Salary sacrifice to be taxed

If NI isn't something you give much thought to, and all your posts have been about tax.....why are responding to posts about salary sacrifice, which is all about NI and nothing to do with tax?

Anyone who pays into a pension is in the same tax position regardless of whether they pay through their employer or make the payments directly themselves.

Everyone is not in the same position with regard to NI, if their employer offers salary sacrifice, which we have shown most do not (and DB schemes don't, and min wage workers can't use it, etc etc).

But you don't need salary sacrifice to make extra pension contributions. Sarary sacrifice means you save on NI. If you don't want to save the NI contributions don't use salary sacrifice.

The wealthy don’t pay IHT - well no where near what they could be paying.

Take 2 people. One person has £100m assets including a house worth £5m. He gives £93m to kids in middle age, keeps the house and keeps £2m to live off. When they die the IHT is approx £2m on the house and on any left over cash. the £93m is tax free as long as they outlive the gift by 7 years.

Another person has £300k savings and a little house which is now worth £1.2k. They need these assets in their retirement to live off, and hence will pay tax on anything above the nil rate band. No IHT is avoided.

Rumours are that RR will do away with the 7 year rule, or modify it to try to stop the first person here avoiding tax.

Stamp duty is a truly dire tax that affects everyone, rich and poor. See the latest IFS podcast about property taxes to see why this tax must be axed as soon as possible.

But it's really hard to give tax breaks that work for the low paid that the wealthy can't also take advantage of, isn't it?

Again, not criticising the wealthy for taking advantage of tax breaks, I'm criticising them for whining about losing those tax breaks 😆

In most DB scenes (certainly the public sector ones) the scheme rules from when it was set up precludes salary sacrifice.

Strange that. I'm a retired member of a DB scheme and it operates salary sacrifice. There would be little point offering it if the employer didn't pay NI. So what you are saying makes no sense.

I was referring to income tax and not NI. Salary sacrifice does not put you in a better position regarding income tax than if you reclaimed via your annual tax return. That was the point I was making. NI is not something I give much thought to given that the amounts I pay are dwarfed by the amount of income tax. But I put a lot into my pension to try and make up for the fact that (1) I was entitled to an employer pension until I was 31 and (2) that I worked part time for 12 years. It’s never been about saving tax, it’s about making sure that I am not reliant on the state in old age.

I was referring to income tax and not NI. Salary sacrifice does not put you in a better position regarding income tax than if you reclaimed via your annual tax return. That was the point I was making. NI is not something I give much thought to given that the amounts I pay are dwarfed by the amount of income tax. But I put a lot into my pension to try and make up for the fact that (1) I was entitled to an employer pension until I was 31 and (2) that I worked part time for 12 years. It’s never been about saving tax, it’s about making sure that I am not reliant on the state in old age.

Apparently, three consultants were hired this week to give Labour MPs some lessons in tax and economics. Honestly you could not make his shit up. We have glorified social workers and charity workers, who have never run anything in their lives or generated any wealth, making choices about the country finances. I bet Rachel from accounts was at the front row being educated by the consultants.

There has to be some consequence to this. This cannot go on. Parliament needs to be dissolved and Labour government booted out into oblivion.

They have specifically stated they are making changes to salary sacrifice which is DC schemes only. DB schemes don’t use salary sacrifice, but the employer contributions are exempt from NI also. Therefore this policy would create a huge distortion with unfair taxation which will make the gap in generosity between DB and DC schemes even more extreme.

Of course they wouldn’t want to raise it on DB schemes because then they’d have to increase the budget for schools, NHS etc to cover and extra 15% on all the employer contributions, which in DB schemes are often 25-30% of salaries. But if they can’t afford it then how do they expect the private sector to do so?

It’s just yet more deliberate destruction of private sector pay and jobs, just like last year’s budget. How she thinks that will raise overall tax revenue is beyond me. Didn’t work last year, did it?

Who says it doesn't apply to DB schemes? I have only heard rumours, starting on here. Please provide a reference to where DB schemes will not be affected.

Why can’t they whine about losing tax breaks? Their taxed to the hilt when low earners get away with paying very little tax.

No, it won’t.

And these aren’t “rumours”. They’ve deliberately leaked this to the press. There are reports in The Times, the FT etc.

Their manifesto and speeches pre-elected clearly stated no tax rises. See the quotes I posted. Manifestos mean nothing.

There is no trust in the Government already because not only did they lie about what they would do but then the things they have done instead have caused huge economic harm and made things worse, and now they are planning more of the same.

WTF are you on about? I never said "the low-paid need tax breaks"; I said the high-paid are whining about losing tax breaks 🙄

It doesn’t matter if the taxpayer has a legally binding contract that NI contributions would lead to a pension. We don’t have any agreement with the government and they govern though trust. As trust is falling fast in politicians we will be in total anarchy if the government suddenly put in means testing or decided the NHS would no longer be free at the point of use etc etc. if it wasn’t in their manifesto then it’s going to be a problem.

the wheels of government turn slowly unfortunately but we need bold politicians who are willing to look beyond their short term popularity and do something for the long term. This is the time to do it as Labour can’t really get less popular - but I don’t think they’re capable. They tied their hands with their promises not to raise the big 3 or touch the triple lock

Who says it doesn't apply to DB schemes? I have only heard rumours, starting on here. Please provide a reference to where DB schemes will not be affected.

Car salary sacrifice schemes are seemingly exempt from these proposals but would surely be an easier sell to the public (as there is less benefit to the government encouraging people to use cars compared to the benefit the government gets if people fund their own retirement). Why the disparity?

Who says it doesn't apply to DB schemes? I have only heard rumours, starting on here. Please provide a reference to where DB schemes will not be affected.

And employer payments into DB schemes are also exempt. Why is the proposal not to apply national insurance to those as well, especially as the employer contributionsn are far, far higher?

Why do the low paid need tax breaks. It’s the high paid workers who are ensuring an ever increasing tax burden as a quick glance at comparable country’s tax systems will show.

Pensions aren’t tax avoidance, they are tax planning, using HMRC’s definitions. This is because, historically, governments have wanted to encourage people to save for their retirement.

The tax position for everyone will be the same whether they use it it not.

Again, you clearly don't know what it is.