To think the UK unfairly taxes families?

[OwnGravityField]

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?

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

There are over 13 million pensioners in the UK though.

Here we go yet ANOTHER ageist thread.

I've never really understood the point of NI if I'm honest, as it isn't as if the funds collected are ringfenced in any way. I would just scrap it and increase income tax if I had the option. I'm sure that tax records could still be used to assess eligibility for contribution based benefits etc.

Willing to be persuaded if someone can explain why NI is still needed, but I don't really get it at the moment.

How is it ageist?

On 25k with children there would be access to UC and childcare vouchers. Obviously the UC would be variable depending on circumstances.

How is it ageism?
The ageism is towards younger people, as @OwnGravityField has explained, not towards the elderly.

YANBU. The country is not a place to live if you want to be happy and keep the money you make. This is why big corporations are leaving and even some SMEs are leaving, too.

This is a good point, but then again there are also so many households with two people on circa 25k who might get nothing. I think my point still stands that in this country, we are unfair in our treatment of younger workers.

They've already paid NI though - partly towards their pension or for in work benefits they can no longer get.

Totally agree. There is no justification for taxing differently based on age. That is age discrimination against the young.

I don't understand why you have used the word "families" in your thread title when you mean "working age adults".

Pensioners are in "families" as well.

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

Why is it “obscene”? Given the way the French react to any proposed cuts in government spending it seems that’s what the French want?

But yes I do agree in principle. National insurance is misnamed as it doesn't insure you against anything, and loads of people think they are paying into a ringfenced pot to fund their own retirement. Nothing could be further from the truth. It's a tax on working and should be scrapped.

Maybe we should stop funding childcare then to make it really fair. Pensioners never had tax payers money funding childcare.

So 10 million pensioners DON'T have £25k coming in. ie the vast majority.

I'm 62. I've already paid 44 years NI and still working full time.

Why not penalise SAHMs? They don't pay NI. It's paid for them by the state.

Or penalise the long term unemployed? They don't pay NI.

Or penalise those who go part time?

I worked full time all the way through raising my child. Shall we compare how much we have paid in, OP? No? Don't you want to look too closely? I suggest you look closer to home, before you start chucking stones. 🙄

Because they could afford for one parent to stay home. Nah, you can’t pull that one on me!

We have retired and have taken our work pensions but are almost a decade off of state pension age. We are entitled to nothing obviously and pay tax on our work pensions. We were higher rate taxpayers and net contributors for a very long time.

Ultimately we have paid a lot of tax as we were in top 5% of households for many years. lost CB when they changed the rules. So I suppose we are in your rather despised group though not yet as receive no pension or top ups from the state.

NI is just another tax. There is no reason why pensioners should pay less tax than others on the same income, particularly when that cohort is the wealthiest.

NI is mainly used for NHS, State Pension and some benefits. Even if it was got rid of the government would have to raise income tax to cover the costs for these services.

Pensioners are exempt because they have paid the max allowance to receive these benefits in old age.

My MIL couldn’t afford to stay at home. She always worked, as did my mother tbh. Now MIL is paying for carers to come in twice a day, a cleaner every fortnight, and access to a fall alarm. It’s not cheap to be elderly.

So you’re saying SAHMs and the unemployed should pay tax despite not having any income whatsoever, so that pensioners could continue to pay substantially less tax?

There is Dubai for people who feel that way

True I think ft working pensioners should still pay no

Ni

I thought the same.