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?

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.

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.

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.

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 🙄

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.

Do you think attendance allowance should be taxed and the winter fuel payment too?

I can’t see any reason why not. I also fail to see why child maintenance is ignored in universal credit assessment. It seems bonkers to me.

Attendance allowance isn't taken into account when working out pension credit, so you'd start to do that too?

Yes, if the recipient's total income is over the tax-free threshold. That's what has been discussed on this thread. No exceptions should be made for any particular group of people

Agreed. Savings are taken into account by not CMS, which is additional income. It's crazy.

Not directed at me, but yes, I would do that too. Income is income, regardless of where it comes from.

Absolutely. We’re all supposed to pay the same, aren’t we?

Agree. CMS should definitely be factored in.

I'm afraid we can. There are quite a number of people who couldn't afford for one parent to stay at home before free childcare hours kicked in. Millions, in fact. So let's make pensioners pay NI and scrap free child care. Fair's fair.

Think we need as many people working as we can - we need to pull in those taxes and one of the reasons we are struggling with tax revenues is that increasing numbers of people are not working due to an aging population and increasing levels of ill health. Keep the Mums at home and it only gets much worse - especially if they are out of the work force for 5 years and become deskilled.

I agree, NI should be abolished and we have a single income tax rate… much fairer.

For the record, I don't think attendance allowance should be taken into account when awarding pension credit (I don't know any pensioners on pension credit - and it's not on the cards for me - so I have no skin in the game) but it's interesting that the pensioners on here think it should, do any of you receive pension credit?

No. I don’t know any pensioners on pension credit either, but if they claim attendance allowance they’re wealthier than those pensioners who just miss qualifying.

Do you mean qualifying for pension credit or attendance allowance? Because attendance allowance is not means tested, it's determined by the state of your health - usually the bar is quite low and requires little evidence and pension credit brings you pension up to just below state pension - so no one "just misses" anything. Can you explain what you mean?

You simply can’t compare the two. Funding childcare allows parents to work and pay income tax. So it’s a positive for the economy.

Pensioners are more likely to be on their own through no choice of their own. Working age singletons are more likely to be on their own through choice.

They could only afford for one parent to stay at home if they went without. We were poor and my mum worked part time from me being about 3. We mostly didn't have holidays and when we did they were in the UK (often at the end of season when half the place was shut). There were 3 (then 4) channels on the telly and no-one had a mobile phone, internet, ate out, went for coffee, had netflix etc. We didn't have a VCR until I started work and then we rented one and I paid half. Loads of people rented a telly. Most families had only one car. No one got their nails done or went for beauty treatments. They didn't have loads of clothes or shop for fun. All my school friends mums worked when I was growing up (except the ones with 3 or more kids), as did my son's friends when he was at school. The mums I know are just as likely to work part time now especially through the primary school years as they ever were. I was the exception working full time from DC being about 9. I am 53.

Most families on 25K will be getting UC and/or childcare vouchers. If both parents work and are on 25K they are arguably not a low income household.

I don't know what you mean by 'presumably because it affects her age group'.
CM has nothing to do with age and everything to do with children! I am not a single mother in case you presume that too. I just don't think either parent's income should be double taxed before it is available to their own child.
I do think it's reasonable that CM is taken into account when calculating any UC payable but it is very unreasonable to take CM payments imo.

You don't seriously feel resentful because you didn't have a mobile phone, Netflix of get your nails done do you? I honestly can't believe anyone would complain about this, especially as neither of the first two things existed!

I think you need the Four Yorkshire Man sketch too: