State Pension vs Income Tax Threshold

Aretnap

Why is non-ISA interest considered income but ISA interest is not considered income in that commented scenario?

ISA interest is not taxable income, which means that for most tax purposes it is treated as if it didn't exist at all, eg it doesn't have to be declared on tax returns etc. No particular reason why that principle should be changed in this particular case - indeed trying to treat it as taxable for some purposes and not for others would probably create a lot of complexity and unintended consequences.

A more interesting question is whether any non-ISA interest at all would make a pensioner liable to pay income tax, or only taxable interest which excess the £1000 personal savings allowance. (The answer may be known, but I haven't seen it.)

Marcon

This thread is in danger of turning into yet another 'guess and speculate' so maybe wait until the legislation is in place, if it ever is?

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/comment/81966342#Comment_81966342

Fair point. I suspect if might get dropped at the next budget to make room for the following changes,

Limiting all pension tax relief to the basic rate of tax

Abolishing the tax free lump sum

Changing the triple lock to a permanent single lock of 2.5%

Silvertabby

https://forums.moneysavingexpert.com/discussion/comment/81966349#Comment_81966349

Now you've done it !

Mind you, it's amazing how many times I've read posts on these and other boards, from people who reckon 'that they wouldn't dare touch the lump sum' or 'they'd better not touch the lump sum'. Reality is that the maximum tax free cash lump sum has already been reduced, in stages, from its maximum £450K in 2010 - 2012 to its current £268K.

michaels

My DW will have a tiny DB pension. She will thus be worse off than someone with no DB pension once the tax payable on her state pension exceeds her dB pension. This is so blatantly wrong that no doubt Labour will be fine with it.

onomatopoeia99

https://forums.moneysavingexpert.com/discussion/comment/81966349#Comment_81966349

We seem to have the "abolish the tax free lump sum" and "limit tax relief" speculated EVERY year no matter the party in government and people rushing to withdraw in March then cursing when it doesn't happen as it has weakend their retirement position. Good to see forum members keeping up the trend.

Taking away the TFLS also takes away any incentive to save in a pension. Either pay 20% tax now and have the money to spend, or get tax relief going in and lock the money away for decades then have to pay 20% tax when you take it out, Why bother locking the money away? There is no incentive to do that unless you plan to put more than £20k/year after tax in (which being honest, very few people can do until children have flown the nest).

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/comment/81966719#Comment_81966719

It was just a joke!