The inevitable pre-budget speculation on pensions

BlackKnightMonty

LHW99 said:

Wouldn't moving the 2p from NI to income tax also catch a number people who do several lower paid / part time jobs, each of which are under the minimum salary to pay NI?

If their income is that low they probably won’t be paying any Income Tax. Or if they are, they will get it back through Universal Credit.

Albermarle

Cobbler_tone said:

2% on tax, 2% off NI. Not forgetting the 0.25% levy on funds and some kind of reduction on relief going in. A 'medium/high probability' anyway according to the BDO. Gone a bit quiet on the TFLS, which should keep many happy, as that seems their main focus.

Maybe certain media outlets have realised that their readers are getting bored rigid reading the same speculation about the TFLS every day for weeks on end .

Albermarle

DRS1 said:

Universidad said:

Cobbler_tone said:

2% on tax, 2% off NI. 

This would be a sensible start to taxing pensioner income more in line with working folk. Perhaps it would be done in small steps like this to test the water. I'm imagining some of the headlines already. (Awarding myself bonus points for headlines in the style of each paper...)

My crystal ball tells me that the end of this road is the abolition of all NICs.  The consequence of which is no-one pays any NICs and consequently no-one qualifies for any state pension.  Bye bye black hole.

Although the relationship between getting a state pension and paying NICs, is just the current way of qualifying for one. It could be replaced by some other criteria.

From the Govt side they could abolish NICs and increase income tax, and pay the state pension from income tax.

ClashCityRocker1

But abolishing NI and increasing Income Tax would be a a sudden and big leap in tax for those over retirement age. I think you'd have to hike the personal allowance a bit to compensate.

Albermarle

ClashCityRocker1 said:

But abolishing NI and increasing Income Tax would be a a sudden and big leap in tax for those over retirement age. I think you'd have to hike the personal allowance a bit to compensate.

I was not advocating it, just pointing out that the link between NI and the state pension, is a construct rather than an absolute direct link. 

Andy_L

LHW99 said:

Wouldn't moving the 2p from NI to income tax also catch a number people who do several lower paid / part time jobs, each of which are under the minimum salary to pay NI?

Is that a bug or a feature? Why should someone with several PT jobs pay less NI than someone who earns the same in one job?

Grumpy_chap

Andy_L said:

LHW99 said:

Wouldn't moving the 2p from NI to income tax also catch a number people who do several lower paid / part time jobs, each of which are under the minimum salary to pay NI?

Is that a bug or a feature? Why should someone with several PT jobs pay less NI than someone who earns the same in one job?

I understand that was, at least partially, within the rationale for reducing the threshold for employer NI.

GunJack

It always used to be that you needed x years of NI to qualify for some other benefits, don't know if it still is. If it's still the case this would also have to be taken into consideration if NI is to be messed with, it's not just pension qualification.

michaels

A lot of us paid NI on the money that went into our pension so paying it again on drawdown (even if it is renamed Income tax) means I have paid the same twice tax on the delayed income. 

And with the only win from a pension over an ISA being the TLFS saving 5% tax on the way out it is getting close to the point where for a basic rate taxpayer is better off taking the income and saving in an ISA than saving in a pension - is that really where the govt wants to be going?

OldScientist

michaels said:

A lot of us paid NI on the money that went into our pension so paying it again on drawdown (even if it is renamed Income tax) means I have paid the same twice tax on the delayed income. 

And with the only win from a pension over an ISA being the TLFS saving 5% tax on the way out it is getting close to the point where for a basic rate taxpayer is better off taking the income and saving in an ISA than saving in a pension - is that really where the govt wants to be going?

You're definitely not paying tax twice on the capital gains.

Except for the employer's contribution.