A Petition for govt to debate about Forces pensions being tax free
Comments
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It's quite frustrating when someone gets taxed at 40% on a pension that they have earned, so they only receive just over half of it, if they leave the military and have another job which pushes them above the 40% tax level.
You'll need to be getting a pension of over £43k (£50k by 2020) in order to pay 40% tax on the amount over. With the average household income in the U.K. around £27k not many fall into this pot.
It's the same for everyone, all income is taxable above the initial allowance, there are ways to reduce your tax bill that the government endorses like putting your money into a pension.0 -
It's quite frustrating when someone gets taxed at 40% on a pension that they have earned, so they only receive just over half of it, if they leave the military and have another job which pushes them above the 40% tax level.
we could make that less of a problem by only having the pension paid at 65ish instead of an immediate pension at 40-odd
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You'll need to be getting a pension of over £43k (£50k by 2020) in order to pay 40% tax on the amount over. With the average household income in the U.K. around £27k not many fall into this pot.
That's not the case, your total income needs to be over 43k to start paying 40% tax, so if you get another job on a similar income to the income you had in the military, (a job you are qualified to do because of your years of experience) your pension payment pushes you over the limit which means that it is taxed at 40%, so in effect you are only getting 60% of a pension you've earned.
I suppose you could get a job on minimum wage, which would be a waste of the qualifications and experience you have, and often jobs in a similar field to the one you had in the military can be few and far between, so accepting the job that suits means that you know you're going to lose 40% of the pension you've accrued over all those years.0 -
I would love to get my pension tax free - but I live in the real world 0
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That's not the case, your total income needs to be over 43k to start paying 40% tax, so if you get another job on a similar income to the income you had in the military, (a job you are qualified to do because of your years of experience) your pension payment pushes you over the limit which means that it is taxed at 40%, so in effect you are only getting 60% of a pension you've earned.
It's not taxed on the way in, so is taxed on the way out *if* you receive more than your allowance.
The real question you're raising is why pension off people who can still make large wages? Surely they could save money or increase wages rather than paying out pensions that aren't required yet?0 -
That's not the case, your total income needs to be over 43k to start paying 40% tax, so if you get another job on a similar income to the income you had in the military, (a job you are qualified to do because of your years of experience) your pension payment pushes you over the limit which means that it is taxed at 40%, so in effect you are only getting 60% of a pension you've earned.
I suppose you could get a job on minimum wage, which would be a waste of the qualifications and experience you have, and often jobs in a similar field to the one you had in the military can be few and far between, so accepting the job that suits means that you know you're going to lose 40% of the pension you've accrued over all those years.
Yes, that's how it works for everyone, the more you earn in income the more tax you pay, doesn't matter if you have one job, multiple jobs, no pension, one pension, multiple pensions. No bodies getting any special treatment but it is possible to reduce your tax bill by putting part of your salary into a pension, say you have £1000 gross, you could put the full £1000 in the pension instead of £600 in your back pocket.0 -
The real question you're raising is why pension off people who can still make large wages? Surely they could save money or increase wages rather than paying out pensions that aren't required yet?
The military do have a fairly good reason for not having to many employees who are the wrong side of 400 -
Gov response now up
Government responded
Income from all occupational pensions, including those for the armed forces, police and firefighters, is already taxable under UK law.
Pension income from occupational pension schemes is treated as taxable income under UK tax law. This is to reflect the fact that pensions are forms of deferred income and as such are taxable. This same tax treatment applies to payments from all occupational pension schemes.
The government recognises and highly values the tremendous commitment and sacrifice that Armed Forces Personnel make in the defence of our country. This is reflected by the fact that members of the Armed Forces’ Pension Schemes do not have to pay contributions to their pension schemes. These are the only public service pension schemes that are non-contributory.
HM Treasury0 -
This is reflected by the fact that members of the Armed Forces’ Pension Schemes do not have to pay contributions to their pension schemes. These are the only public service pension schemes that are non-contributory.
HM Treasury
That's the theory. In fact, the Armed Forces salary is reduced (9% in my day) in recognition of the 'free' pension.0 -
Silvertabby wrote: »That's the theory. In fact, the Armed Forces salary is reduced (9% in my day) in recognition of the 'free' pension.
5-6% in the last AFPRB. Although its based on how much better than "normal" pensions the AFPS is rather than its full value0
This discussion has been closed.
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