Pension tax relief - possible flat rate of 30% / annual cap reduction back to £40k

michaels

I would have thought 25% would be more likely than 30%!

Not sure if a change to the max TFLS could be implemented immediately?

Dazed_and_C0nfused

Mark_d said:

kempiejon said:

Mark_d said:

I don't think it would be practical to implement these changes for the 2024-25 tax year, so next year would be more likely.

If/when these changes do come in I will drop my pension contribution rate from 40% to maybe 10% and use the increase in take-home pay to invest in ISA.  I don't want to be getting 30% tax relief now, only to be hit with 40% income tax in retirement

Conversely who would pay in now as a 20% rate tax payer when they might get 30% next year? I prefer ISAs currently outside of tax for a retirement income. You might find an ISA focus could let you drop a tax code.

I doubt anything would happen instantly or retrospectively so I guess 24/25 is the likely outcome, but I know I cannot know so I'm sticking to my plan trying not to get worked up on 2nd guessing and wait to see.

Do you think a 20% taxpayer could qualify for 30% tax relief? Surely any tax relief you can get can't exceed your marginal rate of tax.

I agree that there's no point second guessing because any thing that Labour introduce won't take effect until next tax year at the earliest.  Having said that, it is interesting to think about different scenarios and how you would change your behaviour

HMRC are introducing a new system specifically so certain people who don't currently receive any tax relief will do going forward.

https://www.gov.uk/government/publications/low-earners-anomaly-pensions-relief-relating-to-net-pay-arrangements

And lots of people making relief at source contributions pay no tax.

westv

My predictions for how October will affect pensions.
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Thank you. 

Dazed_and_C0nfused

westv said:

My predictions for how October will affect pensions.
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Thank you. 

Someone with insider knowledge at last!

Grumpy_chap

Mark_d said:

Do you think a 20% taxpayer could qualify for 30% tax relief? Surely any tax relief you can get can't exceed your marginal rate of tax.

Well, it would not be a flat rate relief of 30% as suggested in the title of the thread if limited to 20% for some.

As to the other part of the title of the thread - reducing AA back to £40k - I don't think that will happen as it was only very recently that all Parties in the House were demanding the AA be increase to stop medical practitioners from retiring early.  That will not have gone away if the AA is reduced, unless it is combined with some further measure that mitigates this impact.

westv said:

My predictions for how October will affect pensions.
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Thank you. 

Don't forget to edit that once the good RR has filled in the gaps.  And then quote yourself back to the thread with a not how great you were

Nebulous2

I'm thinking about this, which is probably a bad idea, after a couple of beers.

As I've said repeatedly - I retired at 59, with a cash cushion to see me through to SPA. I then very quickly took a part-time role with the NHS. I've become fond of my cash safety blanket, and while drawing some of it, I've more than replaced it with what I have paid into a SIPP from my very part-time earnings.

I'm generally enjoying my work, and am due a decent incremental rise next year. 

I'm concerned about spotting the point at which my usefulness to the NHS draws to a close, and have been considering stopping at Christmas, or at the end of the financial year.

An increased rate of tax relief, along with the attraction of a higher hourly rate, might be enough to keep me trundling along for a bit longer....