2024 UK politics - now with Labour in charge
Comments
-
"But all the high earners will leave the country"
0 -
And increasing employer NIC 'cause that doesn't count as a tax on working people apparently.
1985 Mercian King of Mercia - work in progress (Hah! Who am I kidding?)
Pinnacle Monzonite
Part of the anti-growth coalition0 -
The speculation on cgt has probably increased tax receipts this year even if they don't make any changes.
0 -
I suspect gains on (non-property) investments will be taxed at the same rate as income. Currently gains are taxed at 10% within the basic rate band and 20% in the higher rate. Property gains are taxed at 18% and 24% on property.
I think the increase will be staged over 2 or 3 years, with similar increases on property.
0 -
The Tories removed it just before leaving office. So your point is what?
"I spent most of my money on birds, booze and fast cars: the rest of it I just squandered." [George Best]0 -
That's not an answer to the question, is it?
0 -
Cool. I think we're both equally unqualified re such matters!
But I thought of one last night: If one wants to fund a particular lifestyle in retirement then one might choose to plug the "black hole" opened by Reeves snaffling the tax free element of the previous lump sum by contributing significantly more until retirement (and thus claiming more tax relief, which is still valuable, even without a TFLS) by spending less (and thus reducing the government's VAT receipts and corporation tax receipts, as well as the second order benefits to the economy and hence tax revenues via the "multiplier effect").
Or you might think "I need more investment returns" and then ditch UK equities (a "bad thing" for the economy as a whole, one would think) to buy higher yielding assets in other jurisdictions (e.g. the US). And then one might lose a big chunk of your higher risk pension pot, and thus become more dependent on the state in future.
I'm sure there are other courses of action that could play out, but I'm not very imaginative.
Conversely, there's not really much that can be done if you're hit with higher income tax, and the Treasury forecasting of the impact of this would naturally pick up the impact of reduced disposable incomes.
Anyway, the Mail has a story today about Doctors threatening to strike if the TFLS is reduced, so major changes there may remain on the drawing board, along with the reintroduction of the LTA and reductions to higher rate tax relief on contributions.
1 -
This highlights a key point. There are many lefties who seem to think that it's only "fat cats" (by definition deserving of nothing less than being stung for more tax, as they are doubtless "evil" as well, and might also be "bankers") who have pension investments big enough to be affected by reductions to the tax reliefs available. But as Reeves appears to be finding out idea by idea, there are a lot of "ordinary folk", public sector workers no less, who will be adversely affected.
1 -
I don't see why the first is affected by the tax free allowance change, and I don't see it as a major risk that someone with a £500,000 pension pot is suddenly going to be more likely to find themselves dependent on the state. If they are that reckless then they would already be making those decisions.
This is the problem - any justification on the grounds of increasing saving by those who need encouragement doesn't hold water when the change only affects those who don't need encouragement.
0 -
It's exactly the point. There was no limit when the Tories were last in power.
"I spent most of my money on birds, booze and fast cars: the rest of it I just squandered." [George Best]0 -
Do you really not see that if someone loses a chunk of their tax-free allowance that their "spending power" in retirement is reduced, all other things equal?
If so, please send me a PM and I'll make arrangements for you to send me £10k or so from your pension pot, as you won't miss it. £10k to me is the same as having to pay £10k extra in tax in terms of the impact on your retirement spending power. Obviously, I'll happily accept larger amounts.
1 -
Good idea. I'll have some too.
"I spent most of my money on birds, booze and fast cars: the rest of it I just squandered." [George Best]1 -
KG - given just how many enquiries the financial advice community has been fielding over the last month around any changes to the PCLS, I think there are a lot of very concerned pension savers out there, and the rumours and speculation are undoubtedly affecting investors behaviour.
I think you ignore people's aspirations.
1 -
Anyone with a pot of over £400k can easily lose £20k just by poor investment performance or world economy. Losing £10k is not desirable but should be factored into any budgeting. The value of your fund can go down as well as up.
The above may be fact, or fiction, I may be serious, I may be jesting.
I am not sure. You have no chance.Veronese68 wrote:PB is the most sensible person on here.0 -
Its a classic attitude of 'But, but they're all nasty rich people who can always afford to give a more to the state and will just cough up if we raise taxes'. Unfortunately for Reeves, as W&G has pointed out, it's doesn't work that way in reality.
"I spent most of my money on birds, booze and fast cars: the rest of it I just squandered." [George Best]0 -
Are you assuming I wouldn't be affected by any change?
0 -
Cool. You can send me a PM too, and we can make arrangements for you to send me a few £k that you won't miss.
0 -
I'm sure DorsetBoy can comment meaningfully on this, but there are strategies out there to protect one against short term market fluctuations. (Simple one is to hold a cash buffer to cover x months of living expenses.) History tells us that falls in equity funds are relatively quickly reversed.
Conversely, once the Chancellor has appropriated a chunk of your fund by making a "difficult decision", it's gone, and it's never coming back.
0 -
I'm guessing we will not be getting bombarded with requests for bank account details for any transfers!
0 -
Just to clarify my position, I'm not ideologically opposed to any specific change to the pension taxation regime (other than the reintroduction of the LTA (*) or preferential treatment for public sector workers) so long as a reasonable lead time is applied to allow sensible re-planning of retirement finances. Whilst some here are apparently "high rollers" who wouldn't notice losing the odd £10k or so at the drop of a hat, most people aren't this fortunate.
(*) My opposition to the LTA is that the tax implications of retirement savings at any point whilst you're working can only be guessed at, as you don't know what your fund value will be when you (want to) retire.
0 -
We pretty much agree then.
1 -
That would be the "undesirable" part of my post.
The above may be fact, or fiction, I may be serious, I may be jesting.
I am not sure. You have no chance.Veronese68 wrote:PB is the most sensible person on here.0 -
Sure, but people retiring at the top of the curve can be very disappointed. My sister is a F.A. and has clients who retired near the top pre-covid who are moaning they've not seen 5-10% year on year. Some have unrealistic expectations.
The above may be fact, or fiction, I may be serious, I may be jesting.
I am not sure. You have no chance.Veronese68 wrote:PB is the most sensible person on here.0 -
I've made mo assumptions about your personal circumstances. Do you want to fill us in on that?
"I spent most of my money on birds, booze and fast cars: the rest of it I just squandered." [George Best]0 -
What was this then? "Its a classic attitude of 'But, but they're all nasty rich people who can always afford to give a more to the state and will just cough up if we raise taxes'." in response to a comment to me.
I would be affected by changes in this area.
0 -
Again maybe one for DorsetBoy, but isn't this why "Pension Freedom" was introduced so you can drip feed from your investments "as and when" rather than being forced to realise your assets and buy an annuity at a bad time?
0 -
Cool. And obviously an irreversible multi-£k loss to the Chancellor is much less desirable than a paper loss that can be expected to reverse over time.
Equally obviously, if Armageddon arrives then pension funds won't recover and we'll all be best off "long" in heavy metals. (Gold for value; lead for ammunition.)
0 -
This immediate loss to the chancellor is dependent on people taking the same size lump sum on commencement even when it's not tax free. Do you honestly believe that would happen?
0 -
That tax hit doesn't have to be a one-off huge hit. Someone mentioned drip feed. 😉
The above may be fact, or fiction, I may be serious, I may be jesting.
I am not sure. You have no chance.Veronese68 wrote:PB is the most sensible person on here.0 -
Exactly. Unless buying an annuity, you don't take the PCLS out all in one hit.
Golden rule with Flexi-Access Drawdown is you only take money out if you are going to spend it immediately. FAD income made be PCLS only, a combinatgion of PCLS and taxable income, or when the PCLS has run out, taxable income only.
FAD is popular because you have the flexibility to alter your income which annuity doesn't offer. For many, your aren't working one day and retired the next, some retire early and need more withdrawals up to State Pension date, others just dip in to their fund as and when needed, others go part time, or continue to work post SPA.
Pension freedoms are another massive success introduced by the Tories, along with the huge success of auto enrolment.
0
