Tax Threshold Freeze Beyond End of Parliament

arcam_man

I'm not looking for any tax savings, I'm just trying to understand the benefit this this government gets by freezing the tax bands beyond the the current parliament to 2031. I assume that they will take advantage of the increase in the forecast revenue beyond 2029 to increase public funding in this parliament, taking account of this additional revenue. If the next government decides to unfreeze the thresholds prior to 2031, am I correct that any associated cuts in their spending would also need to account for the additional spending in this parliament? 🤔 

badmemory

I assume they did it for the same reason the tories did the same thing.  To make future figures look good.

HedgehogRulez

Because it’s easier to tax your future selves than your current selves. And yes, it means nothing if policy changes in future budgets.

Isthisforreal99

I think increasing the personal allowance to ensure it was sufficient to cover the new basic state pension would have worked out cheaper compared to whatever fudge they come out with -

"The government will ease the administrative burden for pensioners whose sole income is the basic or new State Pension without any increments so that they do not have to pay small amounts of tax via Simple Assessment from 2027-28 if the new or basic State Pension exceeds the Personal Allowance from that point. The government is exploring the best way to achieve this and will set out more detail next year"

Dazed_and_C0nfused

Isthisforreal99 said:

I think increasing the personal allowance to ensure it was sufficient to cover the new basic state pension would have worked out cheaper compared to whatever fudge they come out with -

"The government will ease the administrative burden for pensioners whose sole income is the basic or new State Pension without any increments so that they do not have to pay small amounts of tax via Simple Assessment from 2027-28 if the new or basic State Pension exceeds the Personal Allowance from that point. The government is exploring the best way to achieve this and will set out more detail next year"

True, but that would mean millions of higher rate taxpayers would have benefitted so cheaper to implement but at much more cost to the exchequer revenue wise

Isthisforreal99

Dazed_and_C0nfused said:

Isthisforreal99 said:

I think increasing the personal allowance to ensure it was sufficient to cover the new basic state pension would have worked out cheaper compared to whatever fudge they come out with -

"The government will ease the administrative burden for pensioners whose sole income is the basic or new State Pension without any increments so that they do not have to pay small amounts of tax via Simple Assessment from 2027-28 if the new or basic State Pension exceeds the Personal Allowance from that point. The government is exploring the best way to achieve this and will set out more detail next year"

True, but that would mean millions of higher rate taxpayers would have benefitted so cheaper to implement but at much more cost to the exchequer revenue wise

Maybe, doubt we will ever know the actual cost of whatever they do come up with - it will not take account of the thousands of hours that HMRC will spend explaining to the confused that it does not apply to them, such as

https://forums.moneysavingexpert.com/discussion/6643579/state-pension-but-i-pay-tax#latest

gwynlas

All governments appear to like making life problematic for those to follow as obviously costings for future  budgets depend on such in the same way we might go for a 5yr fix on mortgages.

Will the next government reintroduce a 2 child benefits cap?

I believe that any big financial plans such as HS2 that will necessarily go beyond tenure of present legislators should be the responsibility of a cross party committee

badmemory

What they need to do is find a way to take some serious load off HMRC.  Last year my state pension didn't get to my account until at least December from the previous tax year.  Every year before that it was done & dusted by July.

sheramber

Dazed_and_C0nfused said:

Isthisforreal99 said:

I think increasing the personal allowance to ensure it was sufficient to cover the new basic state pension would have worked out cheaper compared to whatever fudge they come out with -

"The government will ease the administrative burden for pensioners whose sole income is the basic or new State Pension without any increments so that they do not have to pay small amounts of tax via Simple Assessment from 2027-28 if the new or basic State Pension exceeds the Personal Allowance from that point. The government is exploring the best way to achieve this and will set out more detail next year"

True, but that would mean millions of higher rate taxpayers would have benefitted so cheaper to implement but at much more cost to the exchequer revenue wise

They could revert to the increased allowance for pensioners with a restriction on the total income. 

Over a certain amount of income you lose the extra allowance. 

That was how it was done years ago. 

Albermarle

HedgehogRulez said:

Because it’s easier to tax your future selves than your current selves. And yes, it means nothing if policy changes in future budgets.

My guess is that they are hoping for an improved economic outlook, or revenue/spending balance, so they can unfreeze the allowances in the year before the next general election.

eskbanker

badmemory said:

What they need to do is find a way to take some serious load off HMRC.  Last year my state pension didn't get to my account until at least December from the previous tax year.  Every year before that it was done & dusted by July.

That's a long wait, most get it every four weeks!