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?

Maybe a line for the price of avocados would change everything though?!

Fair enough. I don’t know what stats are. Grew up with a ft working mum too (I’m 61 now, as did my husband, 67) though part time.

If your children are earning the same as you were years ago then you must have been on an above average salary and your children haven"t got themselves lucrative careers

Families with young kids get other things though, like tax relief on childcare, child benefit, tax credits, depending on income obviously. Pensioners don't get the equivalent. It probably evens out? Pensioners have usually paid in for a lot longer too and have had all their lives to build up assets, so are bound to be better off in general as a group, than those just starting out.
I do think income tax and NI should be combined though, and both workers and pensioners should pay the same. It makes things overly complicated to have 2 taxes that differ depending on age.

"Roughly 79 per cent of those aged over 65 own their homes, with more than 4 per cent still having some mortgage to pay off. Soaring asset prices have, in turn, created immense household wealth that subsequent generations have not benefited from; cohorts born after 1970 have acquired property wealth at a significantly lower rate, with most of the benefits accumulating to those born in the 1950s. Savills have estimated that as a result, the over-50s account for about 78 per cent of the UK’s privately held housing wealth."

"The result of these higher prices has been to trap people in the private rented sector even as rents soar. In 2022, housing costs took up 24 per cent of the income of a typical household renting in Britain, as opposed to 16 per cent of the budget of those who were paying off a mortgage. Both sets could feel hard done by relative to previous generations, however: in 1980, a 30 year old could expect to spend about 10 per cent of their income on housing."

"In 2018-19, the government spent roughly £14,655 for each child in Britain, £10,178 for each working age adult, and £20,789 for each pensioner. Spending on the last group has risen even as spending on other groups has fallen. Similarly, NHS spending on the over-65s has hovered around two fifths over the past decade, with spending on this group set to rise as its numbers swell. "

I know the truth is uncomfortable but it's still the truth. We have an ageing population and as a whole they have taken more out of the system than they have put in. This doesn't mean every pensioner is rich or there aren't young feckless people. But it does explain part of our issue with productivity & growth.

Similar. Was alone from 7-7, Saturdays too when mum worked over time, from aged 10. From around 11, locked out all day because id left the grill on one day making toast and she came home to an house full of smoke. No idea if there was any “childcare” available. Next door neighbour sometimes gave me some squash and biscuits.

@MrsSkylerWhite no one on the thread has said no mothers worked in the past have they?

You've watched too much TV. Working class women have always worked. The SAHM mum is a myth unless you were middle class.

Exactly, my generation (generation x) weren’t called latch key kids for no reason, Both parents worked, it was the norm unless you were the true version of middle class, most parents were not Margot and Jerry Leadbetter which seems to be what clueless posters on here spout as fact 🙄.

The triple lock should absolutely be paused.

@Theresabatinmykitchen post some statistics then that show the vast majority of mothers with dependent dc worked full time in the past. You are claiming it was the norm & anyone who knows otherwise is clueless.

No, they haven’t but I think many don’t realise that it was very common.
With young adult children, fully acknowledge the difficulties that young people face. Rather than waiting until we die, we’ve gifted to our kids so they each have modest homes, youngest completing next week. No idea what the hell they could have done without help.
That’s not to say though that previous generations didn’t face their own, somewhat different, challenges.
I’m increasingly uncomfortable with how generations seem to be being pitted against each other now. It shouldn’t be a race to the bottom.

And UC reduced from a 2 child cap to 1 child only.

The benefit system is heavily favourable towards families and pensioners .

It's working aged adults without dependants they came claim something for that face hardship

@MrsSkylerWhite I said more mothers work now which is a fact.

I’m increasingly uncomfortable with how generations seem to be being pitted against each other now. It shouldn’t be a race to the bottom.

But many people don't seem to have a problem with the fact we have taken money away from the young to give to the older generation. Some of that is inevitable with an ageing population but the fact is our state pensions & NHS model are funded like a ponzi, it isn't sustainable. It doesn't matter that you have gifted to your dc, it's bigger than that. Much bigger.

I know the truth is uncomfortable but it's still the truth. We have an ageing population and as a whole they have taken more out of the system than they have put in. This doesn't mean every pensioner is rich or there aren't young feckless people. But it does explain part of our issue with productivity & growth.

I don’t feel any guilt, personally. We’ve paid top rate tax for decades, kids in private schools, first child born with private medical care, claimed no state assistance and have always maintained my NI contributions when I wasn’t in paid work. We’ve had some excellent NHS care in recent years but we are still certainly net contributors by quite some margin. Never had a problem with that at all. Certainly shan’t feel any guilt about receiving my state pension in a few years. It will probably trickle down through the family anyway.

And UC reduced from a 2 child cap to 1 child only.

@Gingernessy disagree with that, I don't think we should push more dc into poverty, they are the future.

Appreciate that but that’s not the fault of today’s pensioners is it? They were living their lives with what they were presented with at the time. Doesn’t everyone?
It’s a succession of incompetent governments, systems and rules to blame for what people are having to cope with now.

@MrsSkylerWhite I'm confused why you are telling me about everything you have done, my parents have done similar. It's irrelevant when looking at the bigger picture. If everyone was like you or my parents we would not have such economic constraints. Plus at your age you aren't even a pensioner so I'm not sure what you are framing the OP around you 😆

The vast majority of people are net recipients & the majority of net recipients are pensioners. Thats reality.

What’s your solution, a cull?

Childcare is equivalent to social care. Both are subsidised by the state dependent on income.

Low income individuals get help with this, those that can afford it do not.

I think they need to roll income tax and NI together and everyone who is over tax threshold pays.

We are at a stage where every individual in the country needs to do what they can - although I would prefer to start with a wealth tax/land tax/exit tax

My husband is a pensioner, we’re living off his pension.

Doesn’t everyone get free hours now, regardless of finances? Happy to be corrected, kids are adults.

Appreciate that but that’s not the fault of today’s pensioners is it?

Yes & no, we have to take some responsibility for how we vote though. It's not unsurprising that as a group pensioners will vote for things that benefit themselves now as opposed to things that are long term which they may not live to feel the benefits of. But there is a problem when the electorate is disproportionately made up of older people as what then happens to young people & their futures. We already have more over 65s then under 15 yr olds, It's unprecedented.

My husband is a pensioner, we’re living off his pension.

@MrsSkylerWhite but you aren't in the cohort I was referring to as you are not receiving a state pension.

Voted Labour last election.