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?

Fair enough. He is.

It is a complete mystery to me why young families seem to expect to have similar financial circumstances to those who bought their houses years ago, have maybe had a couple of inheritances along the way and a couple of lump sum pensions, all of which may well happen to 30 somethings when THEY reach retirement age.
Moan, moan, whinge about how hard is is for them at the moment - as it has always been for young families. Why do you think you are unique?

You're generalising as are all the people who lump pensioners all together.
You have no idea of the income we had or what it had to pay for.
But really it shouldn't be a competition over who had it harder, the real question is what can be done about it?

Doesn’t everyone get free hours now, regardless of finances?

Everyone gets 15 hours free for 3 & 4 yr olds for 38 weeks. Truly free childcare isn't really a thing despite what people think.

Indeed.

Voted Labour last election.

@MrsSkylerWhite the above doesn't change any of my points You are not everyone!

But really it shouldn't be a competition over who had it harder, the real question is what can be done about it?

You need to acknowledge something before you can address it surely?

I don't think NI should be charged on pension income but I do think it should be charged on employment income after state pension age.

t is a complete mystery to me why young families seem to expect to have similar financial circumstances to those who bought their houses years ago, have maybe had a couple of inheritances along the way and a couple of lump sum pensions, all of which may well happen to 30 somethings when THEY reach retirement age.

It's a complete mystery to me why so many posters ignore the facts & data. Young families are not expecting to have similar circumstances to pensioners now & the average 30 something will be a lot poorer than current pensioners when they get to that age. That's the point!

Moan, moan, whinge about how hard is is for them at the moment - as it has always been for young families. Why do you think you are unique?

I'm not young but young people are in a unique position now. The country has not had these demographic changes ever before, things will have to change because of it.

Amol Rajan podcast Radical had a good guest Dr Eliza Filby on the Generational Divide; Living with(out) the Bank of Mum and Dad episode speaking on this recently.
IIRC pensioners of today weren’t squeezed like the gen X and Z of today with paying for childcare , paying for up to 40 years of elder care , cost of living crisis , rent/mortage relatively much more expensive , triple lock pensions, winter fuel allowance, generous inheritance tax allowances. She noted as well that the cost of training and education fell from paid apprenticeships of old to the worker themselves so effectively another tax.
In summary work
no longer makes one wealthy or even self sufficient - the bank of granny and grandad is the quickest way to get wealthy or marry into inherited wealth. Depressing ! But she suggested some radical suggestions. Taxing inherited wealth amongst them.

Interesting. I think our grandson received 30 hours free. Just looked it up and says to qualify for this the parents need to work the equivalent of 16 hours pw between them and household income should not exceed £100,000 per annum. Seems like a reasonable deal to me. I don’t suppose many pensioners receive 30 hours of free care up to an household income of £100,000.

Not that I think they should: if we can pay, we should, at whatever age we are.

Between them, ie, each so 32 hours total. Put that badly.

Exactly this!

What’s your solution, a cull?

Yes, that's the intelligent answer 🙄

To start with I would roll NI into income tax as I already said, pause the triple lock as I already said. Relook at care costs for those still in their homes.

What's your suggestion @MrsSkylerWhite carry on arguing it isn't a thing?

Many working people will pay NI for more years than they need to “get their stamp”, but they still need to keep paying as long as they are working.

it should be scrapped and replaced within the general taxation.

dividends should also be taxed at the same rate as income

@MrsSkylerWhite you asked

"Doesn’t everyone get free hours now, regardless of finances?"

I answered your question.

I’m not arguing it isn’t a thing at all!

I’m arguing that blaming today’s pensioners is just wrong. We all live life according to what it deals us.

I absolutely agree with your triple lock point.

As do I. Pensioner benefits do need to be looked at, but demonising pensioners is neither mature, sensible nor pleasant.

What you mean young people will have to get used to life without endless tech, fast food, clothes and beauty, holidays etc? They’ll have to scrimp and save and get used to a life that doesn’t represent an Instagram feed? How is that change? That’s a reality that generations before them have had to navigate.

Apart from the ageism, I would agree with you and I am a pensioner. I think NI is a terrible tax anyway. However, it would definitely complicate things if you started charging people over pension age NI. This is because, while you are paying NI, you are building up pension contributions. If you carry on paying them while you are a pensioner, does your pension increase after a while? This is assuming that you didn’t qualify for a full pension in the first place.
I think the idea being floated at the moment, of reducing NI and increasing tax is a good one.

Incorrectly, I think? Goggle is telling me 30 free hours up to £100,000 household income. As far as I’m aware, pensioners do not receive free, across the board, equivalent care?

Hear, hear. There’s division in the UK more than enough already.

@MrsSkylerWhite how did I answer incorrectly? The free hours don't start until age 3, they aren't for the whole year and they aren't universal depending on what you earn?

How is that universal free childcare?

Who has argued that pensioners get childcare paid?!