TAX ON FULL STATE PENSION APRIL 2027

Cobbler_tone

Interesting reading these suggestions of radical changes to the whole tax system. You don't get to start with a blank sheet of paper but can expect some 'Reform' in a few years.

It is cited as an over complicated system but can you imagine how complicated it would be simplify it?! It would probably take a generation to work out if you were any better/worse off or not. They are aiming for increases in taxation at the moment and I can't see anything other than some basic increases to income tax and/or NI, with some tightening of the avenues to avoid paying it. There'll be a bit of whining and then people will get on with it.

ClashCityRocker1

Cobbler_tone said:

Interesting reading these suggestions of radical changes to the whole tax system. You don't get to start with a blank sheet of paper but can expect some 'Reform' in a few years.

It is cited as an over complicated system but can you imagine how complicated it would be simplify it?! It would probably take a generation to work out if you were any better/worse off or not. They are aiming for increases in taxation at the moment and I can't see anything other than some basic increases to income tax and/or NI, with some tightening of the avenues to avoid paying it. There'll be a bit of whining and then people will get on with it.

There's talk of cutting NI and increasing income tax, which won't be popular with the retired, so you could link it to a raise in the threshold before you start paying. You could up 40% tax to 41%

You could also consider addressing the loss of child benefit and other cliff edges by ceasing to taper and just upping higher rate tax a tad. 

As you say, there will be some moaning, might as well get on with it!

RReeves

..just like to thank you all for your input....all very helpeful (I don't really have much of an idea myself..)

Universidad

BikingBud said:

We make many choices in life, inhibiting your own self betterment is a choice.

I cut my hours at least partly due to a tax threshold, but I'm a much better person for working less.  

german_keeper

Up until now I have been really quite proud of what me and my wife have achieved on a relatively low income. She's just gone to bed but I will mention to her tomorrow that we are a net economic drain.  

hugheskevi

BikingBud said:

Does all this discussion not demonstrate that our tax system is absurdly complex and needs resetting to remove all the niches and routes to exploit?

I went travelling around the world to avoid higher rate tax, 3 times (twice in 20s, once in 40s). A very pleasing 3 and half years in total, timed so as to reduce tax in 7 different tax years. 

I then made excessive pension contributions from my early 30s to avoid higher rate tax.

When I couldn't justify any more contributions on any conventional basis at the age of around 40, I took out an offset mortgage so I could have a nice pool of 100% offset savings that I can dip into before age 55, then repay from pension at 55 so I can continue with excessive pension contributions and retire preposterously early and still benefit from pension tax relief. Sadly not as much as I'd like, as these contributions are all going to be subject to higher rate tax, but at least I will still get 25% tax 

That all reduced my productivity, but on the other hand, I set up a small consultancy to help higher earners with Annual and Lifetime Allowance issues so that was a bit of extra economic activity, and a nice way to use my wife's and my own dividend allowance each year to further help keep our tax rates low.

I don't know what I would have done without our absurdly complex pension and tax system, it has shaped my entire life 

More seriously though, I will be economically inactive from the age of 48. I won't be taking any benefits, but economically speaking, it doesn't matter - I will be an unproductive member of society living off the production of others. I will just be living off a combination of profits, equity ownership, and dividends rather than State redistribution of resources. All forms of economic inactivity are harmful and something for the State to try to avoid, regardless of how they are funded. 

Given the value I place on leisure compared to more consumption, it just isn't worth working when for every £1 my employer gives me in remuneration above £50K (ignoring pensions for ease):

• 15p goes in employer national insurance
• Of the remaining 85p, 1.7p goes on employee national insurance and 34p is taken in income tax
• Of the remaining 49.3p, 9.86p will be taken in VAT when I spend it.
• That leaves me with 39.44p of good and services, although a good chunk of that will be used by whomever I buy goods or services from to fund their tax liabilities (Corporation Tax, Business Rates, Fuel Duties, Employer National Insurance, Dividend Tax, etc)

BikingBud

Universidad said:

BikingBud said:

We make many choices in life, inhibiting your own self betterment is a choice.

I cut my hours at least partly due to a tax threshold, but I'm a much better person for working less.  

You have a career behind you of assisting others to progress their own betterment.

You have built a future income stream and you are not solely reliant on others. 

But the reduction in hours is now tax that is lost 

BrilliantButScary

BlackKnightMonty said:

german_keeper said:

Up until now I have been really quite proud of what me and my wife have achieved on a relatively low income. She's just gone to bed but I will mention to her tomorrow that we are a net economic drain.  

You are not on your own. Remember 53.3% of all UK households stand with you as net economic drainers.

Well, I am just thinking, is it worth it to get myself banned or this thread closed? Tempting....

What about all the 'net economic drainers' that continued to go out to work during the Covid pandemic? Doing jobs that are 'beneath contempt' in some people's opinion on this thread. 

https://www.jrf.org.uk/work/economic-growth-and-poverty

kinger101

BlackKnightMonty said:

german_keeper said:

Up until now I have been really quite proud of what me and my wife have achieved on a relatively low income. She's just gone to bed but I will mention to her tomorrow that we are a net economic drain.  

You are not on your own. Remember 53.3% of all UK households stand with you as net economic drainers.

I blame central heating.  Impossible for a child to find gainful employment as a chimney sweep these days.  

kinger101

BrilliantButScary said:

BlackKnightMonty said:

german_keeper said:

Up until now I have been really quite proud of what me and my wife have achieved on a relatively low income. She's just gone to bed but I will mention to her tomorrow that we are a net economic drain.  

You are not on your own. Remember 53.3% of all UK households stand with you as net economic drainers.

Well, I am just thinking, is it worth it to get myself banned or this thread closed? Tempting....

What about all the 'net economic drainers' that continued to go out to work during the Covid pandemic? Doing jobs that are 'beneath contempt' in some people's opinion on this thread. 

https://www.jrf.org.uk/work/economic-growth-and-poverty

You don't have to say it. We're all thinking it anyway.