yes!!!!!

zagfles

dunstonh said:

bostonerimus said:

Wonderful news if you have enough lifetime income to take advantage, but it will only increase wealth inequity. It's a nice gift for the best off and irrelevant to the majority of people.

The UK tax system has been punishing wealth generation for a while now.    

Do not forget that the super wealthy get their annual allowance tapered. So, they didn't get £40k before and wont get £60k now.   The most they could pay in is £4,000 and that is going upto £10,000.  

The changes to the pension allowances affect basic rate taxpayers through to the lower end of high earners (sub 250k a year)

Yes, the big winners are those on low 6 figure salaries, eg NHS consultants. There's nothing of any benefit to those at the very top end, eg pro footballers and overpaid pundits on 7 figure salaries, they won't even be able to put 1% of their salary into a pension without being hit by an AA charge.

caveman8006

The key question for me is what should people like me be doing? I have crystalized 100% of the existing LTA and was in the habit of taking a taxable income from the drawdown account to take my total earnings up to the higher rate limit (so as to avoid the threat of an LTA tax on any growth in the pot at 75, particularly when receipt of the State pension would have  severely constrained basic rate withdrawals between 67 and 75). Am I now safe in leaving the drawdown pot to grow as a potential IHT-free inter-generational transfer?   

Notepad_Phil

caveman8006 said:

The key question for me is what should people like me be doing? I have crystalized 100% of the existing LTA and was in the habit of taking a taxable income from the drawdown account to take my total earnings up to the higher rate limit (so as to avoid the threat of an LTA tax on any growth in the pot at 75, particularly when receipt of the State pension would have  severely constrained basic rate withdrawals between 67 and 75). Am I now safe in leaving the drawdown pot to grow as a potential IHT-free inter-generational transfer?   

Future governments can always make whatever changes they want, so I would never say anything is completely safe, but it appears to be safer now then it was pre-budget.

zagfles

caveman8006 said:

The key question for me is what should people like me be doing? I have crystalized 100% of the existing LTA and was in the habit of taking a taxable income from the drawdown account to take my total earnings up to the higher rate limit (so as to avoid the threat of an LTA tax on any growth in the pot at 75, particularly when receipt of the State pension would have  severely constrained basic rate withdrawals between 67 and 75). Am I now safe in leaving the drawdown pot to grow as a potential IHT-free inter-generational transfer?   

I doubt it. If we get a Labour govt in a couple of years I suspect they'll look at clamping down on using pensions to dodge IHT.

ukdw

Notepad_Phil said:

caveman8006 said:

The key question for me is what should people like me be doing? I have crystalized 100% of the existing LTA and was in the habit of taking a taxable income from the drawdown account to take my total earnings up to the higher rate limit (so as to avoid the threat of an LTA tax on any growth in the pot at 75, particularly when receipt of the State pension would have  severely constrained basic rate withdrawals between 67 and 75). Am I now safe in leaving the drawdown pot to grow as a potential IHT-free inter-generational transfer?   

Future governments can always make whatever changes they want, so I would never say anything is completely safe, but it appears to be safer now then it was pre-budget.

Rather than tinkering with the LTA - I suppose future governments might instead tinker with the £268k max figure.  
Or potentially re-introduce the LTA again.

So might be worth considering fully crystallising before the next government change, and therefore also fully using the £268k PCLS limit.

UrbanAchiever

On the face of it this is good news for those who will benefit from the abolishion of the LTA.  However, from my point of view I expect labour will be the next party in power, and they will reintroduce the LTA, at a level that none of us can predict.  As such it will be very risky for me to put more into my pension with the expectation of the LTA no longer applying when I come to draw my pension (8 years from now).

So I don't plan on changing anything despite this being a positive for me today.  My pension pot is likely to hit c£1m when I'm 57 and I think that will be the likely LTA level under a labour govt.  So I will continue to invest in S&S ISAs alongside my pension contributions to ensure I can retire early, ahead of being able to access my pension.

zagfles

UrbanAchiever said:

On the face of it this is good news for those who will benefit from the abolishion of the LTA.  However, from my point of view I expect labour will be the next party in power, and they will reintroduce the LTA, at a level that none of us can predict.  As such it will be very risky for me to put more into my pension with the expectation of the LTA no longer applying when I come to draw my pension (8 years from now).

So I don't plan on changing anything despite this being a positive for me today.  My pension pot is likely to hit c£1m when I'm 57 and I think that will be the likely LTA level under a labour govt.  So I will continue to invest in S&S ISAs alongside my pension contributions to ensure I can retire early, ahead of being able to access my pension.

I doubt they'd reintroduce it without the protections we've seen when they've lowered it. Unless they want to decimate the NHS. But you never know...

Scot_39

RogerPensionGuy said:

1.8M would of been sensible for the LTA and abolishing it is super for the very very well off in our society. 

Arguably returning it to inflation linked would have been more rational - from the old 1.5-1.xm level.

And may have avoided the political Labour 'tax cuts for millionaires' tag lines already used by Starmer in the house.

But it's also a tax administation complexity - and a tracking complexity - that would have increasingly been needed to cover a few - 'very very well off'

Yes a £million sounds a lot on face of it or put in 40k per year. 50 odd years - to LTA - but that ignores hopefully decades of 5%+ equity growth.

You don't have to earn 6 figure or 7 figure salaries to build up a million.

But on a indexed joint life annuity - even at todays near decade high returns - let alone last years or before due to emergency raters - buys a pension - a fraction of what many of Drs and Consultant will get from NHS FS/LAS DB schemes.

So although it became known as the Dr's tax - it was not trivial for many others in DC schemes.

Probably most of the 1.3m one firm estimated impacted by LTA  - would have been just above the current threshold anyway.  So the complexity would have applied to even fewer over time if ramped it back up - again politically probably wiser.

Becuase the richest would have been well aware - like those who registered for protection in the past - or others who did cut contributions or working hours or both - to avoid in future.

Scot_39

Pat38493 said:

Beddie said:

Makes sense to remove it. The annual limit is enough, although it could have stayed at £40k + inflation.

Great for the people who are already wealthy enough not to need it. Perhaps he could have helped people nearer the bottom by doubling employer pension contributions - 3% is woeful.

As  I expected they framed it as specifically to help NHS doctors and consultants not to retire early.  From what I understand, the AA limit is actually in some ways the bigger issue as it could in extreme cases result in very large and immediately payable tax bills landing on the doormats of some consultants or doctors, to pay tax right now on money which they wouldn't be able to get for many years into the future.

The Treasury secretary who appeared on BBC didn't explicitly say they hadn't thought of tinkering with the NHS scheme - but said the system that had been put in place for a smaller number of judges - had identified targetting as a risk.

And their were potential litigation issues of restricting the help - to a limitted number of professions.

hyubh

zagfles said:

dunstonh said:

bostonerimus said:

Wonderful news if you have enough lifetime income to take advantage, but it will only increase wealth inequity. It's a nice gift for the best off and irrelevant to the majority of people.

The UK tax system has been punishing wealth generation for a while now.    

Do not forget that the super wealthy get their annual allowance tapered. So, they didn't get £40k before and wont get £60k now.   The most they could pay in is £4,000 and that is going upto £10,000.  

The changes to the pension allowances affect basic rate taxpayers through to the lower end of high earners (sub 250k a year)

Yes, the big winners are those on low 6 figure salaries, eg NHS consultants. There's nothing of any benefit to those at the very top end, eg pro footballers and overpaid pundits on 7 figure salaries, they won't even be able to put 1% of their salary into a pension without being hit by an AA charge.

If doctors worked in a free market environment like professional footballers, I'm pretty sure they wouldn't be enjoying the levels of DB entitlement that (in combination with their high rates of pay) caused their recent LTA issues in the first place...