Budget 15th March2023, any pension changes predictions or views?

Pat38493

Albermarle said:

arnoldy said:

Sea_Shell said:

You just know that the opposition will have a field day with those increases.  

"helping the rich" etc etc.


I wonder...IF they did win next time out, will they REVERSE these changes, or suddenly go very quiet on them.  

Yup you can hear the melody of the words now, "...Jade single mother with 3 disabled children can't even afford shoe leather to walk to the foodbank whilst the rich get £1.8 million tax free and can pass that on to their kids" etc etc 

I wonder if there might be a sting in the tail/small print of a review of the pension inheritance tax rules. Whilst an argument can be made for increasing LTA/AA, the pension inheritance tax exemptions can only really be seen as largely benefitting wealthier households/Top 10% passing on large sums down the family line, bolstered by tax relief but paying little or no tax back. If the LTA goes up to £1.8 million, the scope for doing this gets even greater.
Along with the property owning divide, it just further increases inequality. Could be a good target for Labour one day.

Probably makes sense but would it require primary legislation?

From what I can see they are trying to keep things to pulling levers on limits etc - I guess they can do this without actually changing any laws and just a vote in the HOC?  There are probably much better and more targeted ways to help doctors and NHS consultants for example but they would take months or even years to enact.

However you could be right about the sting in the tail one way or another - it now seems to become the pattern that we get controlled leaks for a few days before a budget with the less favorable parts miraculously not leaked.

I also found it interesting this morning that Labour are not immediately jumping on this with "tax cuts for the rich" - not yet anyway.

Also a bit tongue in cheek, but the way my investments started to tank the last week or two again, it might not make any difference increasing the LTA anyway.

I also agree with other posters who highlighted the 62% tax as an increasingly problematic additional factor that could lead to people retiring earlier - however this also might require primary legislation to fix?

Albermarle

Probably makes sense but would it require primary legislation?

Pretty sure yes, and could be complicated as it is linked to trust law. Which is what I only said a review might be announced for the future. As Zagfles has pointed out a simple change could be making beneficiary pension taxable even if the donor dies before age 75. This rule is an anomaly from the past and without any rational basis.

Pat38493

Albermarle said:

Probably makes sense but would it require primary legislation?

Pretty sure yes, and could be complicated as it is linked to trust law. Which is what I only said a review might be announced for the future. As Zagfles has pointed out a simple change could be making beneficiary pension taxable even if the donor dies before age 75. This rule is an anomaly from the past and without any rational basis.

Tricky area because from what I heard one a recent podcast, anything to do with inheritance tax is "the most hated tax of all".  Apparently people find it highly infuriating that they cannot pass on their wealth to their kids without the government taking a "second bite" from it.

On the other hand, the ability of people to pass on high levels of wealth to their children is arguably the single biggest driver of long term social inequalities in modern western societies.

NedS

SpeedSouth said:

If the AA increase does happen, could it be introduced for this tax year 22/23 would you think?  I imagine it would be from 23/24 but would be nice if I could drop some more in this year.

Absolutely no chance any changes will be retrospective. We are looking at 2023/24.

zagfles

NedS said:

SpeedSouth said:

If the AA increase does happen, could it be introduced for this tax year 22/23 would you think?  I imagine it would be from 23/24 but would be nice if I could drop some more in this year.

Absolutely no chance any changes will be retrospective. We are looking at 2023/24.

I suppose if they really wanted people to carry on working they'd delay the LTA increase till 2028   Or increase it in yearly increments.

It would actually be sensible in theory, trouble is no-one would trust that it would actually happen, particularly as there'll be an election next year...

Malthusian

Albermarle said:

Pretty sure yes, and could be complicated as it is linked to trust law. Which is what I only said a review might be announced for the future. As Zagfles has pointed out a simple change could be making beneficiary pension taxable even if the donor dies before age 75. This rule is an anomaly from the past and without any rational basis.

There is a bit of a rational basis, which is not snatching bread from the mouths of widow(er)s and orphans who have lost the family breadwinner before their time. This doesn't just affect pensions per se but also group "death in service" insurance written under pension legislation.
If somebody dies during working life they will usually not have had time to build up a sufficient pension fund, so the tax exemption doesn't put their family in clover, it just makes their position less vulnerable.
75 is of course quite late for that, but there's nothing 70-year-olds from marrying late, having young children and still being in work. There is no single age at which people go from "working" to "retired" and 75 is erring on the side of caution.
It would also have little impact as most people live beyond 75, especially those with pension funds of any decent size.
Besides, dying before 75 saves the Government a huge sum of money on State Pension and NHS costs.

Pat38493 said:

From what I can see they are trying to keep things to pulling levers on limits etc - I guess they can do this without actually changing any laws and just a vote in the HOC?  There are probably much better and more targeted ways to help doctors and NHS consultants for example but they would take months or even years to enact.

It might be wishful thinking, but perhaps the Government does not share the UK media's view that doctors are the only profession in the UK who produce value to society while earning more than £50,000pa.

westv

Can we please have the tax free amount raised from 25% to 30%? 

RogerPensionGuy

I just watched BBC1 TV at 13:00.

Their expert said only people earning 80K or more PA in their last year of employment would exceed the current LTA. 

So apparently just work for one year at say age 57 on 80K PA and you will exceed the current LTA or work for 45 years and last year at 80K and you will also exceed the LTA. 

It's no wonder so many people shy away from getting involved in pensions and any serious planning for later life, the government need to have sensible rules and any negative changes need at least 20 years lead with protections if required. 

drjohn67

Doctors are most certainly not the only profession of value.

However, the current primary care system designed by politicians / non-clinicians, and imposed unilaterally on GPs through repeated application of an exceptional clause in the contract, influences demand for GP appointments that cannot be sustained with the number of GPs being trained/retained. There is a potential cliff edge with 20% due to retire in the next 5 years and 20% of GPs under 30yoa quitting. 300 million consultations (15 times as many as A+E) managed with 8% of the NHS budget. A small shift from destabilised primary care will have a disproportionately negative impact on the ambulance and A+E services. 
I opted out of primary care and won't personally benefit from increased GP income. However, the potential hazard approaching is worrying. 

Appreciate difficult choices going forward as growth has stagnated and there are no easy cuts in government expenditure after years of austerity recovering from banking crisis, COVID and now energy crisis/Ukraine war. 

westv

RogerPensionGuy said:

I just watched BBC1 TV at 13:00.

Their expert said only people earning 80K or more PA in their last year of employment would exceed the current LTA. 

So apparently just work for one year at say age 57 on 80K PA and you will exceed the current LTA or work for 45 years and last year at 80K and you will also exceed the LTA. 

It's no wonder so many people shy away from getting involved in pensions and any serious planning for later life, the government need to have sensible rules and any negative changes need at least 20 years lead with protections if required. 

All that assumes a 3/4 final salary pension - which most people don't have.