yes!!!!!

zagfles

MDMD said:

ukdw said:

BuildTheWall said:

ukdw said:

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.

LTA won’t be re-introduced. It’s just too complex to administer and comes with a lot of historical baggage. 

More Likely is pensions brought under IHT. 

According to the headline of the Radio 4 today programme this morning - 'Labour have pledged to reintroduce the LTA should they get elected' - and instead plan to implement a bespoke system for the NHS.

Last September Wes Streeting was calling for it to be scrapped

https://www.ftadviser.com/pensions/2022/09/07/labour-would-scrap-pensions-tax-cap-to-boost-nhs-staff/?page=1

Yes, but now the Tories have done it they see an opportunity to gain political capital out of the tired old trope of "Tories looking after their rich mates"

Ciprico

I think it would be very difficult to make a special exception for doctor's pensions... and I don't know but very possibly many of the high earning consultants do a fair amount of private work which presumably falls outside the NHS DB scheme so would there be another special case for doctors who also have a DC pension, and why should their DC pension be treated differently to everyone else's

And presumably there are number of highly paid NHS managers who are not clinical - should they be excluded...

..or a clinician who tranfers into management so ceases to be a doctor, so falls outside the doctor catagory that has to be venerated and instead becomes a highly paid and unappreciated manager, would they fall out of any new system.

...and other government workers like headmasters presumably have the same pension problems.

It would be troublesome to implement and fundamentaly unfair to find a policy that applied to only a few wealthy doctors and judges, and probably not a vote winner...

Qyburn

zagfles said

Yes, but now the Tories have done it they see an opportunity to gain political capital out of the tired old trope of "Tories looking after their rich mates"

In support of these changes people go on about doctors and similar. But those are DB pensions, so the perceived issue could have been fixed by changing how both LTA and AA are calculated for DB pensions, where there is no actual pot to compare with LTA and no actual employer contributions to compare with AA.

Making changes the way they have ensures that all of the richest can benefit, whether friends of the Tories or not. BBC reckons less than 4% of earners will benefit.

zagfles

Qyburn said:

zagfles said

Yes, but now the Tories have done it they see an opportunity to gain political capital out of the tired old trope of "Tories looking after their rich mates"

In support of these changes people go on about doctors and similar. But those are DB pensions, so the perceived issue could have been fixed by changing how both LTA and AA are calculated for DB pensions, where there is no actual pot to compare with LTA and no actual employer contributions to compare with AA.

Making changes the way they have ensures that all of the richest can benefit, whether friends of the Tories or not. BBC reckons less than 4% of earners will benefit.

The very richest will hardly benefit at all. The AA taper is still in place, although raised a bit to £10k, so anyone earning over £260k will have their AA reduced, down to £10k if they earn over £360k

The people who benefit most are those on around £100-260k

dunstonh

Making changes the way they have ensures that all of the richest can benefit, whether friends of the Tories or not. BBC reckons less than 4% of earners will benefit.

It generally wont benefit the real top earners as they are handicapped by tapering.   It will benefit the medium to high earners.  However, the number of people being captured by the LTA was increasing quickly.    It was a growing problem.   

Plus, many people with DC pensions manage the problem by either crystallising early and waiting until age 75 for the final check or delay crystallising or phase it knowing it will be inevitable at some point.   Those people won't make the 4% that the BBC is referring to but they are affected by it.  

It would be far more helpful if they published a figure that reflected those that are going to be affected by it, even if they are not currently in a position to be affected by it.

If basic rate taxpayers are being captured by it, then it ceases to be a tax on the very wealthy.

aldershot

There have been some media comments that the prospective cost of the change is around £66,000 per doctor saved, if it only prevents 15000 retiring early. I think that misses the point that if they don’t retire early, and continue to work and earn for a few more years, they will be paying much more than that in tax and NI anyway so the cost will be negated and we get to keep a few more consultants in the NHS, assuming of course that they were actually leaving the workforce which anecdotally, they were actually doing.  

This also applies to any other individual who decided to leave the workforce due to the LTA. As noted in another thread on the subject, it’s not the only reason why anyone (myself included) leaves the workforce, but it is a trigger point to making a decision that you may not make if you weren’t pushed. 

drjohn67

Happy to be relieved of the LTA - it doesn’t feel like a benefit as such but rather removal of a disproportionately harsh penalty applied to a small group. Some of the thresholds created pockets which skewed overall tax percentages.

It would seem fairer to have raised tax free thresholds for the poor and started a 40something rate from 100k or acted on tax loopholes. Those earning well above the 150k band may already have access to schemes share option schemes allowing income to be taxed as capital gains. 

Although it may still have cost more to me personally each year it would have felt better to me for my tax to be relieving those on 25k rather than 250k and wanting to push 100k of that through share options.

Tax at 100k = 33% of income
Tax at 120 = 37.5% of income
Tax at 150k = 39% of income
Tax at 250k = 42% of income 
Tax if 250k if 150k and 100k shares paying capital gains tax = 30% of income

However, some people with long service histories and earning around 120k were paying tax charges equiv to 15-20% of annual income on top.
120k earner with long service history paying 50+% was not a gradually progressive rate of tax.

MK62

zagfles said:

Qyburn said:

zagfles said

Yes, but now the Tories have done it they see an opportunity to gain political capital out of the tired old trope of "Tories looking after their rich mates"

In support of these changes people go on about doctors and similar. But those are DB pensions, so the perceived issue could have been fixed by changing how both LTA and AA are calculated for DB pensions, where there is no actual pot to compare with LTA and no actual employer contributions to compare with AA.

Making changes the way they have ensures that all of the richest can benefit, whether friends of the Tories or not. BBC reckons less than 4% of earners will benefit.

The very richest will hardly benefit at all. The AA taper is still in place, although raised a bit to £10k, so anyone earning over £260k will have their AA reduced, down to £10k if they earn over £360k

The people who benefit most are those on around £100-260k

.....but the very richest might well be set to benefit very significantly from the abolition of the LTA.

zagfles

MK62 said:

zagfles said:

Qyburn said:

zagfles said

Yes, but now the Tories have done it they see an opportunity to gain political capital out of the tired old trope of "Tories looking after their rich mates"

In support of these changes people go on about doctors and similar. But those are DB pensions, so the perceived issue could have been fixed by changing how both LTA and AA are calculated for DB pensions, where there is no actual pot to compare with LTA and no actual employer contributions to compare with AA.

Making changes the way they have ensures that all of the richest can benefit, whether friends of the Tories or not. BBC reckons less than 4% of earners will benefit.

The very richest will hardly benefit at all. The AA taper is still in place, although raised a bit to £10k, so anyone earning over £260k will have their AA reduced, down to £10k if they earn over £360k

The people who benefit most are those on around £100-260k

.....but the very richest might well be set to benefit very significantly from the abolition of the LTA.

How exactly? As they can only put £10k a year in going forwards, and were restricted to £4k a year till now? Maybe they already piled in during 2006-2010 under the last Labour govt while the LTA was £1.8 million and AA was £250k and no taper? In which case they'd have probably used protections when the Tories reduced the LTA/AA and stopped payments to avoid further AA and LTA hammering.

This is completely useless for the very rich. It's very good for those on £100-260k

peterg1965

ukdw said:

According to the headline of the Radio 4 today programme this morning - 'Labour have pledged to reintroduce the LTA should they get elected' - and instead plan to implement a bespoke system for the NHS.

So, with the opinion polls looking like a Labour win at the next election, pensions 'rules' will remain uncertain.  I despise this kind of politics, its great soundbites and headlines for Starmer & Co, but utterly undermines the main purpose of the LTA/AA changes made by the Chancellor to encourage key people to remain in, or return to work.  On a personal level it does make planning more difficult. I don't expect any sympathy, but it annoying.