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?

What would you suggest as the best source for this data? Peaked my interest 😁

So not only do you want us single childless people to subsidise your family for all our working lives, you want an extra cut once we’ve retired?

Your family doesn’t speak for everybody. Generations have families don’t all have the same jobs and I’d love to know how you know the amounts in Victorian bank accounts. I have no idea what wealth my grandparents had .

Sorry @Schubert11 but you are completely wrong. This is the first time in hundreds of years or progress and improvement in quality of life that the middle aged and young are worse off! Look it up. No wonder you haven't understood why the younger generations are fed up if you don't even know this.
That is the reason that the current tax system needs to be re-evaluated. I don't think this should involve just pensioners by any means. There are many other areas that need to be looked at to make things generally fairer.

That's a different argument.
Childless people benefit greatly from other's children. There is no extra cut. The retired are paying less, not more.

Absolutely not. But I am pointing out that pensioners are still benefiting from NI payments, therefore they should still contribute towards them.

although, I think a blanket tax instead of NI would be fairer

I doubt very much parents raising children in the 1st and 2nd world wars were better off than their boomer children.

As I said in a previous post not just landlords but anyone with savings/ investments.

What is particularly unfavourable about tax on a bit to let? They don't pay NI on it, it isn't on a higher rate is it?

I am so sorry @MrsSkylerWhite. I can't seem to find any good source immediately, although the AI summary confirms it! I have worked for the NHS for many years and this is well known to be a fact and born out by a lot of personal experience too. Use of the healthcare services increases hugely in the last year of life. This is just as it should be, of course. Everyone should be getting the care they need.

Now you are agreeing with me!

I'm in my 70s, I do get a flu jab every year, don't qualify for a COVID jab, apparently I need to be 75. Not sure about pneumonia jab but I've never been offered one.

Just checked and the pneumonia jab is a one off. Maybe I had it years ago, I must check.

For balance my GC get a flu jab, they don't pay NI either.

I agree and think that the entire tax system needs a review. I think it would be fairer if IT and NI were merged and CTG, etc reviewed fully.
I am not a LL and certainly not a tax expert but my understanding is that they cannot claim tax relief on their mortgage interest. That seems unfair. I say that despite being completely opposed to the massive BTL boom that kicked off during the 1990s. It is one of the factors that has caused current housing problems.

NI should be scrapped and rolled in to general income tax.

With the pension age continually being raised, and pension credit being worth the same if not more than state pension there just isn’t much point in it as it is. Im sure it will be reformed eventually.

I'm not sure why they should get tax relief on interest. They are paying off a debt, no one forced them to borrow money. It would feel like people who couldn't afford to buy investment properties are subsidising them.

I agree with you on every thing else, review the whole thing or it just creates more cliff edges, scope for clever accountants etc.

I was a stay at home mum until my child went to school and by today's standards we couldn't afford it but we did it and I don't regret that decision.
We didn't go on holiday, we paid for the children's clothes and birthday /Christmas presents and any luxuries by buying from a catalogue and paying for them weekly, we didn't go out as a couple ever, we didn't have a car, we had a mortgage where we only paid interest because it's the only one we could afford!
Contrary to some people's beliefs we were not rolling in money or living the life of luxury!

Dividends and rental income are still taxed, but in different ways.

Lots of discussion about people having paid tax in all their lives and how hard they’ve worked before becoming pensioners means they feel they deserve to pay less tax than younger people, presumably.

This doesn’t get round the point that on the continent, except for France, this kind of thinking doesn’t exist. The situation on the continent is that tax is based on ability to pay, not an assumption that younger people should pay vastly more taxes than older people (as is the case today in the UK).

Actually, I’d forgotten something else: the extra graduate ‘tax’ of student loans.

Instead of turning this round to ‘why I deserve my special tax treatment in retirement’ can someone with some skin in the game please explain to me why younger people should be paying vastly more tax than pensioners? What is the rationale? Presumably if you feel you deserve special treatment in retirement, then you also feel that young people deserve to be punished simply for being young? To me, that doesn’t make sense.

Two things that I do think need to be looked as re pensions in the future:

1. Young people need to pay into a workplace pension with no option not to. I worked with someone who - honestly - went to the bother of opting out of paying £1.20 a week when auto enrollment became a thing. In future, anyone who has not made all their relevant NI (or whatever) contributions does not get a pension, no ifs or buts. So no credits for claiming CHB, no credits for being on UC long-term. Only those who can't work because of disabilities or caring needs (as in, top level of PIP) should get NI credits, not long-term unemployed, SAHMs etc. There should be no pension credit either - we should give plenty of notice for (eg) anyone 21 or under now that they will largely have to make their own arrangements to top up their state pension with no excuses. Start early enough and you will not notice the contributions.
2. Public sector workers should not have the option to retire early at taxpayers' expense. There is nothing intrinsically more stressful, tiring, exhausting and all the other excuses we hear on here day after day about public sector jobs over private sector jobs. The pay isn't worse either.

Harsh but fair

Clearly that’s not fair on everyone though is it
Fair would be taxing every penny earned from whatever source
starting at £0.0

"Presumably if you feel you deserve special treatment in retirement, then you also feel that young people deserve to be punished simply for being young?"

Not paying NI is something decided by the government. Nobody goes in to the local town hall asking for special treatment.

If paying NI is punishment then pensioners have already had theirs.

"can someone with some skin in the game please explain to me why younger people should be paying vastly more tax than pensioners?"

You mean the better off, minority of pensioners don't you? Not all pensioners.

I think it's the absence of hope which has changed. In days gone by, it was the case that if you worked hard at school, got qualified and worked hard at your job then you could expect to "get somewhere". That has gone.

100% tax needs to be looked at and wealthy pensioners should be contributing more.
I agree that there is a social contract but we cannot sustain the triple lock, or the NI exemptions, it cannot be afforded and it is incredibly unfair on the next generation (in addition to the current).

House prices relative to earnings are about 2.5 to 3 times higher today than they were 30 years ago. The current working population often needs 2 parents in full time work and are faced with escalating childcare costs including wrap around care. Sure, 30 free hours but there are extras, term time only funding and means testing to take into account. No to mention that due to a sector in crisis some provision have stopped accepting free hours.

something has to change. You can’t keep targeting the same section of the population with a begging bowl. We have a productivity crisis that will simply get worse.

Yes, I can agree with that. But that's not really what people on here are saying.

Dividends, interest, rental income are taxed like pensioner income i.e. without NI.

Agree although I do think a parent should get NI credits up to the child reaches 1.