Well for people/couples who each have substantial pensions and downsizing equity perhaps it's a reasonable consideration. Same as for inheritance tax, lots of raised eyebrows about lowering the threshold, but at present less than 4% of estates pay any inheritance tax, which kind of means you are pretty lucky to be inheriting an estate of such value, compared to the remaining 96% of estates that are below the threshold.
I agree that inheritance tax is fair game, as it’s usually free money to the recipient, but there is a risk that removing the state pension from those that have saved for their retirement might just lead them to either spend or hide the money instead.
But you also have to consider that when the State pension was introduced, it was in an age when most families rented their homes and had one wage earner, so had limited sources of income or assets with equity to release, nor was there much in the way of inherited wealth to rely on. Lots of manual workers had no access to workplace pensions until industries were nationalised, so took out modest insurance policies instead. I agree that people are more likely to spend/hide/pass-down their wealth, but I also think that the rules on drawing down pensions early and taking cash lumps sums was a deliberate ploy to get people to spend it, thus putting more money into the economy and raising more VAT income.
My kids, in their 20’s have pensions and health insurance…. I think that they will be using those in sickness and old age, not State pension and NHS.
People also forget that the vast majority of employer and employee pension contributions throughout employment are accumulated on a tax free basis, so having to pay income tax on pension payments received when retired is perhaps not as unfair as is often suggested,
Except for example, I could pay tax on that income now at 20% but by retirement I’m going to be taxed at 40% or even more. It’s all a bit unfair, unless you decide to live on the dole your whole life
Only if you have accrued enough pension to then pay tax at the higher rate,but on a comparison basis, if you only earn enough to pay 20% tax, then your pension contributions and subsequent annuity paid out to you on an annual basis will probably be of a similar taxable value? Also remember that a significant amount of your accrued pension pot can be drawn down as a tax free lump sum, which will reduce the overall taxable pension, and if you then chose to invest that lump sum into property or stocks and shares etc then you'd be benefitting from the appreciation of that as well. I don't think it's unfair at all.
That depends on the size of your gain, your overall taxable income and the type of asset you own. Everyone has a CGT allowance, up to which there is no CGT to pay. And even then it is still only a percentage of what you have gained if benefited from it when alive, otherwise possibly to be paid as inheritance tax by those benefitting from it once you've gone.....in that case is nil CGT unless the assets appreciate while your estate is being administered.
On 30th October I think CGT will be brought inline with income tax. We’re screwed by the gov’t. Unless…
You still have a separate allowance for CGT, its come down drastically in the last few years though https://www.gov.uk/capital-gains-tax/rates Based on their worked example an annual capital gain of £12,600 results in a CGT of 10%
Just wait and see…. CG allowance might come down further yet and if not now, by the time we retire I’m sure it’ll be gone altogether. and your example of 10% is current. Come October it’ll be brought in line with income tax.
I don't consider it as money being taken out of your pocket, just slightly less is going into your pocket. Inheritance and capital gains is effectively a tax on a secondary windfall/profit, not a primary tax on your daily existence.
The bottom line is that governments are in the business of transferring funding/benefits from those that are unlikely to vote for them, to those that are more likely to vote for them.
Looked into my old pension today, after an old work mate promoted me on what he got and what he is going to do with it. I won’t get as much as he did, in fact, he got twice as much, as he had a higher paid job in the factory and I was outside on the fork trucks more, plus our first house which was built in 1908 needed loads of work on it as it was knackered. But I will have enough to pay my mortgage off, which is probably a good thing to do, what with the state of the world, would anyone agree?
Well… I did it. I cashed in my meager pension from when I worked at the printers and am now mortgage free. Hasn’t given me much change though, but I don’t have to find the money for the mortgage in the winter when I’m not busy. From the first of nov, I get given a couple of hundred quid a month which will go straight into a ISA. When I get to ‘retirement age’ it should be worth around about the same as the lump sum I got… if I make it that far.
depends what you owe, what interest yourepaying, what return you get on your pension pot, what an ISA pays etc
