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Post by johnc on Feb 10, 2020 15:00:34 GMT
According to the Financial Times, the Chancellor is going to reduce tax relief on pension contributions for higher rate taxpayers to 20% from 40%. Although this story does the rounds every year, I can't help thinking that at the beginning of a 5 year term, such a policy may well be slipped in. Just a word of warning for anyone contemplating making contributions, perhaps pre budget might be better timing than post budget.
I wonder what the doctors and dentists (who have been hammered by the Pension Charge) will think when their contributions to the NHS pension scheme only get 20% relief and their monthly take home pay goes down with another increase in tax: the £300K + salaries being offered on the other side of the Atlantic might look very attractive.
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Post by Deleted on Feb 10, 2020 15:26:19 GMT
Will not be pleased if they do, but what can you do?
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Post by racingteatray on Feb 10, 2020 15:54:50 GMT
I can't help thinking back to all that Election Day jubilation from the dinner party set about how much less tax they were going to have to pay...
None of us can trust Boris.
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Post by johnc on Feb 10, 2020 18:54:11 GMT
Will not be pleased if they do, but what can you do? I will convert to a limited company immediately. The biggest problem with that is the car since my total mileage per annum in only about 6,000 half of those being business. At 45p/mile for 3,000 miles, it doesn't really make much of a dent in the running costs. |
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Post by PG on Feb 10, 2020 19:11:34 GMT
I hate to admit it but it is one of those policies that actually makes sense, if at the same time the £1M pot and earnings cut off stupidity is lifted. Because most people pay basic rate when they draw a pension but may have had higher rate relief on the contributions into the pension.
Better might be to go to a flat rate of, say, 25% / 30% for everyone - encourages basic rate taxpayers to contribute but does not penalise higher rate payers so much. And when I saw the maths, it still gives a pretty huge overall saving to the government.
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Post by Deleted on Feb 11, 2020 9:21:03 GMT
Your last point is what was suggested when this issue last raised its head.
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Post by johnc on Feb 11, 2020 9:40:42 GMT
Reducing tax relief to 20% or anything less than higher rate relief creates a massive imbalance between those who have the majority of their pension paid by their employer and those who have to pay their own contributions. Apart from a very small number of highly succesful businessmen the vast majority of those I see with a Lifetime Allowance or an Annual Allowance problem are doctors, dentists and senior academic staff i.e. all funded to a large extent by the taxpayer and no-one is talking about reducing their contributions.
For most of my moderately succesful self employed clients they have to stretch each year to make pension contributions and they only make the contributions they do because of the 40% tax relief. If that relief were to be halved they would have no choice but to reduce the amount they put away for retirement. In addition most of these people were unable to afford to put much away in their 30's or even 40's and it is only a bit later in life that they have the funds to try to redress the deficit. If the reduction in tax relief occurs it will be a real kick in the teeth and will significantly impact their ability to try to provide for their future.
Remember that one of the reasons that higher rate tax relief appears to be an issue is that the threshold for higher rate tax is so low. Had the threshold kept up with inflation it would be close to £80,000, so the blame lies firmly at the door of Government (past and present) and not the middle earning taxpayers who look as though they will once again have to pay the price.
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Post by scouse on Feb 11, 2020 10:00:02 GMT
It's going to be another budget with a eye for approving headlines at the Guardian/Observer/Mirror/BBC, so in other words BOHICA.
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Post by johnc on Feb 11, 2020 10:32:02 GMT
It's going to be another budget with a eye for approving headlines at the Guardian/Observer/Mirror/BBC, so in other words BOHICA. Well I for one won't be taking it in the ass. If tax relief on pensions is reduced to basic rate I have just calculated that I could be close to £20K a year better off being a limited company with my "employer" paying all the contributions, me no longer paying NI and anything I don't draw out, only being taxed at 19% instead of 41%. By taking dividends I can also avoid the additional 1% income tax rate in Scotland. |
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Post by Tim on Feb 11, 2020 15:41:04 GMT
It's going to be another budget with a eye for approving headlines at the Guardian/Observer/Mirror/BBC, so in other words BOHICA. You're kidding right? The Daily Telegraph would go crazy if he did that, as would all the other right of centre news media (i.e. the majority of it). |
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Post by Tim on Feb 11, 2020 15:50:39 GMT
Reducing tax relief to 20% or anything less than higher rate relief creates a massive imbalance between those who have the majority of their pension paid by their employer and those who have to pay their own contributions. Apart from a very small number of highly succesful businessmen the vast majority of those I see with a Lifetime Allowance or an Annual Allowance problem are doctors, dentists and senior academic staff i.e. all funded to a large extent by the taxpayer and no-one is talking about reducing their contributions.You forgot about financial services lifers - several of my colleagues who spent 30 years working for the likes of Standard Life have the Lifetime Allowance problem simply caused by the availability of massive bonuses, not because they were necessarily brilliant at what they did. |
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Post by Deleted on Feb 11, 2020 15:56:24 GMT
Every time they come up with new ways to make tax 'seem' "Less taxing" I wonder who they think they are fooling. Perhaps I am a simpleton but perhaps a reasonable tax rate for everyone and no opt outs of exceptions for this that and the other. Would that not be fairer? Obviously the start rate would be something that could be adjusted as need be but really? All the crap idea's they come up with seem to be just another con persons kick in the nuts. As I have seen in various places across the internet, "A fine is a tax when you do wrong and a tax is a fine when you do good".
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Post by Deleted on Feb 11, 2020 15:58:45 GMT
The problem is that 'fair' means different things to different people!
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Post by johnc on Feb 11, 2020 18:03:00 GMT
You forgot about financial services lifers - several of my colleagues who spent 30 years working for the likes of Standard Life have the Lifetime Allowance problem simply caused by the availability of massive bonuses, not because they were necessarily brilliant at what they did. One of my friends has just retired from Standard Life with a brimmed to the top pension fund. His problem is that he is only 52 and can't retire properly so he has now taken on several non exec directorships to tide him over. He can't understand why my pension isn't just as big whilst usefully forgetting that I have never had an employer to put £20K or £30K into my scheme each year. |
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Post by Deleted on Mar 7, 2020 15:07:01 GMT
Read any more about this, John? It's not being flagged up internally where I work, but that doesn't mean it's not. I am wondering about bunging a few quid in at the start of the coming week.
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Post by Deleted on Mar 9, 2020 12:34:11 GMT
My accountants aren't flagging it up, but acknowledge that no-one knows. Given what's happened in the market today, have decided to bung in a few grand.
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Post by johnc on Mar 9, 2020 13:33:14 GMT
My sources say there was a bit of a back bencher revolt over the possibility of higher rate relief on pensions being withdrawn. It's not totally off the table but less likely to happen. Top of the poll is the abolision of entrepreneur's relief and the possible restructure of IHT including a tax for lifetime gifts. I just chucked a bit more into my pension too. The current fall is supposedly due to the fall in oil prices which I can't see as a long term situation. However the Coronavirus situation is the big unknown.
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Post by Tim on Mar 9, 2020 17:02:12 GMT
The current fall is supposedly due to the fall in oil prices which I can't see as a long term situation. Our CIO brilliantly described this as the oil producers being like a firing squad standing in a big circle and opening fire! At least we haven't had to keep him away from the window ledge..... |
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Post by Deleted on Mar 9, 2020 17:11:20 GMT
My sources say there was a bit of a back bencher revolt over the possibility of higher rate relief on pensions being withdrawn. It's not totally off the table but less likely to happen. Top of the poll is the abolision of entrepreneur's relief and the possible restructure of IHT including a tax for lifetime gifts. I just chucked a bit more into my pension too. The current fall is supposedly due to the fall in oil prices which I can't see as a long term situation. However the Coronavirus situation is the big unknown. Can't say I'm relishing that either - fuckers. |
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Post by Deleted on Mar 11, 2020 14:13:22 GMT
Looks like HRT relief retained, and entrepreneur's relief capped at £1m. I can (more than) live with that.
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Post by johnc on Mar 11, 2020 14:27:26 GMT
Looks like HRT relief retained, and entrepreneur's relief capped at £1m. I can (more than) live with that. I'm happy with that too and I think most small entrepreneurs will find £1m more than adequate. They just need to scrap their crazy IR35 ideas and life will be much easier. |
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Post by Tim on Mar 11, 2020 14:45:16 GMT
Did anything happen with the proposed changes to BPR?
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Post by scouse on Mar 11, 2020 15:33:50 GMT
I see that buinsess rates are to be scrapped for the next year for small business'. What's the bets that when the detail is announced we Estate Agents are going to be excluded?
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Post by Bob Sacamano v2.0 on Mar 11, 2020 15:36:52 GMT
^ That's because you are The Spawn of Satan.  |
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Post by scouse on Mar 11, 2020 15:39:13 GMT
^ That's because you are The Spawn of Satan. We aren't all that bad. Second cousins maybe. |
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Post by johnc on Mar 11, 2020 16:33:10 GMT
Did anything happen with the proposed changes to BPR? Nothing in the main body of the budget mentioned any reduction of BPR or APR. The devil is always in the detail but there were no hints of anything nasty. |
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Post by Tim on Mar 11, 2020 16:58:13 GMT
Did anything happen with the proposed changes to BPR? Nothing in the main body of the budget mentioned any reduction of BPR or APR. The devil is always in the detail but there were no hints of anything nasty. Great. Ta |
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Post by LandieMark on Mar 11, 2020 18:18:39 GMT
At least fuel duty remains the same. There was going to be some angry farmers around here if they removed the rebate on red diesel.
The scrapping of business rates for the coming year is a great idea. I now hope that some of my more delinquent tenants now cough up their arrears!
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Post by scouse on Mar 13, 2020 11:07:40 GMT
I see that buinsess rates are to be scrapped for the next year for small business'. What's the bets that when the detail is announced we Estate Agents are going to be excluded? I was right. A2 class (Financial services such as banks and building societies, professional services (other than health and medical services) and including estate and employment agencies. It does not include betting offices or pay day loan shops) not included. In Ormskirk's town centre that leaves: 4 banks 1 solicitor 5 Independent Estate Agents 1 Chain Estate Agent paying business rates next year.* On my street of 39 shops and offices, I'll be the only one paying rates. *not quite true, there are the grand total of 6 other properties with a rateable value greater than the £51k cut off (in a town centre of around 130ish shops) |
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Post by Deleted on Mar 16, 2020 20:24:49 GMT
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