Higher rate tax payer

Jibergurt

My father (90s) has found himself in the bizarre situation of becoming a higher rate tax payer because of his pensions. He has a military pension and a teachers pension, as well as his OAP so not anything wild or outlandish. He never came near being a higher rate tax payer when working. He is well aware of how fortunate he is, but I think it is ridiculous. He has been retired for 30 odd years, and didn’t boost his pension or anything, in those days you didn’t, but is this becoming the norm now? 

crv1963

I think with the fiscal drag through freezing the personal tax allowance this will become more common. My mother gets state pension and at 85 years has been sent her first ever tax bill. Although a small amount it worried her as she doesn't use the internet so she thought she'd be sent to prison for none payment and worried unnecessarily for a few hours until she called me!

molerat

He has a military pension and a teachers pension, as well as his OAP so not anything wild or outlandish.

But still in excess of £50K, something many pensioners, and workers, can only dream of.

but I think it is ridiculous

No different to anyone else with that well above average income.

Dazed_and_C0nfused

molerat said:

He has a military pension and a teachers pension, as well as his OAP so not anything wild or outlandish.

But still in excess of £50K, something many pensioners, and workers, can only dream of.

but I think it is ridiculous

No different to anyone else with that well above average income.

I guess he could be Scottish resident? 

Higher rate threshold is significantly less now for Scottish taxpayers 😢

And if his largesse means he is giving money to charity he should make sure he utilises Gift Aid and lets HMRC know about his Gift Aid donations so he can receive any higher rate relief due.

molerat

Dazed_and_C0nfused said:

molerat said:

He has a military pension and a teachers pension, as well as his OAP so not anything wild or outlandish.

But still in excess of £50K, something many pensioners, and workers, can only dream of.

but I think it is ridiculous

No different to anyone else with that well above average income.

I guess he could be Scottish resident? 

Higher rate threshold is significantly less now for Scottish taxpayers 😢

And if his largesse means he is giving money to charity he should make sure he utilises Gift Aid and lets HMRC know about his Gift Aid donations so he can receive any higher rate relief due.

Maybe in excess of £43.5K then, still something many pensioners, and workers, can only dream of.  And likely the pips will be squeaking even more next year given Swinney's stated "ambitions". (My opinion as a Scottish taxpayer)

Samuelsjourney

I fully expect to be a higher rate tax payer at pension age too but was a lower rate tax payer during the bulk of my career. I know its a nice situation to be in but im now loading ISAs and savings to mitigate drawdown of DC pot. Yes im in Scotland too.

bolwin1

His pension must be more than £10,000 over the UK average earning to be attracting higher rate tax. Why shouldn't he be shouldering the tax burden like the rest of us (& he's not paying national insurance like the workers are). 

Samuelsjourney

bolwin1 said:

His pension must be more than £10,000 over the UK average earning to be attracting higher rate tax. Why shouldn't he be shouldering the tax burden like the rest of us (& he's not paying national insurance like the workers are). 

Probably paid his fair share of NI contributions over his working lifetime imho unlike those that choose not to work and receive credits to there NI record…..

Bostonerimus1

I don't think we should abandon the progressive income tax based on age and you and your father can take comfort in its inherent "noblesse oblige". Also consider all the tax breaks people get by contributing to pensions so paying tax on the back end seems like part of the deal to me. Freezing of allowances and inflation increases means that many will end up paying a bit more tax.

MetaPhysical

I agree with the OP.  It is disgusting.  Higher rate tax was at one point meant for wealthy, high earning people.  £50k when taxes have come off is the equivalent net income of about £3400 per month assuming no NI.  OK, not bad but hardly a king's ransom.

Yankee24

I NEVER get this type of thinking.   Complaining because you essentially earn a decent amount.  On the broadest shoulders go the biggest burden. Why do pensioners whine so much?   I have paid higher rate taxes for 20 years. I am lucky.  The alternative is to have less and pay less?