To think the Tories are clever?

[ClassicLib]

They are introducing a massive pension tax cuts for their rich mates in the city, and selling it by claiming that it might also persuade a few rich NHS consultants to delay their retirement to their second homes in France for a couple of years.
And who is paying for this? Why you & me, of course, because our basic rate & higher rate tax allowances are being frozen until 2028. This is actually a massive income tax increase for ordinary working people, of course. And the media have fallen for their spin.
That’s smart politics…

They are dodgy cunts

Same.
What policies do labour have that will turn my head?
That's all I need, I'm a floating voter.
I read manifesto breakdowns the night before and go with what benefits me and mine.
I'm not old or middle class.
It's normally Conservative to be honest.

Yes the PP is talking about the tapered annual allowance. Very high earners (now starting at £260k) start to have a reduced annual allowance so they can put less into their pension than everyone else. This did take them to a maximum of £4k a year allowance, but that is raising to £10k a year. It is explained about half way down here www.hl.co.uk/news/articles/lifetime-and-annual-allowance-spring-budget-changes-what-they-mean-for-you

Despite the rhetoric this isn't really a measure that helps the very wealthy. It's most useful for those earning in the lowish 6 figures. Sure they're well off but they often have skills and experience that is of real value and there is quite a bit of evidence that the previous tax regime was an incentive to retire early.

Barely any of this discussion reflects the fact that one of the largest tax benefits of pension payments - the tax free free amount - has been frozen at its current level. That means that although it'll be possible to pay more than the current LTA into your pension, the advantages of doing so drop at that point.

The annual allowance is increasing from £40k to £60k. But the pp is correct, those on very high incomes are affected by the pension taper which limits the amount of tax relief they receive on their pension contributions. Very high earners are currently receive tax relief on pension contributions up to £4k but this limit will be increasing to £10k.

People can already get help with upfront childcare costs on UC by applying to the flexible fund. The dwp don't advertise this very often though !

They are only making that UC childcare upfront change because they have taken to court about it. The government lost, but appealed against it. Charming.
ukhumanrightsblog.com/2021/11/15/court-of-appeal-upholds-universal-credit-childcare-rules/amp/

Re tapered allowance. Does this mean pension contributions are limited to £4k or does this mean you can put in more but the amount that is not taxed is £4k?

So very high earners are only allowed to pay a small amount into their pension tax free even via salary sacrifice and this is much less than a lower earner can put into their pension tax free?

No, I think they're utter bastards.

Do you pay inheritance tax on a pension pot though? (I think if in a SIPP then free of inheritance tax?)

Thanks @Mia85 for clarifying so articulately

@ThreeFeetTall you can put as much as you like in your pension, the limits apply to tax savings. My husband contributes more than the 4k because he would lose out on employer contributions otherwise; he has to pay tax on those contributions. Without the tax incentive we wouldn’t want to lock money up in a pension we can’t touch until 58, it would make more sense to use a more flexible ISA or even regular investment account

@Labraradabrador thanks

It's not that smart since everyone can see it for what it is. Their target audience was always going to vote for them.

@ThreeFeetTall only if you die before 75. Pretty sure early death is not an intentional tax avoidance strategy.

Yes, their target audience will, even if they try to hide behind at least they know what a woman is

It’s really encouraging to see how many people have seen through that now. It’s cropping up much less than it was a few months ago.

Ah I see, yes probably not overall a great strategy 😬

AIBU probably not, FWR will have different views

This is complicated and you need specialist advice.
As I understnd it, when taking a pension lump sum, 25% is usually tax-free. The other 75% is taxed as earnings.
Depending on how much your pension pot is, when it's added to your other income it might push you into a higher tax band. (Your pension provider will deduct the tax.)

When you die, the first £325,000 of your estate can be passed to your children tax-free.
If you pass your home to your children, including adopted, foster or step children – or your grandchildren, your allowance increases to £425,000.

If you give away gifts worth more than £325,000 in the seven years before your death, the recipients will be liable for Inheritance Tax, on a sliding scale.

Isn't part of this argument that they will recoup some of this in income tax from those who continue working? That money can then be used to fund other things
My instinct is that we should do more to help the poor but I read an argument that the returns on this will benefit society financially and in terms of maintaining services. My head is spinning from all the arguments for and against!

You are correct.

No-one can legally escape paying tax totally.

So, yes, those who continue to work and earn large salaries will pay large amounts of tax.
When they retire they'll pay tax on their pension pot. So it ends up in the exchequer one way or another.

This is nonsense.

People who could benefit are those doing valuable (and consequently highly-paid) jobs such as;

Surgeon
Airline Pilot
Train Driver
Private Dentist
NHS Consultant
Some GPs
Chemical and Mechanical Engineers (especially in oil industry)
Ship's Captain.

None of these industries produce multimillionaires as far as I know.

Same is true for pretty much anybody earning that kind of money.

That said, it's astonishing nothing's been done about the bottlenecks in the tax system at £50k and £100k that cause many of our most productive workers to stop going for promotions or cut their hours. If we want more tax revenue, it is crazy to have a system that makes it not worthwhile for people around those thresholds to work more. The effective tax rate at £100k can be over 100% (i.e. you get less net pay if you work more hours!!).

Are you sure those figures are correct? I think it is 40K going up to 100K

No. For high earners the max pension contribution per year is rising from £4k to £10k. For everyone else it's increasing from £40k to £60k.