Budget 25% tax free

michaels

Albermarle said:

Cobbler_tone said:

Sea_Shell said:

*Speculation alert*

Personally, I won't be surprised if it was capped at £100k.

Hopefully they leave the access ages/dates alone.

I thought the 'rumours' i.e. the leaks, would be hitting the headlines by now. I'm impressed that we don't all know by now what is actually going to be released.

My main interest is CGT as my second home should complete this week but could also take another month or so because I know how these things can drag out! I just can't see them messing with this with an immediate impact but wouldn't rule anything out. Hopefully if they do mess with this it'll be left until the next tax year.

Not sure on the tax free limit on pensions. I could see them reducing it over time. £268k, £200k, £150k etc. I don't see them shafting themselves and their friends in such an extreme immediate cut. It would seriously impact a large number of people planning their retirements in the next few years but we've seen how pensioners are seen. 
It'll be anything to keep people in work for longer, or get them back to work, or capture more tax from them.

The £268K was effectively set the last time LTA was fixed. Due to inflation it is already worth less than £200K in real terms.
Further reduction and inflation on top will reduce the inventive for many people to save into a pension, and that for sure is not what any Govt wants as it potentially pushes up the benefits bill. 

I would have thought the current compulsory pension contributions plus state pension means very few will be eligible for benefits post retirement so don't think they need to worry about that.  This anything that makes people take income now and pay tax on it rather than deferring the income and tax until pension age will be considered a win

Grumpy_chap

westv said:

And pigs might fly. 

Hey, wait!
Is that a loop hole?
Will travel by flying pig escape any increase to APD?

Sea_Shell

JoeCrystal said:

FIREDreamer said:

westv said:

Only another 7 days.

… and a couple of hours.

But who’s counting!

Whatever happens, I am hoping there will just be a single thread to discuss all pension related impacts! Might set one one up if it doesn't appear so I got somewhere to post all government documents or consultations related to pensions.

This budget could likely break the internet !!! ☹️

Let's hope MSE doesn't get overwhelmed.

MallyGirl

I like to think that people will check if there is already a thread before starting a new one - but then experience has shown that to be a bit optimistic. I can split threads but not merge them.

Sea_Shell

MallyGirl said:

I like to think that people will check if there is already a thread before starting a new one - but then experience has shown that to be a bit optimistic. I can split threads but not merge them.

Each announcement will probably be followed by simultaneous multiple new threads....I think😉

TheBanker

Breaking News:
It is reported that the Chancellor has decided to fill the 'black hole' by introducing a new tax. The 'Budget Speculation Post Tax' will apply to all threads started on internet forums speculating about potential tax rises. Posters will be required to pay 50p per thread started. It applies retrospectively to any post made since 4 July 2024.

It will only be a temporary measure as the Government expect to have collected the required £40bn by the end of October.

RogerPensionGuy

sargan said:

There have been reports by 2 Government think tanks advising to cap tax free at £100k
I now into Retirement, but not touched any pensions yet. (part form State Pension)

If they do cap the 25% is that legally from the day of budget or do these changes typically only apply in Apr for the next tax year.   I have just short of £200k I could take out under 25% tax free rule ..... pondering what to do.
Pension fund currently performing at 31%   (though of course can drop) .... 

A lot of people paid extra into pensions ... on the expectation that this saving would give them 25% tax free .... will they be allowed to make retrospective ?

You mentioned 31% pension performance, but that might change. 

Is this 31% the pension pot groat over the last 12 months?

If, yes to the above, can I ask what units or funds in your pot is getting these returns please? 

Albermarle

michaels said:

Albermarle said:

Cobbler_tone said:

Sea_Shell said:

*Speculation alert*

Personally, I won't be surprised if it was capped at £100k.

Hopefully they leave the access ages/dates alone.

I thought the 'rumours' i.e. the leaks, would be hitting the headlines by now. I'm impressed that we don't all know by now what is actually going to be released.

My main interest is CGT as my second home should complete this week but could also take another month or so because I know how these things can drag out! I just can't see them messing with this with an immediate impact but wouldn't rule anything out. Hopefully if they do mess with this it'll be left until the next tax year.

Not sure on the tax free limit on pensions. I could see them reducing it over time. £268k, £200k, £150k etc. I don't see them shafting themselves and their friends in such an extreme immediate cut. It would seriously impact a large number of people planning their retirements in the next few years but we've seen how pensioners are seen. 
It'll be anything to keep people in work for longer, or get them back to work, or capture more tax from them.

The £268K was effectively set the last time LTA was fixed. Due to inflation it is already worth less than £200K in real terms.
Further reduction and inflation on top will reduce the inventive for many people to save into a pension, and that for sure is not what any Govt wants as it potentially pushes up the benefits bill. 

I would have thought the current compulsory pension contributions plus state pension means very few will be eligible for benefits post retirement so don't think they need to worry about that.  This anything that makes people take income now and pay tax on it rather than deferring the income and tax until pension age will be considered a win

It is a good point that auto enrolment will gradually mean more and more people having some level of non state pension provision. However you still have the self employed and unemployed and economically inactive.

Anyway apart from that, and away from all the current fevered speculation, governments of all stripes seem to be in favour of people building up a retirement pot, and not having to live through retirement scrimping and saving.
I think they will be reluctant to do anything that could put off low and middle earners from saving for their older age.
Or even higher earners although they may make the system a bit less attractive to pump up pensions to the max, than it is now.

JoeCrystal

Albermarle said:

It is a good point that auto enrolment will gradually mean more and more people having some level of non state pension provision. However you still have the self employed and unemployed and economically inactive.

Anyway apart from that, and away from all the current fevered speculation, governments of all stripes seem to be in favour of people building up a retirement pot, and not having to live through retirement scrimping and saving.
I think they will be reluctant to do anything that could put off low and middle earners from saving for their older age.
Or even higher earners although they may make the system a bit less attractive to pump up pensions to the max, than it is now.

Self-employed people are mainly an area of concern for the government in terms of retirement savings since the majority of them generally do not bother. If I remember correctly, private pension provision for self-employed workers within the construction sector has declined from 38% to 12% over the ten years between 2005 and 2015, while in the medical profession, it only went down from 87% to 79%.

It has been declining at an increasing rate since the nineties and is picking up in speed. In 1998, for example, about half of the self-employed workers in the country contributed to a private pension scheme, which fell to 16% by 2018.

It has something to do with the fact that self-employed decades ago were much more "switched on" regarding the need to provide for their retirement than the current lot. So, understandably, you can see why any government is concerned about it, especially since it would likely mean more benefits paid to these self-employed workers who paid much less taxes than the employed.

michaels

JoeCrystal said:

Albermarle said:

It is a good point that auto enrolment will gradually mean more and more people having some level of non state pension provision. However you still have the self employed and unemployed and economically inactive.

Anyway apart from that, and away from all the current fevered speculation, governments of all stripes seem to be in favour of people building up a retirement pot, and not having to live through retirement scrimping and saving.
I think they will be reluctant to do anything that could put off low and middle earners from saving for their older age.
Or even higher earners although they may make the system a bit less attractive to pump up pensions to the max, than it is now.

Self-employed people are mainly an area of concern for the government in terms of retirement savings since the majority of them generally do not bother. If I remember correctly, private pension provision for self-employed workers within the construction sector has declined from 38% to 12% over the ten years between 2005 and 2015, while in the medical profession, it only went down from 87% to 79%.

It has been declining at an increasing rate since the nineties and is picking up in speed. In 1998, for example, about half of the self-employed workers in the country contributed to a private pension scheme, which fell to 16% by 2018.

It has something to do with the fact that self-employed decades ago were much more "switched on" regarding the need to provide for their retirement than the current lot. So, understandably, you can see why any government is concerned about it, especially since it would likely mean more benefits paid to these self-employed workers who paid much less taxes than the employed.

But benefit entitlement is fairly stingy once you have a state pension so assuming those unemployed had their 'stamp' paid and the self employed paid their class 2 contributions then they are not gong to cost the government much even if they have given themselves a very tight retirement.

Quite a lot of the changes that have been mentioned would have impacted worse on me (NI on the way in, basic rate on the way out) than they would have impacted on higher earners - things like reducing the TFLS (the only benefit for basic rate taxpayers), applying NI on pension income (double taxation for those not using employer conts/salary sacrifice) etc