It's not often I agree with a Tory.......

[wellquickwoody]

Give it a rest about the gold reserves, do a bit of research!!!!!! As for pensions, why should pension funds get tax relief on dividends and nobody else?

Cos the tax has already been paid on the earnings that have been paid into the pension funds?

 

[seagullsovergrimsby]

Surprisingly, I think, despite the Liberal Democrats only having a consistent 8-10% in the poll, they will hold on to more seats than people assume. The key question is the collapse in their vote. Where they have MP's they often prove popular, and may hold a loyalty vote. Where they were challenging, yes, they have no chance. All that matters is their vote in the constituencies they hold.

I think Nasty Nick in Sheffield Hallam is in for a tonking from the electorate next May

 

[Seagull58]

Give it a rest about the gold reserves, do a bit of research!!!!!! As for pensions, why should pension funds get tax relief on dividends and nobody else?

Because the dividends are reinvested in the pension fund and the income is taxed when taken as a pension.

 

[Eeyore]

I think Nasty Nick in Sheffield Hallam is in for a tonking from the electorate next May

A popular student constituency. Why would they not vote for him ?

Oh, wait.....

 

[seagullsovergrimsby]

A popular student constituency. Why would they not vote for him ?

Oh, wait.....

Exactly

 

[drew]

Cos the tax has already been paid on the earnings that have been paid into the pension funds?

I'm not going to claim to be a pension expert but my understanding of the tax relief for contributions is that you don't pay tax on that money. eg. on PAYE, your employer deducts pension contributions before deducting income tax from the balance. So you don't pay tax on those earnings become the pension contributions (other than national insurance)!!!!

 

[Surrey Phil]

So, the budget deficit was all Labour's fault and nothing to do with the global financial crisis was it? As for the situation in France I think you'll find it has more to do with their inextricable link with the Eurozone which has overriden any policy formulated on a domestic basis. Higher taxes for the wealthy do work but only as part of a wider economic formula and I don't buy this let the wealthy keep their money and it will trickle down to us plebs, let the wealthy keep their money and they'll do just that, keep it. This type of "doff the cap to the country squire" attitude should be consigned to where it belongs, somewhere between the 17th and 18th century.

Interesting that Tories plans will wipe out deficit by 2018/19 whilst under Labour there will still be a £30bn deficit based on their plans. I'm not a Tory fan but when will these idiots learn you simply can't spend what you don't have. Sadly, too many other idiots won't see through it either!!

 

[beorhthelm]

The dividends are earnings and all earnings are taxed!

not on the money you put in a pension! it is inconsistant to ask people to save, give them a tax relief to encourage this, then tax any earnings on those savings.

 

[drew]

not on the money you put in a pension! it is inconsistant to ask people to save, give them a tax relief to encourage this, then tax any earnings on those savings.

The inconsistency then is not giving tax relief on other forms of saving eg building society (notwithstanding ISAs)? You earn money, you get taxed, you put what's left in the savings account, it earns interest and you get taxed on that interest.

The other thing about this change introduced today is that I have seen comment in that it will be used as a vehicle to avoid inheritance tax!!! Which end of society is going to benefit from that?

 

[beorhthelm]

The inconsistency then is not giving tax relief on other forms of saving eg building society (notwithstanding ISAs)? You earn money, you get taxed, you put what's left in the savings account, it earns interest and you get taxed on that interest.

but thats not a pension is it? the provision for tax relief is expressly to encourage long term savings in pension funds. for all intents this defines pensions from other "savings". besides iirc you can claim back tax on savings if you aren't earning above the basic rate threashold. earn money = get taxed at prevailing marginal rate. put money into a pension = get tax relief on the money put in. earn money in a pension = get taxed. that is clearly inconsistant. and lets be clear, its the vast majority of people taking out private pensions that are hurt by this, me and you that are having their pension reduced by this. (unless you are fortunate enough to be in a public sector pension)

The other thing about this change introduced today is that I have seen comment in that it will be used as a vehicle to avoid inheritance tax!!! Which end of society is going to benefit from that?

it avoids a punitive death tax, but the inherited pension fund is subject to income tax. those that will benefit from this are the middle classes, with a couple of pension pots that they dont "use up". the end of society you think this will benefit will be least effected as they are likly to be able to pass on an untouched pension without tax under the current rules.

 

[drew]

but thats not a pension is it? the provision for tax relief is expressly to encourage long term savings in pension funds. for all intents this defines pensions from other "savings". besides iirc you can claim back tax on savings if you aren't earning above the basic rate threashold. earn money = get taxed at prevailing marginal rate. put money into a pension = get tax relief on the money put in. earn money in a pension = get taxed. that is clearly inconsistant. and lets be clear, its the vast majority of people taking out private pensions that are hurt by this, me and you that are having their pension reduced by this. (unless you are fortunate enough to be in a public sector pension)



it avoids a punitive death tax, but the inherited pension fund is subject to income tax. those that will benefit from this are the middle classes, with a couple of pension pots that they dont "use up". the end of society you think this will benefit will be least effected as they are likly to be able to pass on an untouched pension without tax under the current rules.

Sorry, but think you missed the point I was making. Why is one form of saving actively encouraged by way of tax relief on what you put in and another, which may also be a long term saving for later life, not have the same tax relief. I think your comment about getting tax back if you are low paid is a red herring when considering the general principle.

As for your equation, surely the proportion of the money you earn that goes into the pension is effectively not taxed. For example, put simply, you pay 20% income tax and contribute 10% of your gross earnings into pension. You earn £100. £10 is paid into pension and of the remaining £90, you get £72 having had £18 deducted for income tax. The £10 paid into the pension has not been subject to tax and what you are saying is that the money that that £10 now earns (whether that be interest or dividiends) should also not be taxed!

With regard to the pensions affected. The 'end of society' that will benefit will be those that have a large untouched pot in their fund. I'm not sure but as I understand it once you take a lump sum and buy an annuity with the balance then you wouldn't have a fund to transfer. I suspect the majority of people would do just that. It would be a much smaller section of society that has massive pension pots that they can afford to leave untouched or only take out a proportion and therefore pass the balance on when they die. Inheritance tax may be punitive but on the scale of things very few people pay it. in 2011/12, there were 550,000 deaths of which only 15,000 estates actually paid IHT!


Going back to the very heart of the matter. We are all supposed to be in this together. GO still wants to reduce the deficit with more austerity but he only seems to want to hit those that can least afford it whilst actually giving money back to those that are sitting relatively comfortably. Why not propose the pension changes for when he no longer needs to make budgetry cuts rather than with immediate effect?

I don't profess to be an expert but really am just looking at the general principle rather than the intricate detail.


Just as an addendum, just seen this little snippet from the BBC :-

How many people have been paying 55% tax?
Until April 2011, anyone over the age of 75 had to buy an annuity. In the three and a half years since then, relatively few people will have paid tax at 55%. But neither the Treasury nor HM Revenue and Customs will say exactly how many.

One would assume that it is a relatively small number so that comes back to the point of who are the main beneficiaries of this change!

 

[Southwest Seagull]

A popular student constituency. Why would they not vote for him ?

Oh, wait.....

Interestingly I'm a student in at the Uni of Sheffield.

Not sure what will happen, I imagine Clegg will still retain Hallamshire though.

 

[beorhthelm]

I don't profess to be an expert but really am just looking at the general principle rather than the intricate detail.

i'm saying the general principle, re the pension dividend taxing, is that Brown took our money. you're quite right, any long term savings should probably be treated similarly, but pensions are an easier thing to apply the relief to as they are segregated and held away from us (so we cant dip in as we wish,.and have to muck about with paying the tax). the reaction to the new pension seems to be a knee jerk that assumes this benefits the wealthy, however everything i read suggests this isnt the case. without understanding the detail, its rather pointless to debate that one further.

 

[Seagull58]

Over the past 30 years you have got tax relief on payments made into a pensin plan up to an annual limit that used to be age dependent. As you got older you got tax relief on ln a larger annual payment. This was changed a few years ago so that you could pay in up to 100% of your taxable income and get tax relief on all of it. However, you always pay tax on any income you draw from the pension plan,, apart from the tax-free lump sum that you can take when you convert to income drawdown.

 

[pastafarian]

aim for a social anarchist political structure, with direct democracy (representative democracy).

try and sell that marxist crap to the people of Hong Kong.....see how they will like it.......oh!

 

[Seagull58]

The inconsistency then is not giving tax relief on other forms of saving eg building society (notwithstanding ISAs)? You earn money, you get taxed, you put what's left in the savings account, it earns interest and you get taxed on that interest.

The other thing about this change introduced today is that I have seen comment in that it will be used as a vehicle to avoid inheritance tax!!! Which end of society is going to benefit from that?

It is not inconsistent. Any income you take from the pension fund is taxed at your highest rate. In a savings account you get taxed on the interest (unless you are a non-tax payer) because you can withdraw interest or capital at any time and you only pay the tax once. In a pension plan the money is locked in and can only be withdrawn under certain circumstances, at which point the income is taxed. When Brown introduced tax on dividends he was introducing double taxation. That's why he is a thief who single-handedly virtually destroyed many people's pensions. He's not too clever at gold trading either.

 

[El Presidente]

It is not inconsistent. Any income you take from the pension fund is taxed at your highest rate. In a savings account you get taxed on the interest (unless you are a non-tax payer) because you can withdraw interest or capital at any time and you only pay the tax once. In a pension plan the money is locked in and can only be withdrawn under certain circumstances, at which point the income is taxed. When Brown introduced tax on dividends he was introducing double taxation. That's why he is a thief who single-handedly virtually destroyed many people's pensions. He's not too clever at gold trading either.

I think you find the people who are dipping their hands into your pension fund most of all are the pension fund managers.

 

[Seagull58]

Sorry, but think you missed the point I was making. Why is one form of saving actively encouraged by way of tax relief on what you put in and another, which may also be a long term saving for later life, not have the same tax relief. I think your comment about getting tax back if you are low paid is a red herring when considering the general principle.

As for your equation, surely the proportion of the money you earn that goes into the pension is effectively not taxed. For example, put simply, you pay 20% income tax and contribute 10% of your gross earnings into pension. You earn £100. £10 is paid into pension and of the remaining £90, you get £72 having had £18 deducted for income tax. The £10 paid into the pension has not been subject to tax and what you are saying is that the money that that £10 now earns (whether that be interest or dividiends) should also not be taxed!

With regard to the pensions affected. The 'end of society' that will benefit will be those that have a large untouched pot in their fund. I'm not sure but as I understand it once you take a lump sum and buy an annuity with the balance then you wouldn't have a fund to transfer. I suspect the majority of people would do just that. It would be a much smaller section of society that has massive pension pots that they can afford to leave untouched or only take out a proportion and therefore pass the balance on when they die. Inheritance tax may be punitive but on the scale of things very few people pay it. in 2011/12, there were 550,000 deaths of which only 15,000 estates actually paid IHT!


Going back to the very heart of the matter. We are all supposed to be in this together. GO still wants to reduce the deficit with more austerity but he only seems to want to hit those that can least afford it whilst actually giving money back to those that are sitting relatively comfortably. Why not propose the pension changes for when he no longer needs to make budgetry cuts rather than with immediate effect?

I don't profess to be an expert but really am just looking at the general principle rather than the intricate detail.


Just as an addendum, just seen this little snippet from the BBC :-

How many people have been paying 55% tax?
Until April 2011, anyone over the age of 75 had to buy an annuity. In the three and a half years since then, relatively few people will have paid tax at 55%. But neither the Treasury nor HM Revenue and Customs will say exactly how many.

One would assume that it is a relatively small number so that comes back to the point of who are the main beneficiaries of this change!

Some of the pension changes that have been introduced are expressly so that people do not have to buy an annuity and, effectively, take a gamble on how long they will live with the added guarantee that their descendents get nothing! Once they removed the requirement to buy an annuity the sensible thing to do (in my view) is to organise the pension pot so that you take an income from the interest earned (through dividends or fixed interest gilts and bonds) and do not eat into the capital. No matter how large or small your pension pot that is likely to be a better solution than buying an annuity, unless hte pot is so small that you may as well take it all as a lump sum. It is only in the last 3 years that people have had the option of not taking an annuity and of leaving the pension to their heirs, so you would expect the number that have done so and paid 55% tax on it to be a small number. That number will increase exponentially over the next 20 years, especially now that they have removed the 55% tax grab.
Furthermore, ISAs are there to encourage the other form of saving. Thye difference being that you get tax relief when you withdraw the money, either capital or income, instead of when you pay it in.

 

[Seagull58]

not on the money you put in a pension! it is inconsistant to ask people to save, give them a tax relief to encourage this, then tax any earnings on those savings.

Indeed. The earnings should be allowed to roll up tax free within the pension fund, which means that there is more tax for the government when the income is taken. However, I suspect that Brown, with his redistributionist, centralist, socialist principles, had the objective of killing off the private pension industry for the middle classes and force them all to rely on the state so that he could dictate who got what and when. Despite his best efforts he didn't fully achieve the objective.

 

[Seagull58]

I think you find the people who are dipping their hands into your pension fund most of all are the pension fund managers.

Well yes, they take more than the government but I had mine with Hargreaves Lansdown and paid very low fees. Of course, yes, there are fees levied but the initial fee in most of the funds I'm invested in was zero.