Income Tax bands frozen till April 2028 view?

jimi_man

A few more years of high inflation will push me into the higher tax bracket with my pension if the freeze continues. 

sevenhills

jimi_man said:

A few more years of high inflation will push me into the higher tax bracket with my pension if the freeze continues. 

Well they changed the pension lifetime allowance, they will have to tax the rich somehow.

RogerPensionGuy

jimi_man said:

A few more years of high inflation will push me into the higher tax bracket with my pension if the freeze continues. 

A nice problem to have, so many people will never have to deal with that problem I'm sure.

BikingBud

sevenhills said:

jimi_man said:

A few more years of high inflation will push me into the higher tax bracket with my pension if the freeze continues. 

Well they changed the pension lifetime allowance, they will have to tax the rich somehow.

Means testing of the SP? - Should be considered in amongst all other options.  Would we complain escalate from "miffed" to "peeved"

Silvertabby

BikingBud said:

sevenhills said:

jimi_man said:

A few more years of high inflation will push me into the higher tax bracket with my pension if the freeze continues. 

Well they changed the pension lifetime allowance, they will have to tax the rich somehow.

Means testing of the SP? - Should be considered in amongst all other options.  Would we complain escalate from "miffed" to "peeved"

Not only was the original State pension means tested, it was payable from age 70 (both men and women) and only to those 'of good character'.

The good old days?

peterg1965

The tax system in the UK is hugely complicated and gets more so as the years pass. I thought reform was on the horizon in 2010 when George Osborne announced a review to combine NI and Income Tax, but that came to nought.

Fiscal Drag (The ultimate stealth tax! ) , means that more people are paying the higher rates of income tax and the overall tax take is probably as high as it has been in living memory.   Whilst i appreciate the need to control inflation, high taxes (of all kinds) put a brake on the economy and hinder GDP growth by stifling spending and reducing investment by businesses.  I guess this is what the (Truss/Kwartang) mini budget was looking to address, but failed.

Example - the 45% additional rate band of Income Tax, initially caught about 200,000 tax payers, that figure is set to rise to 600,000+ in the next few years, with fiscal drag and a lowering of the threshold to £125k. The marginal rates of tax when earning over £100K are over 60% when the loss of PA occurs - its a mess  and a disincentive to higher earners/wealth creators.

With the current Govt and the noise from Labour, there seems to be a 'maintain the status quo' message when it comes to taxes, its time for leadership and in the post Brexit UK economy a massive shake up of the overall tax code in the UK is well overdue.

SouthCoastBoy

jimi_man said:

A few more years of high inflation will push me into the higher tax bracket with my pension if the freeze continues. 

This perfectly outlines what I think is the underlying issue and is not being tackled by the govt, non workers that have unlimited inflation rises, either through their pensions or benefits are not being hit by inflation, but the workers are, until this is resolved inflation will continue as the propensity to spend is not limited. The workers, that can, either by living on a pension or benefits will stop working as work as the marginal hourly rate in real terms is no longer attractive. Interest rates will need to carry on rising until we end up in a recession.

Pat38493

SouthCoastBoy said:

jimi_man said:

A few more years of high inflation will push me into the higher tax bracket with my pension if the freeze continues. 

This perfectly outlines what I think is the underlying issue and is not being tackled by the govt, non workers that have unlimited inflation rises, either through their pensions or benefits are not being hit by inflation, but the workers are, until this is resolved inflation will continue as the propensity to spend is not limited. The workers, that can, either by living on a pension or benefits will stop working as work as the marginal hourly rate in real terms is no longer attractive. Interest rates will need to carry on rising until we end up in a recession.

Well I suppose it is quite "interesting" that a lot of pensioners with gold plated inflation proof pensions are saying that workers should not take pay rises in order to combat inflation :

kinger101

peterg1965 said:

The tax system in the UK is hugely complicated and gets more so as the years pass. I thought reform was on the horizon in 2010 when George Osborne announced a review to combine NI and Income Tax, but that came to nought.

Fiscal Drag (The ultimate stealth tax! ) , means that more people are paying the higher rates of income tax and the overall tax take is probably as high as it has been in living memory.   Whilst i appreciate the need to control inflation, high taxes (of all kinds) put a brake on the economy and hinder GDP growth by stifling spending and reducing investment by businesses.  I guess this is what the (Truss/Kwartang) mini budget was looking to address, but failed.

Example - the 45% additional rate band of Income Tax, initially caught about 200,000 tax payers, that figure is set to rise to 600,000+ in the next few years, with fiscal drag and a lowering of the threshold to £125k. The marginal rates of tax when earning over £100K are over 60% when the loss of PA occurs - its a mess  and a disincentive to higher earners/wealth creators.

With the current Govt and the noise from Labour, there seems to be a 'maintain the status quo' message when it comes to taxes, its time for leadership and in the post Brexit UK economy a massive shake up of the overall tax code in the UK is well overdue.

I used to work in taxation, and at the time, pretty much all of the relevant legislation for direct taxes could be found within two very hefty volumes of Tolley's Yellow Tax Handbook.  Two decades later, after a series of chancellors simplifying our tax laws, they've managed to reduce that to five volumes.

Dazed_and_C0nfused

dunstonh said:

I think the personal allowance will increase if the triple lock remains.    The problem is the state pension.   If the PA remains as it is (as planned), then within a short period, it will make virtually everyone with a state pension a taxpayer.   It will create an expensive situation where current non-taxpayers with no other income source will need to pay HMRC.      

Now that HMRC have introduced Simple Assessment, partly to address this very issue, I suspect the cost will be negligible in the overall scheme of things.