £31,447.

• The median average salary for full-time workers in the UK is £31,285.

• The mean average salary for full-time workers in the UK is £38,131.

• The mean is higher than the median, because a small number of very highly paid people skews the figures

• The mode average is lower still than the median 

I was not questioning the figures itself, I was questioning the fact that they are what they are. 25k median for all workers is low, meaning many will be significantly under that and that means a lot of people are poor, although they work full time. 
The average median of full time workers should be at around 50k and not 38k so less people would require constant support or top ups. Everyone should be able to maintain a basic standard of living and I don't see this being the case.  

In an ideal world you are right, but would take some major economic, social and political shifts to get even close.

25k median for all workers is low, meaning many will be significantly under that and that means a lot of people are poor, although they work full time. 
Low paid workers often get tax credits and other benefits, especially if they have children.

Some would say ( and I guess you would) by doing this the government is effectively subsidising large companies to pay low wages, which is a bit mad.

eskbanker

pecunianonolet said:
The average median of full time workers should be at around 50k

On what basis, i.e. is that part of some sort of cohesive economic theory or just some random aspirational wishful thinking?  Seems to me that if the private sector was paying that sort of money the country would be hopelessly uncompetitive, and if average public sector salaries were in that territory the tax ramifications really would be genuinely eye-watering....

intalex

Dazed_and_C0nfused said:

intalex said:

Albermarle said:

The current tax free allowances are actually pretty generous by international standards. A saver in France, Ireland, Germany etc would love to be able to shelter £20k pa from tax !

Both the £20K and the £1K PSA, almost exclusively benefit the Top 20% and are of zero benefit to more than 50% of the population. So no chance they will get increased, just be glad they exist at all.

Sorry if it's a silly question, but how is it 20k?

https://www.gov.uk/individual-savings-accounts/how-isas-work

Oops, missed "ISA allowance" in the title, also my current attention is a bit absorbed by income values rather than principal values/thresholds/allowances.

pecunianonolet

Albermarle said:

In an ideal world you are right, but would take some major economic, social and political shifts to get even close.

25k median for all workers is low, meaning many will be significantly under that and that means a lot of people are poor, although they work full time. 
Low paid workers often get tax credits and other benefits, especially if they have children.

Some would say ( and I guess you would) by doing this the government is effectively subsidising large companies to pay low wages, which is a bit mad.

Yes, low paid workers get tax credits, that translates into the easy message "Works full time, doesn't earn enough so we need to apply credits so they can actually survive". Would be better if they would earn enough so no credits or other benefits would need to be paid. Supporting families with children is obviously a good thing.

Example: I am on a regular basis in different warehouses, people work, in this case, there from 8am until 4:30pm Monday - Thursday and 8am -  4pm on Friday. When I ask them how their weekend was many tell me they work Saturday in their second job, some even a half day in their 3rd job on Sunday. They get paid slightly above living wage. 70% there are agency workers, 80% from foreign countries, massive labour shortage there since months. That warehouse company is struggling for space, is as busy as never before and the managing director tells me he has to turn down work as there is not enough labour but his customers don't want to pay more to allow him to attract more labour by better pay. 

@eskbanker: In other countries e.g. Germany a 50k salary isn't seen as something extraordinary, still a good salary but in the UK you have income tax and national insurance deducted. In Germany you have deducted income tax, unemployment insurance, health insurance, pension insurance, caring insurance (those without kids pay a premium), and church tax if you are in the church but you can opt out for a fee. In turn state pensions are higher for most, you get a dentist appointment within a week, you can see a GP as you wish and no phone triage. Situation in caring sector and hospitals is not great due to staff shortages, etc. What I am trying to say is that a higher median leaves more in peoples pockets but ensures public services are better (not perfectly) funded. Also, more people contribute a little compared to a small group having to fund the majority. I would think that they are still competitive as a country...