Concerned that Labour govt might fleece me in upcoming budget?

[RightOh9oo]

Aibu to be concerned that Labour government might fleece myself/family in the next budget?

If they remove the right to UK pension for all, by making it means tested....I think I'll stop working this year. I'm early 50s, does anyone else feel like this?

I'm going without so much to save in my private pension, so no holidays to speak of.

Does anyone know what is in store in the upcoming budget?

Some talk of relaxing fiscal rules but we'll see

If they can't get growth we'll get closer to France's big issue

I agree with you entirely (I usually do) on every point you make except that this level of pensioner wealth is typical because it just isn’t. All my contemporaries are pensioners, none of us have second homes or have ever had them and we’re all comfortably off.

Yes. There are many studies which have been privately commissioned by chancellors and then ignored that state this. There are huge pinch points for higher earners. Loss of personal allowance, loss of childcare, loss of child benefit, pension relief, etc etc. These pinch points stop productivity because the penalty of working more is so huge - it’s not worth it. Hence productivity and brain drain issues.

Generally, higher earners, tend to be more motivated and they are likely to work more. The problem is - the tax system has become putative and now people are changing behaviour. Lower taxes can actually mean a higher tax take. Where as higher taxes can and do lower tax take.

One in six households over the age of 65 owns a second home. And people over 65 own one quarter of all the second homes owned in the country. Which is huge.

It still doesn’t make it typical. Five out of six pensioner households don’t own a second home and three quarters of them aren’t owned by pensioners.

It’s hardly representative of a hard done by generation is it?

Nobody said it was.

Well, for example, if the government decided that a private pension would be taken into account when means testing the state pension, some people might be tempted to spend their cash rather than put it away in a private pension.

Of course some private pensions will be higher than the State Pension, but many won't be. Not everyone is as fortunate as your mum and dad.

Similarly, if savings above a certain amount were taken into account when means testing the State Pension, then people would keep their savings under that amount. So they would have less money to pay for their own care if needed later in life and the state would need to step in sooner.

I am sure there would be other unintended consequences.

Like all means tested benefit there would be a cliff edge and challenges around people who fall just over the threshold.

A more equitable way would be perhaps make NI payable by pensioners.

Of course we could go for the third rail of British politics and tax housing gains more.

I don’t think people are this stupid or this sensible tbh.

Stupid because the only ones that would lose out would be yourselves if you chose not to save at all, because the state pension is so low that the drop in living standards for many would be very difficult. For those for whom it doesn’t represent a fall in living standards they wouldn’t have been able to save that much anyway.

Sensible because what you’re saying takes an element of financial literacy and forward thinking which tbh most people just don’t have (sadly). And if they do, they’re generally better off and wouldn’t risk having to live on the state pension for the rest of their life.

Too much tax piling up

It's already high

Yes to NI on pensioners - they are the biggest users of the NHS so why not?

I’ve started a thread on CGT on housing gains in the politics section, needless to say people don’t like the idea because don’t tax me tax THEM!

It’s not though. Tax for average worker is at lowest rate since 1970s.

we need to tax differently, not more.

Is it? I didn’t know that!

Is that specifically tax at the lowest rate, or is it tax with tax credits/benefits/other government payments taken into account? I could definitely understand if it is the latter.

Can you point me to more information, please?

@DotPotato what are the differences in metrics for the tax burden to be seen as highest atm since WW2 with current gov (a line I have seen repeated) and your statement?

Hmm. If you put NI on the State Pension, then you might end up with more people having a low enough income to qualify for Pension Credit?

If you mean working pensioners, then I agree they should pay NI on their wages.

https://ifs.org.uk/articles/how-tax-burden-high-when-most-us-are-taxed-so-low

It’s here, a good read

no - keep the personal allowance, which covers the state pension plus a bit more. But apply NI in the same way as income tax .. definitely on earnings and in principle on income from private pensions too. Which is.. btw… totally untaxed until you get it in retirement (because we have EET system)

Just posted link - tax burden is tax take as share of national income. One of the reasons it’s high is because national income hasn’t gone up that fast. Personal tax rates however are not high for average workers.

It was a good spin for a while that is going to backfire when they do actually need to put up taxes!

This is a good example of the issues and why higher earners are changing behaviour. It’s also why I laugh when people bang on about the Scandinavian model. They don’t understand it. Higher earners have been positively fleeced to coin op and the well is running out.

What is EET? I am under state pension age and pay tax on my occupational pension.

Basically it means the money you and your employer pay in to your private pension is not taxed. You are taxed when it comes out.

It is to incentivise pension saving. Not paying in to a workplace pension when you have one offered is possibly the biggest financial mistake anyone could make.

Oh thanks. I think I misunderstood Dot's point!

@DotPotato thanks for the link. It actually does meet some of what I knew from analysts on the radio

This

While average earners have seen their tax bills fall, the reverse is true of high earners. Someone just about in the top 1 per cent of income tax payers, on £200,000, say, will be paying a good £10,000 a year more than in 2009.

Our reliance on top earners has continued to grow. That top 1 per cent pay 29 per cent of all income tax now, up from 25 per cent in 2010 and 21 per cent at the turn of the century. Whisper it quietly, but this Tory government has taken a serious chunk out of the incomes of the 1 per cent.

And this

If we were to implement the tax system of a typical high-tax European Union country it is middle earners who would be hit hardest."

Which is why I often post against the tax the rich rhetoric, it's already high to the point of behaviour change