Salary sacrifice to be taxed

[SomethingInTheAirToday]

https://x.com/politlcsuk/status/1986914552093745592?s=46

not only are my generation not going to have a state pension or private healthcare, but we also can’t save into our own pensions because we need to fund the current generation.

this makes me so angry

"up to £60k" is what everyone with a pension puts in 🙄

I agree that tax breaks on pensions are for the wealthy. £60k pa is a lot. £40k was a lot. I suspect the average that goes in is under half of that. A cap of £1.02m was a lot, removing it was laughable.

I also think that a £20k tax free ISA allowance is for the wealthy, and while I enjoy it, I can't get worked up about it being reduced because the vast majority of people don't have £20k all together, let alone each year!

Tories are talking about removing stamp duty - another wealthy person tax. Low earners can never afford to buy, so it has no impact on them. Removing inheritance tax - a tax break fur the wealthy, you can bequeath up to £1m tax free in the most usual circumstances. How many people even have that, even with a home included? It's 6%. 6% of estates pay IHT. So, removing or reducing that is a tax break for the wealthy.

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?

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

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

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 😆

For pensions, yes. That is what I use it for. But I am aware that it is used for other things where it is not possible to have the same tax benefit unless you use salary sacrifice. That is what I was referring to. Again, you at being rude and aggressive for no reason. You are just making yourself look idiotic.

Boohoo76. Do you agree that you are paying less NI by using salary sacrifice, as does your employer.

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.

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?

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.

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?

No, it won’t.

Exactly. It is just deferral of tax to mirror ISAs, with some deliberately devised incentives to encourage both employers and employees to save into it because it is beneficial for everybody if they do so. The deferral of the tax is a feature of the scheme, not “avoidance”: HMRC designed it like this deliberately. Not sure why people find that so hard to grasp.

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 🙄

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.

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?

Apparently splashing cash on brand new cars is to be encouraged but saving for retirement should be discouraged. 🤦🏻‍♀️

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.

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

Yes @222daysexactly

I don't have subscriptions to these publications. Does it give details or are you speculating?

In what way?

Low earners "get away with"? Jesus Fucking Christ!

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.