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I don’t get why they didn’t just abolish the drop off in NI payments for higher earners. Leave it at 12% but for all money earned instead of dropping to 2% over whatever the threshold is. Do that along with all dividends, bonuses, share options etc being taxed the same as income and there’s a shed load of extra cash.
that would lead to everyone in the upper tax bands paying between 52 and 72% tax on each pound earned. Regardless of your views on the laffer curve, I think there's something deep-seated that people would feel about the government taking more than 50% of their money, and would probably lead to losing votes and possibly tax income as well.
It definitely would be sensible to just bundle all tax into a single tax, which doesn't have wierd spikes up-and-down as it goes, but I guess there's political reasons and optics as to why national insurance and council tax are separate.
I would think a lot of people are fairly well set by 55 although still nice to have the money.
Judging by the figures of how many people have 30 year mortgages, remortgaged regularly, and low pension pot's, I think a lot of people are planning to use the inheritance to fund later life...
For the Scottish policy aware people –
how does this affect Scotland beyond the Barnett link increase in funding?
Could Scottish government choose to spend the increase in a different way?
I thought we have devolved income tax, but I don’t think we have devolved NI?
Swinney was on GMS this morning talking about it, thinking is that it would be spent in the same way although that's dependent on negative consequentials. Waiting for more details before making any commitment.
… bonuses, share options etc being taxed the same as income and there’s a shed load of extra cash.
Hate to break it to you but they already are, or at least mine are. Both are considered to be income and are taxed (and NI) accordingly.
As this move is going to be primarily aimed at funding the NHS 'backlog', with comparatively little going to SC, am I cynical to think that we'll see a series of 'fast-track' decisions soon that bring in 3rd party private HC providers- and that all of this fluff is just designed to signal to them that their investments are going to be highly lucrative?
Thinking like a current Tory minister here for a bit, and that this is just heavy privatisation by the back door.
that would lead to everyone in the upper tax bands paying between 52 and 72% tax on each pound earned. Regardless of your views on the laffer curve, I think there’s something deep-seated that people would feel about the government taking more than 50% of their money, and would probably lead to losing votes and possibly tax income as well.
To be fair, there's so few people in the highest income tax bracket, that loosing their votes is not going to make any electoral difference.
There is a very disingenuous article in the FT this morning, claiming that gradautes in the basic tax rate bracket face a 50% marginal tax rate (if you include student loan repayment), although they only achieve that number by adding in employer's NI contribution which is very poor journalism for the FT!
From next April, graduates such as teachers or marketing executives earning £30,000 will only get half of any pay increases granted by their employers despite paying an income tax rate of 20 per cent.
If their salary goes up £1,000, they will pay £200 in additional income tax, £132.50 more employee national insurance, and £90 in extra student loan repayments. Their employer will pay another £150.50 in employer national insurance. The total tax payments on £1,150.50 in additional employment costs will therefore be £573, a tax rate of 49.8 per cent of the additional pay bill.
The correct number should be £200 + £132.50 + £90 = £422.5 / £1000 = 42.25%
https://www.ft.com/content/bbaf099a-0b5b-48ad-9ca5-fee26844c1df
Hate to break it to you but they already are, or at least mine are. Both are considered to be income and are taxed (and NI) accordingly.
There are various schemes for start ups which offer tax breaks on share options / shares - although they seem to change almost every year.
https://www.taxinnovations.com/business/rewarding-employees/share-schemes/
The biggest tax dodge is carried interest on Private Equity / Fund managers.
https://www.rossmartin.co.uk/partnerships/1827-tax-loophole-tax-on-carried-interests
Funny how the government can print money for the past 10 years but it's covid that needs paying for. National debt was about 80% of GDP before covid and is about 100% after. The rates for the debt are historically low. That 80% was as a result of the 2008 crash. Source: R4's 'more or less' last week.
This hits the poor but they'll still vote in 'good old Boris' next time. Tw4ts.
I don’t get why they didn’t just abolish the drop off in NI payments for higher earners. Leave it at 12% but for all money earned instead of dropping to 2% over whatever the threshold is. Do that along with all dividends, bonuses, share options etc being taxed the same as income and there’s a shed load of extra cash.
So you want anyone earning over £55kish on PAYE etc to pay another 10% in tax?
You've really not thought this through have you...
but it’s covid that needs paying for.
This tax hike doesn't actually pay for Covid, none of the new money is going to paying off the massive increase in national debt as a result of furlough etc.
To be fair, there’s so few people in the highest income tax bracket, that loosing their votes is not going to make any electoral difference.
So few?
About 4 million of us...
ignore - forgot about the 45% rate, lol
About 4 million of us…
in the 45% bracket at over £150k?
You sure?
Less than 1% of tax payers according to HMRC....
To be fair, there’s so few people in the highest income tax bracket, that loosing their votes is not going to make any electoral difference.
The last time we had marginal tax rates that high (pension allowance taper so only a couple of years ago) it causes NHS waiting times to increase as the surgeons made the decision to not work overtime due to massive tax bills they received. I imagine this would have similar if not worse unintended consequences.
So you want anyone earning over £55kish on PAYE etc to pay another 10% in tax?
You’ve really not thought this through have you…
You may be unhappy about the idea but that doesn't mean it hasn't been thought through.
Perhaps a better way to frame the idea would be as a removal of the 10% reduction lower earners don't benefit from.
This hits the poor but they’ll still vote in ‘good old Boris’ next time. Tw4ts.
This. All day long.
You said:
in the 45% bracket at over £150k?
You sure?
Less than 1% of tax payers according to HMRC….
He said:
I don’t get why they didn’t just abolish the drop off in NI payments for higher earners.
It drops off at about £55k salary.
well if we're playing that game...
I said:
To be fair, there’s so few people in the highest income tax bracket, that loosing their votes is not going to make any electoral difference.
To which he said:
About 4 million of us…
Well its 33 years until I retire - I hope its sorted by then
I would put the chances of "a normal world" (i.e. one without major societal changes caused by climate change rendering all this tinkering ridiculous) being here in 20 years at abotu 1 in 3.
I'm putting my pension money into chainsaws and 4x4s
Well its 33 years until I retire – I hope its sorted by then
LOL. As if people will be allowed to retire in 30 years. The retirement age will be going up 2 years every year 🙂
Yes things may be a lot different, and a lot worse by time I get close to 68.
A society that turns on their older generation as we see happening for the last few years(even on the pages here) does not bode well for other vulnerable groups in society; how long before those with disabilities get identified and scapegoated for voting differently and causing all the bad things in the world?
A society that turns on their older generation as we see happening for the last few years
We have had 40 years of selling "futures" down the drain, now those "futures" are the present generation they want some of the proceeds of those sales.
A society that turns on their older generation as we see happening for the last few years(even on the pages here) does not bode well for other vulnerable groups in society; how long before those with disabilities get identified and scapegoated for voting differently and causing all the bad things in the world?
There is a big difference between a set of people who have done very well out of historical pension schemes, large house price rises and 'earning' more per month via their pension than people who are working than a set of disabled people. Not sure how you made the leap to disabled people?
although they only achieve that number by adding in employer’s NI contribution
Well, that's because plenty of employers will ask employees to cover both sides of the increase in NI.
There is a big difference between a set of people who have done very well out of historical pension schemes, large house price rises and ‘earning’ more per month via their pension and then slamming every door possible behind them than people who are working than a set of disabled people.
FTFY
As written here previously. The older generation had a different hand dealt to them. They are products of their environment - just as we are to ours.
That they have generous pensions and were able to buy houses which are now worth lots of money is just the end results of the gamble they took all those years ago.
There were others at that time who lost their pensions in various companys over the years, and there were others who lost their houses when interest rates were crippling during the 1980`s ... I understand envy is one of the 7 deadly sins, but it does not always have to be a race to the bottom.
That they have generous pensions and were able to buy houses which are now worth lots of money is just the end results of the gamble they took all those years ago.
There was no gamble in having a generous pension and no gamble in buying a house when they are cheap. Those hit by housing crash in the 1980's (me!) recovered easily from it by just buying a house when they were at the bottom.
No envy from me, I am sat in the the same fortunate position of having a very good pension and a house with a lot of equity in it. What did I have to do to be in that position - **** all.
From what I have read, home interest rates were between 16-10% during the 80's and early 90's, and nearly 1% of all mortgaged properties were repossessed. From what the older members in my team tell me it caught a lot of people out who initially stretched themselves too thin .. their gamble didn't pay off.
Of course paying into a pension was a gamble back then - that quite a few subsequently collapsed for various reasons proves this; if they'd opted out and just put the money to one side they'd have been better off.
bonuses, share options etc being taxed the same as income and there’s a shed load of extra cash.
Hate to break it to you but they already are, or at least mine are. Both are considered to be income and are taxed (and NI) accordingly.
Surprised nobody has picked up on this. Surely share dividends are ( tax + NI)d less than income? That's why contractors do it, no?
Unulales. It quite worrying the way you're trying to portray that the exceedinly rich and lucky portion of the current generation of oldies got there through some amazingly merititcious method which they thoroughly deserve..
The obvious answer is to just removed the cap on NI - far fairer and more logical
From what I have read, home interest rates were between 16-10% during the 80’s and early 90’s, and nearly 1% of all mortgaged properties were repossessed. From what the older members in my team tell me it caught a lot of people out who initially stretched themselves too thin .. their gamble didn’t pay off.
Of course paying into a pension was a gamble back then – that quite a few subsequently collapsed for various reasons proves this; if they’d opted out and just put the money to one side they’d have been better off.
Nether of those things were a gamble.
Mortgages were actually harder to get than now and much, much harder than in the 2000s. The rates weren't that great even when they were lower so not like going from today's rate to 10% plus. Yes the rates caught people out just as they would now but nobody was gambling the the rates wouldn't go up, wasn't really a consideration.
And relatively speaking such a low number of people have been hit by pension collapses that it is insignificant and nobody who paid into a pension saw it as a gamble in any way whatsoever, it was just a method you used which was assumed safe.
The obvious answer is to just removed the cap on NI – far fairer and more logical
But that would hit the tory voters the most, why would they ever do that?
LOL. As if people will be allowed to retire in 30 years. The retirement age will be going up 2 years every year
This.
People need to ignore the reassuring noises they're being told by the government and start facing up to the cold, harsh reality.
The kind of (triple-locked/final salary) retirement presently being enjoyed by this generation of pensioners is just a totally unsustainable anomaly which has now been rectified. A brief window of luck. Nothing even remotely similar will be on offer to anyone who follows them, other than a tiny well-remunerated minority. What's happening at the moment is just the necessary readjustment
If you haven't already accepted that then you're absolutely delusional. It's simply unaffordable in the long term. It's unaffordable now. Unless younger generations are to be saddled with truly eye-watering levels of taxation to support it.
I'm 50 and have already made my peace with the fact that I will never retire. It's just a pipe dream, so you better accept it as such. I've a few private pensions that I've paid into through my life, but looking at them its obvious they would only ever provide a subsistence level of abject poverty.
The state pension age will be like the amount of missions they have to fly in Catch 22 before they get rotated. With the same results.
It will be raised and raised as people approach it, and each time its raised, less and less people will make it to the new finish line
There you go... a happy thought for you on a Sunday 🙂
and no gamble in buying a house when they are cheap
It was quite hard to buy a house in the 70s. My parents had to wait to borrow money from a Building Society as the BS had to wait for someone to pay off a morgage before they had the money to lend to them. So houses were cheap but mortgages were scarce.
Of course paying into a pension was a gamble back then – that quite a few subsequently collapsed for various reasons proves this; if they’d opted out and just put the money to one side they’d have been better off.
It wasn't a gamble at all, they were extremely generous final salary schemes eg my one only required a 5% employee contribution but after 40 years I would get an index linked pension at 2/3 final salary with 50% widow pension in the event I died first.
A very small number of schemes were the subject of fraud but on the whole they were excellent (my parents are currently enjoying the fruits of their schemes). Mine collapsed when the company liquidated, but I still got an amazing payout from the scheme, best investment I ever made (paid in less than £7k, got £200k out 1520 years later).
Paying in to a pension now is more of a gamble imo. The government of the day may change the rules at any time and the organisation you've trusted your money to might fold leaving you with nothing. See BHS. Also colleagues I have who paid in to a pension scheme with their previous employer that went aot. Not much left from that. It's the only game in town though so what are you going to do?
It was quite hard to buy a house in the 70s. My parents had to wait to borrow money from a Building Society as the BS had to wait for someone to pay off a morgage before they had the money to lend to them. So houses were cheap but mortgages were scarce.
Very true, but still not a gamble. Sounds like unaleles has been talking to some old and entitled workmates who are telling them the they are in a good position housing/pension wise because they gambled and it was down to them and their big risks rather than just being around at the right time and actually doing nothing special at all.
Very true, but still not a gamble. Sounds like unaleles has been talking to some old and entitled workmates who are telling them the they are in a good position housing/pension wise because they gambled and it was down to them and their big risks rather than just being around at the right time and actually doing nothing special at all.
+1
I've a final salary pension from the mid 80's, worked there for 2.5 years and was earning £14k. The pension is currently worth £6k pa (and £4k to my OH if I die) and a minimum of 5% rise per annum, or inflation if higher.
No gamble, you were just 'enrolled' on your first day.
I’ve a final salary pension from the mid 80’s, worked there for 2.5 years and was earning £14k. The pension is currently worth £6k pa (and £4k to my OH if I die) and a minimum of 5% rise per annum, or inflation if higher.
No gamble, you were just ‘enrolled’ on your first day.
Really??
Which scheme was this?
Unulales. It quite worrying the way you’re trying to portray that the exceedinly rich and lucky portion of the current generation of oldies got there through some amazingly merititcious method which they thoroughly deserve..
Not all older people who own their houses and have a pension are exceedingly rich .. some aren't rich at all.
To place all of them in the same group of the very small group who now own million pound property and receive Police/Firemen like pensions is unfair.
No doubt we in our thirties will have some sort of luck/advantage over those in their 30's in 30 years time .. it's how it is.
I don't agree with the whole race to the bottom thinking. We need to stop looking for problems and start looking for solutions.
Paying in to a pension now is more of a gamble imo. The government of the day may change the rules at any time and the organisation you’ve trusted your money to might fold leaving you with nothing. See BHS.
The Pension Protection Fund has only existed since 2005 so it was actually more of a gamble previously.
We need to stop looking for problems and start looking for solutions.
🙄
I’ve a final salary pension from the mid 80’s, worked there for 2.5 years and was earning £14k. The pension is currently worth £6k pa (and £4k to my OH if I die) and a minimum of 5% rise per annum, or inflation if higher.
Thats a fabulous scheme - far better than any public service one
I paid in to the nhs for 18 years. Earning from £22000 to £32000. My pension is under £8000 pa. Still a damn good deal but nothing like that.
What is needed to be understood about public service pensions is its effectively deferred salary and is a part of the reason why many of us went into public service and put up with the low wages in exchange for job security and good pensions
Also that all the schemes have been radically changed to make them much less valuable
I’m 50 and have already made my peace with the fact that I will never retire. It’s just a pipe dream, so you better accept it as such. I’ve a few private pensions that I’ve paid into through my life, but looking at them its obvious they would only ever provide a subsistence level of abject poverty.
Well, there's a lesson for everybody. Perhaps stop relying on the state/politicians to pay for your retirement and invest some self interest in saving for yourself.
Its all very well complaining, but rarely does anything good come from drumming your fingers and expecting someone else to selflessly provide for you.
What is needed to be understood about public service pensions is its effectively deferred salary and is a part of the reason why many of us went into public service and put up with the low wages in exchange for job security and good pensions
Many folk working in the private sector made/make the same decision. It's not exclusive to the public sector. Neither are low wages.