Georgie boy is after your pension money!

[Ethan]

The Government is hypocritical on corporate tax. In my opinion, corporate tax is not a moral issue, it is a legal one. If the law permits companies to reduce their tax legally, they would be very foolish and in breach of their legal responsibilities to shareholders not to do so.

HMG knows this because their mates at the big accountancy forms come up with these schemes, HMG supports PFI which is a way to get investment without accruing debt on the public books, Gideon's family firm pays a remarkably small amount of corporation tax because they offshore their money and HMG sold their MHRC buildings to an offshored company (if that isn't the definition of irony).

 

[Deleted member 18588]

The difficulty for this and previous Governments lies in attempting to act unilaterally on corporate taxes.

Ours is far from the only country permitting these "loopholes" and if the UK stood alone in making the necessary changes we would see our Corporation Tax take reduce further.

Fortunately there does appear to finally be more of a will to make the necessary changes by many countries, including UK, so hopefully, in the not too distant future, we may see multi-national companies paying a fairer share.

We shall see!?

 

[Hobbit]

The Government is hypocritical on corporate tax. In my opinion, corporate tax is not a moral issue, it is a legal one. If the law permits companies to reduce their tax legally, they would be very foolish and in breach of their legal responsibilities to shareholders not to do so.

HMG knows this because their mates at the big accountancy forms come up with these schemes, HMG supports PFI which is a way to get investment without accruing debt on the public books, Gideon's family firm pays a remarkably small amount of corporation tax because they offshore their money and HMG sold their MHRC buildings to an offshored company (if that isn't the definition of irony).

What's PFI got to do with Corporation Tax? And can we at least acknowledge that the govt that brought in the vast majority of PFI was Labour under Blair.

 

[Ethan]

What's PFI got to do with Corporation Tax? And can we at least acknowledge that the govt that brought in the vast majority of PFI was Labour under Blair.

Because PFI is often funded by offshore companies so as well as punitive contract rates they dodge tax. But it is also an off books cheating way of getting capital investment without public debt. It was invented by the Tories but Brown certainly liked it.

 

[Foxholer]

What's PFI got to do with Corporation Tax? And can we at least acknowledge that the govt that brought in the vast majority of PFI was Labour under Blair.

However, it was brought in by the Conservatives - John Major's lot! Blair/Broon merely continued the 'policy' - for different reasons!

Roundly criticised by Labour, when in opposition, for its creeping privatisation, it was then grabbed for use be Blair/Broon for its 'off book' attributes!

The only thing this really proves is how hypocritical politicians - of all creeds - are!

 

[delc]

Going back to Gordon Brown, almost one of his first stealth taxes was the abolition of Advance Corporation Taxes, which effectively meant that pension funds could no longer claim back the tax paid on dividend income. He presented this in his budget speech almost as if it were a tax cut rather than a tax increase, which effectively it was! I was surprised that so little fuss was made about this at the time!

Traditional pension funds depend on compound interest over many years, so even a small loss of income every year can have a big effect on the final pot. At the time many pension funds were still somewhat in surplus, so I suppose that GB thought people wouldn't notice this stealth tax, which actually took over £5bn per annum out of pension funds. However it proved to be the death knell of the traditional defined benefits pensions which people had enjoyed for over 50 years!

 

[SwingsitlikeHogan]

Going by the various announcements yesterday - and various commentators view that it wasn't Goergie Boys best day - I do wonder whether he has any idea whatsever about what's going on and any real strategy and vision for the finances of the country other than 'cut the deficit' - austerity is the only way.

 

[Ethan]

Funny that Gideon is so keen to raid higher rate tax payers pension funds. Probably not so worried about inheritance tax dodgers:

http://www.ibtimes.co.uk/thatcher-tax-offshore-haven-property-will-526405

 

[Deleted member 18588]

Funny that Gideon is so keen to raid higher rate tax payers pension funds. Probably not so worried about inheritance tax dodgers:

http://www.ibtimes.co.uk/thatcher-tax-offshore-haven-property-will-526405

Cannot see where the pension funds are being raided.

It is being proposed that relief on contributions be restricted to standard rate but that does not constitute a raid on funds.

I would have thought that, based upon your previous pronouncements, you, like SilH, would be whole heartedly in favour of an albeit modest level of equalisation.

For far too long in this country pension contributions by the better off in society has been much more about tax-planning rather than provision for retirement.

 

[MegaSteve]

One of the things that used to tee me off good and proper were bosses that would happily tell you they hadn't taken a salary increase in years... Then just as they were approaching retirement start taking the salary increases that were 'due' to them [apparently]... With the pension we were in being based on the best three of your last ten they were quids in...

 

[Deleted member 18588]

One of the things that used to tee me off good and proper were bosses that would happily tell you they hadn't taken a salary increase in years... Then just as they were approaching retirement start taking the salary increases that were 'due' to them [apparently]... With the pension we were in being based on the best three of your last ten they were quids in...

Some of the biggest culprits for this were in the Public Sector. I know through providing pre-retirement financial advice to many on courses sponsored by their employer.

Promoted one or two salary bands but without too many worries over increased responsibilities as they spent much of their final year attending these types of course and being "recommended" to gradually cut back their hours.

 

[delc]

Cannot see where the pension funds are being raided.

It is being proposed that relief on contributions be restricted to standard rate but that does not constitute a raid on funds.

I would have thought that, based upon your previous pronouncements, you, like SilH, would be whole heartedly in favour of an albeit modest level of equalisation.

For far too long in this country pension contributions by the better off in society has been much more about tax-planning rather than provision for retirement.

The principle used to be what went into a pension fund was tax free, but you were liable for tax on the pension income after retirement. The end of ACT's by Gordon Brown meant that the part of the fund derived from dividend income was no longer tax free, and this has been raiding pension funds to the tune of £5bn a year ever since. Up to now personal payments into a pension fund have been tax free, but George Osborne is trying to reduce this concession for higher rate taxpayers, which now include many middle income professionals due to fiscal drag (tax allowances not being upped in line with inflation). So essentially he will get more income tax out these people, and the tax man will be paying less into their pension funds.

 

[pendodave]

I'm as spartist as the next comrade, but I find it hard to argue against even the ***** Osborne on trimming tax relief on pension contributions. There are a lot of people and a lot of services in this country that deserve the cash more. Not that Osborne will ever send it to them, but that's another thing altogether.

Politicians have painted themselves into a ridiculous corner on 'headline' income tax. They therefore have to find other ways of extracting their pound of flesh.

Taxation is the price of civilisation (though obviously the rich and multinationals don't see it that way).

 

[Deleted member 18588]

The principle used to be what went into a pension fund was tax free, but you were liable for tax on the pension income after retirement. The end of ACT's by Gordon Brown meant that the part of the fund derived from dividend income was no longer tax free, and this has been raiding pension funds to the tune of £5bn a year ever since. Up to now personal payments into a pension fund have been tax free, but George Osborne is trying to reduce this concession for higher rate taxpayers, which now include many middle income professionals due to fiscal drag (tax allowances not being upped in line with inflation). So essentially he will get more income tax out these people, and the tax man will be paying less into their pension funds.

The tax-man does not "pay" into pension funds and by peddling that line you are guilty of continuing to promote the dangerous proposition that pension contributions are more about tax avoidance than retirement planning.

He does, however, grant relief from Income Tax on the individual's contributions and, under the new proposals, will continue to do so albeit limited to standard rate.

 

[delc]

Some of the biggest culprits for this were in the Public Sector. I know through providing pre-retirement financial advice to many on courses sponsored by their employer.

Promoted one or two salary bands but without too many worries over increased responsibilities as they spent much of their final year attending these types of course and being "recommended" to gradually cut back their hours.

I was booted out of my privatised Utility Company with a full pension for years worked, aged 50 1/2 in 1996. Along with many other middle-aged, middle managers I hasten to add. The justification was that they could employ keen young graduates who would work harder for less money, while transferring us oldies to the pension scheme that was (allegedly) bulging with money at the time. Thus we disappeared from their bottom line. Quite honestly, I enjoyed my job and would have much preferred to work there until my normal retirement age. Financially I did very well out of this by getting other (pensionable) jobs that I didn't enjoy quite so much, but the whole thing seemed crazy to me. I have already received in pension payments several times what my pension pot was worth at the time I retired, so I am not quite sure where the money is coming from? Not complaining mind you!

 

[Hacker Khan]

I'm as spartist as the next comrade, but I find it hard to argue against even the ***** Osborne on trimming tax relief on pension contributions. There are a lot of people and a lot of services in this country that deserve the cash more. Not that Osborne will ever send it to them, but that's another thing altogether.

Politicians have painted themselves into a ridiculous corner on 'headline' income tax. They therefore have to find other ways of extracting their pound of flesh.

Taxation is the price of civilisation (though obviously the rich and multinationals don't see it that way).

Great point. It's got to the stage where the headline tax rate is almost meanignless as there are so many other ways they use to raise revenue whilst calling themselves the alleged party of low taxation.

 

[Ethan]

Cannot see where the pension funds are being raided.

It is being proposed that relief on contributions be restricted to standard rate but that does not constitute a raid on funds.

I would have thought that, based upon your previous pronouncements, you, like SilH, would be whole heartedly in favour of an albeit modest level of equalisation.

For far too long in this country pension contributions by the better off in society has been much more about tax-planning rather than provision for retirement.

So in your opinion it is OK to pay tax at higher rates, including punitive marginal rates at certain thresholds, similar loss of personal allowances, reduction in annual allowance and not even get tax deductions at the same rate as you pay in the first place?

The effect on funds is substantial and unreasonable. The rationale is the increasingly discredited austerity policy not to mention the fact that the people who caused it in the first place continue to get away with it, and are back earning their big bonuses which they can offshore.

 

[delc]

The tax-man does not "pay" into pension funds and by peddling that line you are guilty of continuing to promote the dangerous proposition that pension contributions are more about tax avoidance than retirement planning.

He does, however, grant relief from Income Tax on the individual's contributions and, under the new proposals, will continue to do so albeit limited to standard rate.

I may have got this wrong, but when I was in work the pension contribution tax relief was given in the form of a higher personal tax code. I thought they had done away with this, so that you had a standard tax code, but any contributions to a pension scheme was made up by the tax man (like Gift Aid). Thus although the effect was the same, it made it appear that the Government was giving you something, rather than not taking it away from you. Certainly Child Allowance was restructured in that way!

 

[Deleted member 18588]

I may have got this wrong, but when I was in work the pension contribution tax relief was given in the form of a higher personal tax code. I thought they had done away with this, so that you had a standard tax code, but any contributions to a pension scheme was made up by the tax man (like Gift Aid). Thus although the effect was the same, it made it appear that the Government was giving you something, rather than not taking it away from you. Certainly Child Allowance was restructured in that way!

Basically individuals contributions to Personal Pensions are paid net of standard rate tax and if a higher rate tax-payer then the additional relief comes via an adjustment to coding.

If the scheme is an employer sponsored arrangement then members' contributions are deducted from salary thereby granting relief at the highest rate of tax paid.

 

[Deleted member 18588]

So in your opinion it is OK to pay tax at higher rates, including punitive marginal rates at certain thresholds, similar loss of personal allowances, reduction in annual allowance and not even get tax deductions at the same rate as you pay in the first place?

The effect on funds is substantial and unreasonable. The rationale is the increasingly discredited austerity policy not to mention the fact that the people who caused it in the first place continue to get away with it, and are back earning their big bonuses which they can offshore.

Yes! See post #93 from pendodave. After all many who gain the higher relief will revert to standard rate tax post retirement.

Thus they would in your scenario continue to invest in largely tax exempt funds and receive exemption from higher rate tax on those contributions whilst only paying standard rate tax on the taxable portion of benefits arising from those contributions.

As for the effect upon funds I am afraid that there is none arising from this possible change, unless, of course, you are suggesting that higher rate tax-payers will not or should not contribute to their pensions unless they enjoy the benefit of full tax-relief.