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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

To think the UK unfairly taxes families?

556 replies

OwnGravityField · 09/11/2025 12:52

I have just found out that the UK is an outlier, in that it completely stops collecting a form of social tax (NI in the UK) once someone gets to pension age.

In every other country, pensioners’ contributtion as a proportion of income is much more similar to working households.

Example of disparity in the UK:

A working person earning 25k pays:

  • Income tax: £2,486
  • NI: £1,002
  • total = £3488

A pensioner with an income of 25k pays only:

  • Income tax: £2,486
  • no NI
  • total = £2486

So, a UK worker on 25k pays 40% MORE total tax than the pensioner (the difference between 2486 and 3488).

Let’s compare with a beloved utopia of fairness, such as Sweden: worker on similar salary pays 9% more tax than a pensioner.

Yes, other countries have slightly larger differences, but none except France come anywhere close to the UK difference in tax treatment between workers and pensioners.

In the interests of balanced sharing of info: France is tax and spend basket case. France taxes workers roughly twice as hard as pensioners. It’s obscene and the country is practically bankrupt.

Most other European countries narrow the gap by keeping small health or social contributions on pension income.

You might be thinking most UK pensioners don’t have 25k coming in? Nope. 3 million have individual incomes of 25k or more.

Anyway, I think it’s shocking that people at the most expensive time of their lives (kids, mortgage, food) are taxed so much more heavily. AIBU?

OP posts:
Araminta1003 · 11/11/2025 15:53

Some other countries allow tax deductions for the children you have. My brother moved to Switzerland and he can deduct from his taxes and it is quite a generous deduction where he lives. Kids cost money. If we want people to have them, raise them well etc we should not just be dishing out child benefits but also tax incentives at the higher end. If Government wants people to invest in their children, maybe they should encourage it more.

Katypp · 11/11/2025 15:09

I didn't say people with children should be taxed differently. I was referring to posts saying all income should be taxed the same for all income - salary, pensions, benefits, investments, self-employed etc.
Until CM was mentioned, then @rainingsnoring seemed to think there should be different rules for that particular income (presumable because it affects her age group - I don't know).
So you may well have a situation where a pensioner on a full state pension with a small private pension pays tax on the small pension, yet a single mother on full UC with a generous monthly CM payment pays nothing. But that's 'fair' apparently 🙄

BritHoward · 11/11/2025 14:21

Katypp · 11/11/2025 11:57

So, all tax should be fair to everyone and all sources of income should be taxed at the same rate, regardless of what type of income it is. I think that sounds very fair and I think most posters would agree with that.

Until we come to income that is coming to families with children, then - it appears the deal is off, and this income should be treated as a special case.

Everyone should be taxed 'fairly' apart from the group calling for it, apparently.

I’ve looked but I can’t find the post you are referring to where people with children should be taxed differently - they should have different benefits, just like pensioners have different benefits only for them.

Katypp · 11/11/2025 11:57

rainingsnoring · 10/11/2025 19:39

I'm certainly with you on the fairness principle and pleased to see that you agree that there should be no special, lower rate for pensioners.
Why do you think CSA payments should be taxed twice though? That seems unfair. When you say dividends, are you also including the sale of shares, property and other investments? I do agree that CGT is too low compared to income tax but the counter argument is always that it would deter investment which is needed and that it would only be fair if adjusted for inflation. I wonder if a graded CGT could be invented, accounting for inflation with lower rates for those who invest for, say 2 years+ and higher rates for those who place multiple trades. That would encourage the longer term investors. Just initial thoughts from someone who is far from being a tax expert!

So, all tax should be fair to everyone and all sources of income should be taxed at the same rate, regardless of what type of income it is. I think that sounds very fair and I think most posters would agree with that.

Until we come to income that is coming to families with children, then - it appears the deal is off, and this income should be treated as a special case.

Everyone should be taxed 'fairly' apart from the group calling for it, apparently.

BritHoward · 11/11/2025 05:51

ParmaVioletTea · 10/11/2025 19:52

Why should money earned by a parent and taxed at source be taxed again before it can be spent on the child?

You know that workers pay from their taxed income towards pensions (beyond the minimum State pension, that is)? Then that pension is liable for tax if the pensioner has income over the taxable threshold. And it's not as if an 80 year old woman can just go out & get a job ...

That’s not quite how it works. Workers do pay from their taxed income but they get that tax back, your pension contributions are ulimately income tax free - you might not have noticed but the gov credit you the income tax back. You give your pension company have your NI number and they claim your basic income tax back and add it to your pension - if you want to claim for a higher rate you’ll mostly have to do that yourself through a tax return.

Or if you salary sacrifice, your contributions are both free of income tax and national insurance tax (employer NI too) Also no need for a tax return.

Even for Siipps you will get the tax back, there is an annual limit of £60,000 recently uplifted from £40,000. There have been restrictions put in place at higher incomes but generally and for most people their contributions are income tax free and with salary sacrifice NI free too. With the result that you do not pay tax on money deposited into you pension but you do pay tax on your withdrawals.

One argument might legitimately be you’ve already paid NI because you paid it on the way in unless you salary sacrificed - but I assume that detail is a complication too far and will be overlooked. There’s strong rumours that the Gov are looking to limit salary sacrifice benefits in the next budget.

it’s a complicated area and not very interesting so lots of people don’t take the time to understand how it works, even some of our brightest team members are a bit thrown by pension rules - they are another example of an overly complicated system, that advantages some above others because if you are aware of the rules you can save more tax and that is perfectly legitimate.

Plantatreetoday · 10/11/2025 22:51

OwnGravityField · 10/11/2025 21:40

And who is it that is sitting on local council planning committees, preventing any and all housebuilding? What a surprise: pensioners.

That’s not how housing works
Plans go through planners who either recommend or not based on specialists in areas such as
highways
environmental
flooding and drainage
etc

It only goes to committee if there are 5 public objections or it’s against planning guidelines
Planners can still recommend for approval regardless and if the planning committee refuse it it can then be appealed.
Planning committees are not made up of pensioners. As an Architect I’ve been to more than I can conceivably remember.

New housing in inapropriate areas will be refused in the interests of more than the developers need to make money and any housing need. This is because there are priorities.

Essentially housing that is economic with land at grade more often gets through in the right place that can, in fact, accommodate it. Housing that is a detriment spread out over high grade farmland not so much.

The planning committee in the grand scale of things are a tiny cog in a very big wheel.

OwnGravityField · 10/11/2025 21:40

NamelessNancy · 10/11/2025 18:20

Maybe they didn't need that help as much? Sorry my editing is so rubbish but I've tried to highlight the points on this graph where a current pensioner (age 70) and a current 35 year old were 25 looking at housing to salary ratio. IMO this is the crux of it.

ETA I'm neither 70 nor 35!

Edited

And who is it that is sitting on local council planning committees, preventing any and all housebuilding? What a surprise: pensioners.

OP posts:
Plantatreetoday · 10/11/2025 21:22

BritHoward · 10/11/2025 14:41

I think you miss the point - it's not that we want to give up our state pension - it's that we recognise that it simply isn't affordable for the country. We have prepared for it via our pension and savings. It would be easier to stick our head in the sand and shouting at anyone who dares to speak up but we cannot continue to pay for the increasing non-working proportion of our population without making some major adjustments to tax and benefits. The labour have tried and failed to cut benefits to the disabled and the elderly but the reality of the situation has not changed - you can continue ranting all you like but the money has to come from somewhere, the magic money tree doesn't exist.

Eventually that money coming from somewhere it will run out

The only long term solution is everyone working full time which will reduce UC
Then a reduction in PIP as the white paper recommended

Plus raising some taxes which are lower than income taxes
eg cgtax

Plantatreetoday · 10/11/2025 20:25

Gingernessy · 10/11/2025 20:08

I'm far from an expert too.
I'm not adverse to pensioners paying the same rate as younger people - but I do think it should be across the board.
Why should a pensioner pay on income over £12570 but those on full UC often getting more be exempt.

Agree

Plantatreetoday · 10/11/2025 20:24

BritHoward · 10/11/2025 18:45

Yes but that won’t be the case in 10 years - this pension problem just keeps on snowballing - it will not go away - the % of working adults is diminishing we need to tackle the situation now - of face getting into unmanageable amounts of debt.

By 2067 ( depending on retirement age) all working people retiring will have had the benefit of employer contributions to pensions
( self emp excluded)

Perhaps retiring people will have a better income purely on the basis of that employer paid sum. Anyone retiring before that won’t have had that all their working lives

Gingernessy · 10/11/2025 20:08

rainingsnoring · 10/11/2025 19:39

I'm certainly with you on the fairness principle and pleased to see that you agree that there should be no special, lower rate for pensioners.
Why do you think CSA payments should be taxed twice though? That seems unfair. When you say dividends, are you also including the sale of shares, property and other investments? I do agree that CGT is too low compared to income tax but the counter argument is always that it would deter investment which is needed and that it would only be fair if adjusted for inflation. I wonder if a graded CGT could be invented, accounting for inflation with lower rates for those who invest for, say 2 years+ and higher rates for those who place multiple trades. That would encourage the longer term investors. Just initial thoughts from someone who is far from being a tax expert!

I'm far from an expert too.
I'm not adverse to pensioners paying the same rate as younger people - but I do think it should be across the board.
Why should a pensioner pay on income over £12570 but those on full UC often getting more be exempt.

rainingsnoring · 10/11/2025 19:59

ParmaVioletTea · 10/11/2025 19:55

Yes I guess @rainingsnoring when you run out of arguments, you can just mock other posters telling you their experience of what it was like buying their first home in the 1980s.

I have plenty of arguments, don't worry. The chief one is for fairness.

I will certainly mock competitive moaners who seem to think everything is about them.

rainingsnoring · 10/11/2025 19:57

ParmaVioletTea · 10/11/2025 19:52

Why should money earned by a parent and taxed at source be taxed again before it can be spent on the child?

You know that workers pay from their taxed income towards pensions (beyond the minimum State pension, that is)? Then that pension is liable for tax if the pensioner has income over the taxable threshold. And it's not as if an 80 year old woman can just go out & get a job ...

What a ridiculous comparison! How are you even attempting to compare millions of random pensioners being paid a state benefit with a child being supported by their own parent?
Are you suggesting that pensioners should receive even more favourable tax treatment than they already receive?

You do know that not all pensioners are very elderly and incapable right? Many are far younger and leading extremely active lives.

ParmaVioletTea · 10/11/2025 19:55

Yes I guess @rainingsnoring when you run out of arguments, you can just mock other posters telling you their experience of what it was like buying their first home in the 1980s.

rainingsnoring · 10/11/2025 19:54

'The OP is suggesting that somehow, pensioners haven't paid into the system, and are now expecting a free ride. Which - as you point out - is ridiculous.'

Where does the OP say that 'pensioners haven't paid into the system and are now expecting a free ride'. Can you point this out please because I can't see it anywhere. Alternatively, stop making things up.

ParmaVioletTea · 10/11/2025 19:52

Why should money earned by a parent and taxed at source be taxed again before it can be spent on the child?

You know that workers pay from their taxed income towards pensions (beyond the minimum State pension, that is)? Then that pension is liable for tax if the pensioner has income over the taxable threshold. And it's not as if an 80 year old woman can just go out & get a job ...

rainingsnoring · 10/11/2025 19:52

ParmaVioletTea · 10/11/2025 19:47

The halcyon days everyone harks back to "when you could support a family and buy a home on one income" were an anomaly, and I daresay most of the complainers would NOT want to live the frugal lifestyle that even comfortable people did in the 50s-80s.

Absolutely @No5ChalksRoad My first house (in the mid-80s) had no central heating & a boiler over the shower for hot water, plus an outside loo. It's what I could afford. I had a lodger & worked 3 jobs to raise the money to do the renovations to get hot water & an indoor loo. And during that period, interest rates on my mortgage went to over 13%

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Putneydad7 · 10/11/2025 19:51

MrsSkylerWhite · 10/11/2025 19:08

Aren’t tax rates lower now than they’ve ever been? With an higher qualifying rate?

Because it is impossible to compare an ever changing basket of taxes over time, economists tend to use total tax take as a % of GDP to measure how high or low taxes are. So that adds in everything such as income tax, NI, fuel duty, VAT, etc.
Tax as a % of GDP is currently at a peacetime high and is only going higher as taxes increase and growth stagnates.

ParmaVioletTea · 10/11/2025 19:50

Will you be telling the people who wipe your backside when you have dementia how you paid for their education too? Will you be telling the surgeon who saves your life? Not everything is about money you know? We are all cogs in the wheel.

That is exactly my point. I was paid for, I am now paying for @OwnGravityField 's DC, and when I finally do retire (probably when I'm around 75), I hope her DC will be productive enough to support me.

It's a generational thing, and it's the OP who misunderstands this.

rainingsnoring · 10/11/2025 19:49

BIossomtoes · 10/11/2025 19:46

I didn’t say they were. Read what I wrote.

I did read that. Why should money earned by a parent and taxed at source be taxed again before it can be spent on the child? That makes no sense at all. Why should single parents, whose ex partners do nothing for their DCs also have to pay additional tax? Yes, certain other income is taxed more than once but those are very different situations.

rainingsnoring · 10/11/2025 19:47

ParmaVioletTea · 10/11/2025 19:11

A working person earning 25k

I'm working past pension age, so pay no NI, but you know what?

I pay almost £30,000 in tax eery year. So fuck off with your whining.

I'm paying for your DC to be born, to go to school, and for their healthcare.

What a horrible post.
I guess Maggie Thatcher and her 'no such thing as society' did the trick on you. Will you be telling the people who wipe your backside when you have dementia how you paid for their education too? Will you be telling the surgeon who saves your life? Not everything is about money you know? We are all cogs in the wheel.

ParmaVioletTea · 10/11/2025 19:47

The halcyon days everyone harks back to "when you could support a family and buy a home on one income" were an anomaly, and I daresay most of the complainers would NOT want to live the frugal lifestyle that even comfortable people did in the 50s-80s.

Absolutely @No5ChalksRoad My first house (in the mid-80s) had no central heating & a boiler over the shower for hot water, plus an outside loo. It's what I could afford. I had a lodger & worked 3 jobs to raise the money to do the renovations to get hot water & an indoor loo. And during that period, interest rates on my mortgage went to over 13%

BIossomtoes · 10/11/2025 19:46

rainingsnoring · 10/11/2025 19:43

I thought that CSA payments were payments from the 'non resident' parents to the one providing the majority of the care. They aren't benefits are they?

I didn’t say they were. Read what I wrote.

rainingsnoring · 10/11/2025 19:43

BIossomtoes · 10/11/2025 19:42

Why do you think CSA payments should be taxed twice though? That seems unfair.

Most money is taxed several times, why should child support be any different? It certainly shouldn’t be ignored for benefits purposes as it currently is.

I thought that CSA payments were payments from the 'non resident' parents to the one providing the majority of the care. They aren't benefits are they?

ParmaVioletTea · 10/11/2025 19:42

Sexentric · 10/11/2025 19:27

You know you are ridiculous right? You also had free education, and health care. You can't say that paying for someone's kids to go to school is a benefit to the parent! Its a benefit to the child. That you also had. So just the same as you. And OK you didn't take free childcare (neither did I btw) but those kids that the childcare is paying for will grow up to be adults who pay tax to cover your pension! You're not special!

But that's exactly my point.

I am paying back into the system, (and paying more than the average UK income, in fact).

And I hope the OP's DC will also pay back into the system, to cover their education & healthcare.

The OP is suggesting that somehow, pensioners haven't paid into the system, and are now expecting a free ride. Which - as you point out - is ridiculous.

And as a childless woman, I am paying far more than most other women, but I suppose it's convenient to overlook that & just call me selfish for expecting that I can call on some aspects of social care in my old age.

But my general point still stands - the OP misunderstands the concept of mutual support, and indeed "society."