Potential capping of Salary Sacrifice (speculation)?

artyboy

BrilliantButScary said:

ClashCityRocker1 said:

Cobbler_tone said:

zagfles said:

Cobbler_tone said:

zagfles said:

Cobbler_tone said:

MeteredOut said:

Albermarle said:

masonic said:

Do we have a dedicated TFLS speculation thread yet?

It could be open permanently as if nothing happens in this budget, it will not be long before it all starts again before the next budget.....

 they're going to tax people if they've not produced any offspring by the time they're 40 (for women) and 50 (for men) - a kind of negative child benefit tax. 

TBF that happens already naturally and they support the economy for those who do. It's very strong personal justification (and lack of guilt) for the OH retiring at 54. No mat leave, career breaks, or other benefits associated with having kids. On the flip side I blame her for the declining population.   

And no providing the next generation of taxpayers. My two kids are both higher rate taxpayers already in their mid 20's and their taxes will be supporting all pensioners over the next few decades, in all likelyhood by far more than they were supported by taxpayers when children. 

Perhaps the state pension should be abolished and pensioners should be supported by their kids in return for the cost of their upbringing. Those who don't have kids will have had adequate opportunity to save extra for a pension as they didn't have to pay for kids for 18/21 years. 

I certainly wasn’t giving commentary on those who can/choose to have kids. I’d suggest those that do cost the country a lot more but then again with no kids there’s no future. Far too deep a debate for here!
My only comment is that if that is your path at least ‘try’ to be accountable in raising and funding them to adulthood. Some have like getting the puppy they can’t afford.

The puppy's not going to pay taxes when it grows up

 Neither do the unaccountable.

From a species perspective the only reason any of us exist is basically to reproduce. The most selfish thing that an individual can do is limit having kids (maybe to zero) and resist helping to support/raise other kids.

It's a ridiculous and selfish idea to say look after myself only store up wealth resist sharing that wealth even after death - basically insist you are more important than the rest of humanity and deserve to keep everything you obtain (even though you might well have benefited from the common "pot" at lots of stages of your life.

We are a collective, cooperative species. Those saying human nature is selfish and doesn't like collectivity are not paying attention!

Takes a whole village to raise a child, even Silas Marner.

Utilitarianism, paying taxes for the greater good?

That assumes that the taxes paid are actually spent on the greater good...

Cobbler_tone

A lot of chat at a meeting at work today. We have an aging workforce and SS forms a key part of our benefits package. Eg I sacrifice £3k out of £5.1k a month and won’t be unique, especially for those late to the pension party. The savings to the business will be significant too. This could be quite painful but I won’t be in a unique position.

Grumpy_chap

Cobbler_tone said:

We have an aging workforce and SS forms a key part of our benefits package. Eg I sacrifice £3k out of £5.1k a month and won’t be unique,

I think that is an overlooked feature of the SS options that are currently available.

It is, generally, better that people reaching retirement can do so with a comfortable retirement (and spending to keep churning the economy) than on the tight constraints of SP alone.  Plus, an individual who can self-finance a comfortable retirement will be less likely to receive state funding for care homes should the need arise.

There are many that either simply could not afford, or simply did not thing about, pension contributions in their earlier years.  As those individuals reach the distinguished side of 50, they might be fortunate enough to be more better financially positioned and also seeking to catch up their retirement funding.  I am one of them and will make the maximum pension contributions I can.

The availability of a higher SS threshold allows me to do that and to "catch up" the tax relief that would have been received more slowly had I had the finance and understanding when I was 20 that I have now.  

I don't believe that I am unique either.

jobbywobbler

Cobbler_tone said:

A lot of chat at a meeting at work today. We have an aging workforce and SS forms a key part of our benefits package. Eg I sacrifice £3k out of £5.1k a month and won’t be unique, especially for those late to the pension party. The savings to the business will be significant too. This could be quite painful but I won’t be in a unique position.

I am similar and I fair few older than me are doing similar in my multi-national IT firm.    Load her up and put in a decent set of funds, DC is going well.    

Intrigued if it goes ahead and if so, what is the new sweet spot?

Means I won't have the current amount to the pension, then a greater reliance on with the state pension (though I have an DB scheme as well).

There are many other ways to grab NI.   LLP Partners DONT PAY ANY NI!!!!!!    I know a a few of these people and they have the broadest shoulders out of anyone I know.

Lose the triple lock as well!

doodling

Hi,

Grumpy_chap said:

doodling said:

Hi,

The issue with referring to "salary sacrifice" is that it isn't defined.

I think when people think of salary sacrifice, they think of a flexible arrangement whereby someone can choose to give up salary in exchange for employer pension contributions.  The issue is the use of the word "flexible" - what does that mean?

If I just need to email the payroll department to change my employers contributions then that probably qualifies as flexible.  If I need to sign a new contract of employment, is that flexible?  What if I need to interview for a new job with the same employer and sign a new contract of employment, is that flexible?  What if that interview was for exactly the same job as I am doing now, is that flexible?

Then there are things which don't depend on flexibility but which people think might/should qualify as salary sacrifice.  What if my employer decides to increase all employer contributions from the legal minimum to 10% of salary but says there will be no pay rises for 3 years - is that salary sacrifice?  What if the employer contribution percentage is proportional to my rate of pay - is that a form of salary sacrifice?

One we know what everyone means by salary sacrifice then it is easy to predict what effect any taxation of it would have on DB schemes.

Yes, it is.
In detail.  With clearly set out requirements that the contract of employment is changed.
And specific rules in the case of SS for pension (can be changed with greater frequency than other types of SS).

https://www.gov.uk/guidance/salary-sacrifice-and-the-effects-on-paye

Yes, and a number of the things I listed above do not fall within the scope of those definitions (the HMRC manual being the important link on the page you posted).  In fact, a sufficiently large number of things fall outside the definition of salary sacrifice that it might make one wonder whether introducing a tax related to salary sacrifice would be worthwhile, or whether it should apply to all employer contributions...

Note that a tax on salary sacrifice will be borne by those who are financially less secure.  Those who can commit to a permanent change in their employment contract will do so and avoid it, those who want/need the flexibility of varying their pension contributions will pay an extra tax.

kinger101

masonic said:

Do we have a dedicated TFLS speculation thread yet?

Five surely.  One for those who think it will change. One for those who don't think it will change. One for those who think it's not a binary position.  One for those who don't know.  One for those who don't know what a TFLS is. One for those who don't care.  And one for those that can't count. 

kinger101

Cobbler_tone said:

A lot of chat at a meeting at work today. We have an aging workforce and SS forms a key part of our benefits package. Eg I sacrifice £3k out of £5.1k a month and won’t be unique, especially for those late to the pension party. The savings to the business will be significant too. This could be quite painful but I won’t be in a unique position.

I can't see sal sac for pensions going.  It benefits most basic rate taxpayers and those on the border between HR and BR.  Once you're well into higher rate, aside from aggressively gaming it, the NI savings are small.

There has been speculation of raising IT and lowering NI which would make it more pointless,  but IMO, all tax bands need to go up 2 p. There's no scoe for NI reductions, but id prioritize employee first.

Fed up with labour voters saying look how well it works there then not realizing where the tax burden lies in the countries it seemingly works.

The solution is raising your own taxes as well as everyone else's.

HedgehogRulez

After the 2% tax u turn it seems Sal sac changes are the way forward after all

Cobbler_tone

HedgehogRulez said:

After the 2% tax u turn it seems Sal sac changes are the way forward after all

Maybe curl up in a ball for the winter Hedgy. You are making stuff up on speculation on speculation. It can’t be good for your health.
Don’t worry about things you can’t change and make decisions based on things you can.

MallyGirl

Grumpy_chap said:

Cobbler_tone said:

We have an aging workforce and SS forms a key part of our benefits package. Eg I sacrifice £3k out of £5.1k a month and won’t be unique,

I think that is an overlooked feature of the SS options that are currently available.

It is, generally, better that people reaching retirement can do so with a comfortable retirement (and spending to keep churning the economy) than on the tight constraints of SP alone.  Plus, an individual who can self-finance a comfortable retirement will be less likely to receive state funding for care homes should the need arise.

There are many that either simply could not afford, or simply did not thing about, pension contributions in their earlier years.  As those individuals reach the distinguished side of 50, they might be fortunate enough to be more better financially positioned and also seeking to catch up their retirement funding.  I am one of them and will make the maximum pension contributions I can.

The availability of a higher SS threshold allows me to do that and to "catch up" the tax relief that would have been received more slowly had I had the finance and understanding when I was 20 that I have now.  

I don't believe that I am unique either.

Definitely not unique - this was me too. I had been a mortgage free wannabe for many years (with memories of my first mortgage at 17%) so had only ever contributed enough to maximise the employer contribution. OH had always put more in and been very high in equities so we were pretty unbalanced in terms of pension values. I had my lightbulb moment and switched focus to the pension in my last few years, putting in the max allowed, via SS.