Salary sacrifice to be taxed

I’m not sure The Times usually bases its front page on ‘second guessing’ - I think this is the source of the OPs tweet link
https://www.thetimes.com/article/2f1a3288-bf87-4948-8e80-7466d05a75bd?shareToken=www.thetimes.com/article/2f1a3288-bf87-4948-8e80-7466d05a75bd?shareToken=517eee0017523f366ac3ae17e6d822a1

Private sector workers having their tax increased to fund defined benefit public sector pensions. A level of pension provision that private sector workers can only dream of. Absolutely disgusting.

I remember Sunak saying before the GE. Mark my words they will be after your pension, increase your taxes, tax your cars - it’s in Labour’s DNA.

So it also affects lower earners more (8% for them, 2% for higher earners).

@SomethingInTheAirToday are you aware that pensioners have no control over government policy? Why are you directing your anger at them?

Most people don't use salary sacrifice to pay their pension contributions so it will make no difference to most people.

I see this as a better way to increase revenue for the government to now as it won't impact what is in people's pockets.

Stopping NI benefits on salary sacrifice won't make much difference to the amount going into a pension. A basic rate taxpayer will still benefit from 20% tax relief. They will just lose the 8% NI saving, so 8 quid on a £100 contribution. A higher and additional rate taxpayer will still get 40/45% tax relief and will only lose 2% of their contribution, so even less of a contribution hit and still benefitting from the massive tax relief.

There are many businesses out there that also benefit from the NI saving (some are generous and pay the employer NI saving into an employee's pension but most don't), so the government will also benefit from extra employer NI.

To the OP, on 24k, if you have been auto enrolled and you aren't using salary sacrifice it will make no difference to you. If you are using salary sacrifice then it will make very little difference.

It’s not about unfairness. The gov needs people to pay into pensions, because the state pension is going to have to be significantly changed (reduced, means tested, but definitely changed) at some point. They need people to have private pensions. That’s why there are benefits to paying into a pension eg for tax free childcare & free nursery hours it’s your post pension income that counts - that’s not a loophole, it’s an incentive.
If this change discourages people from putting that bit extra into their pension (even if that’s not sensible on their part) then it’s a fuck up.

Do you have any evidence or is it just your opinion? X is full of false speculations about the budget.

Indeed. This is the whole point of pensions. The government is incentivising you to save for the future by not taxing you on this income now, and instead taxing you on this income later in retirement. The current situation isn’t a tax dodge. You’ll just be taxed on it later in life.

I cannot see anything that penalises defined contribution pensions going down at all well when dc pension savers have shot pensions and high tax to bail the government out of their ludicrous defined benefit promises they made to public sector workers.

The deficit is but a drop in the ocean compared to the underfunded public sector pensions shit show coming down the tracks!

You sound depressed

I’d be surprised if this happens as it would mean there would be zero incentive whatsoever for people to pay into private pensions which would be an even bigger disaster - I really hope the government aren’t that myopic.

Naaaah. This is Labour floating stuff. It's what they do.

Maybe the media should stop second guessing and making things up. Just wait for the budget.

So what they should do is start applying national insurance to the incomes of actual pensioners, who are the biggest users of welfare and healthcare by far (accounting for almost 50% of total public spending when they are only 15% of the population, and with a lifetime tax shortfall of £200k per pensioner in real terms between the benefits and services they have claimed and used and the tax they have paid in real terms). They are also, on average, the wealthiest cohort in society.

What they should not be doing is taking yet more from young people who haven’t a hope of achieving the same standards of living that these pensioners enjoy for having worked in similar occupations. It’s disgraceful.

Every time some measure to increase revenue to the government is mooted there’s always a pile on about why it’s unfair. Everyone expects things to get better straightaway but nobody seems willing to pay for it

Eh? I appreciate the anger but your facts are wrong

1. Pension contributions are free of income tax and there is no proposal to change that
2. Pension contributions are free of national insurance. There is a proposal to remove this benefit for salary sacrifice schemes
3. Pension contributions are indeed taxed on withdrawal, except for your 25% tax free lump sum. There is no national insurance on pension withdrawals. For many people their marginal income tax rate in retirement will be lower than their marginal tax rate while working.

While true, it misses the principle. You're trading your time (that you will never get back) for the life you enjoy, while others will not have to.

I appreciate it may not be true but it’s not one twitter account, it’s being reported in multiple places.

I have literally just started overpaying my pension to cut down on my tax. Marvellous.

not to be rude but on 24k a year you aren’t paying for others. You need to be on nearly double this to be a net contributor

Your last sentence is bang on. If this is true it’s ridiculous. The state pension is becoming more and more unaffordable - they need people paying into private pensions because the state pension cannot exist in its current form forever.

Wow, a random twitter account has said something. It must be true.

Let's get all angry about it

A) this is just the scheme that most of us are enrolled in by our employers, we’re not trying to avoid anything

B) less money in the rest of your pay packet means less money people can afford to put in their pension.

Taxing something you want to incentivise is bad.