Austerity! "i'd Pay More Tax If I Could"

[Orraloon]

Aside from from paying more into their pension I'm struggling...or donating money to charity with Gift Aid...

Aye, that's the easiest way to do it. Bang the extra into your pension pot and retire early if you can.

[Charlie Endell]

Aye, that's the easiest way to do it. Bang the extra into your pension pot and retire early if you can.

My employer allows you to pay your annual bonus (if you've been a good boy / girl and are getting one) into your pension - tax wise it's the sensible thing to do but I've alway pressed the 'collect' button - no guarantee I'll be around to pick up a pension.

[FuNsTeR]

Some would say that Labour don't have a few hundred Scottish members. Feel free to poke fun at people worried about their jobs, it's not something I would ever do.

maybe Labour should have thought about that during the referendum when they were claiming the Yes campaign were lying about cuts to future budgets if we remained in the UK .... they got what they wanted and this is the reality of the situation and to top it up they abstained from the austerity vote in Westminster

[Mee]

Aye, that's the easiest way to do it. Bang the extra into your pension pot and retire early if you can.

I expect higher rate tax relief to be removed in the next budget.

Even as a lower rate tax payer you could put all your wages into your pension until you get down to your tax free allowance.

[Orraloon]

My employer allows you to pay your annual bonus (if you've been a good boy / girl and are getting one) into your pension - tax wise it's the sensible thing to do but I've alway pressed the 'collect' button - no guarantee I'll be around to pick up a pension.

That's maybe not the daftest idea. A lot of folk think that pensions are fairly secure investments but they are actually pretty risky. Not that the funds themselves take big risks (they are not really allowed to). It's more that you are effectively gambling on how long you think you are going to live. If you think you are going to live to a ripe old age and/or you want to retire early then getting as much money into your pension as early as possible is a good idea. But if you plan to work until you are 70 or think that you might not even last that long then you might as well spend it all as soon as you get it.

[Orraloon]

Even as a lower rate tax payer you could put all your wages into your pension until you get down to your tax free allowance.

Aye, but it's a lot easier to get by on 42K than it is to try and survive on 10K.

[Charlie Endell]

That's maybe not the daftest idea. A lot of folk think that pensions are fairly secure investments but they are actually pretty risky. Not that the funds themselves take big risks (they are not really allowed to). It's more that you are effectively gambling on how long you think you are going to live. If you think you are going to live to a ripe old age and/or you want to retire early then getting as much money into your pension as early as possible is a good idea. But if you plan to work until you are 70 or think that you might not even last that long then you might as well spend it all as soon as you get it.

Aye - you could stick your bonus (tax free) into your pension and then the markets take a plunge - however, long term it should recover.

[Orraloon]

I expect higher rate tax relief to be removed in the next budget.

What makes you think that?

[Mee]

What makes you think that?

https://next.ft.com/content/abcb2a4e-bb81-11e5-b151-8e15c9a029fb

Pension tax perks for higher earners are set to be abolished

George Osborne to pitch an overhaul of retirement payments towards the Labour heartlands

http://www.thisismoney.co.uk/money/pensions/article-3404980/Flat-rate-pension-tax-relief-ditch-100-year-old-link-earnings.html

Will your potential retirement pot plummet by tens of thousands? What you need to know about 'flat rate' pension tax relief

If you have a look at my post earlier in the thread you will see that low earners get a considerable number of top ups that mean there is not as big a difference between earning 10k and 50k as you would think.

Also worth looking at the laffer curve

https://en.m.wikipedia.org/wiki/Laffer_curve

[Orraloon]

https://next.ft.com/content/abcb2a4e-bb81-11e5-b151-8e15c9a029fb

Pension tax perks for higher earners are set to be abolished

George Osborne to pitch an overhaul of retirement payments towards the Labour heartlands

http://www.thisismoney.co.uk/money/pensions/article-3404980/Flat-rate-pension-tax-relief-ditch-100-year-old-link-earnings.html

Will your potential retirement pot plummet by tens of thousands? What you need to know about 'flat rate' pension tax relief

If you have a look at my post earlier in the thread you will see that low earners get a considerable number of top ups that mean there is not as big a difference between earning 10k and 50k as you would think.

Also worth looking at the laffer curve

https://en.m.wikipedia.org/wiki/Laffer_curve

Sounds like big changes ahead.

It might be worth higher rate tax payers getting as much into their pension now, and for those the on lower rate to wait until after the budget. But it's all a bit of a gamble on what you think Gideon will do.

[McExpat]

VAT is ultimately paid by the individual customer, which is in the vast majority of cases a person rather than a company. The VAT registered companies in the supply chain simply collect the VAT from the customer and pass it to HMRC, after offsetting the VAT that they have paid.

You sound like the vat man!

That's the theory of the matter but the reality of it is very different and the government know it all too well, were that not the case the temp vat cut ' to kick start the economy' wouldn't have seen the light of day.

Vat affects pricing, which in turn affects sales and profits, All of which directly affects business's, particularly service business's which often have little vat to claim back.

Edited February 4, 2016 by McExpat

[Pool Q]

Tax relief on pensions is due to be changed soon. My IFA reckons it will be a flat rate of about 25%. She is usually pretty good on that sort of thing.

[Mee]

Negative interest rates would be a laugh too, economy is totally wrecked

[Scunnered]

maybe Labour should have thought about that during the referendum when they were claiming the Yes campaign were lying about cuts to future budgets if we remained in the UK .... they got what they wanted and this is the reality of the situation and to top it up they abstained from the austerity vote in Westminster

The reality of the situation is that if you want to fight austerity then you have to do it in on two fronts, you can whine and cry about how that situation came about or you can do something about it. We are in the unfortunate situation where we have two governments who are unashamedly pro austerity, excusing one while condemning the other is the height of hypocrisy.

[Orraloon]

The reality of the situation is that if you want to fight austerity then you have to do it in on two fronts, you can whine and cry about how that situation came about or you can do something about it. We are in the unfortunate situation where we have two governments who are unashamedly pro austerity, excusing one while condemning the other is the height of hypocrisy.

Which 2 fronts are they?

[Orraloon]

Tax relief on pensions is due to be changed soon. My IFA reckons it will be a flat rate of about 25%. She is usually pretty good on that sort of thing.

IMO the government should be doing more to encourage folk to put money into their pensions. It will be interesting to see what effect that change has. In theory it should help to encourage lower rate tax payers to save more (if they have the spare cash in the first place) but it will discourage the higher rate tax payers. Gideon probably doesn't care either way. Lack of pension provision is a massive problem for 20/30 years down the line and won't affect him in the slightest.

All he will be caring about is a bit (a fairly big bit, maybe) of extra revenue, but it's not like him to take it off higher earners. I guess loads of folk will be looking for the loop holes which will be there for those who can afford them.

[Pool Q]

I think the theory is that the flat rate had to be sufficiently high to still be worthwhile to higher rate tax payers, if not as attractive as it is now. Certainly should be attractive to those on the basic rate (who have any spare cash) where future problems are likely to be the most acute.

Edited February 4, 2016 by Pool Q

[Orraloon]

I think the theory is that the flat rate had to be sufficiently high to still be worthwhile to higher rate tax payers, if not as attractive as it is now. Certainly should be attractive to those on the basic rate (who have any spare cash) where future problems are likely to be the most acute.

On the face of it, it seems to be a good idea. It's just not like Gideon to take money from rich folk. There must be a catch somewhere?

[Alan]

Common Weal says the tax plan is progressive. "Progressive" is a term used often by politicians.

https://www.commonspace.scot/articles/3389/common-weal-labour-1p-income-tax-increase-would-be-progressive

[Scunnered]

Common Weal says the tax plan is progressive. "Progressive" is a term used often by politicians.

https://www.commonspace.scot/articles/3389/common-weal-labour-1p-income-tax-increase-would-be-progressive

The first comment on the article shows the level of misinformation that is in circulation regarding this. That chap pops up feckin' everywhere as well and there will be people who take his word without bothering to check.

[Orraloon]

The first comment on the article shows the level of misinformation that is in circulation regarding this. That chap pops up feckin' everywhere as well and there will be people who take his word without bothering to check.

This one?

" I don't see anything about the impact on the block grant of increasing income tax."

I think it's a perfectly valid question.

[Alan]

Block Grant not impacted.

[Scunnered]

This one?

" I don't see anything about the impact on the block grant of increasing income tax."

I think it's a perfectly valid question.

It's set out in black and white on the Scottish Government website, the block grant would not be affected by income tax raises. I don't doubt for a second that Mr Bell knows this and is merely playing on ignorance.

[Orraloon]

It's set out in black and white on the Scottish Government website, the block grant would not be affected by income tax raises. I don't doubt for a second that Mr Bell knows this and is merely playing on ignorance.

IMO there hasn't been nearly enough discussion on how these "new powers" will affect the block grant. How is the adjustment calculated? If you are an expert on the "Holtham index reduction method" perhaps you could explain to us why you are so confident that the block grant won't be affected.

"Professor Holtham himself commented that the Holtham model "might not be in Scotland's interests if the Scottish tax base grows more slowly than the rest of the UK""

Increasing the income tax rate in Scotland would lead to at least some folk moving their tax base south of the border. This would undoubtedly have the impact of reducing Scotland's tax base relative to the rest of the UK. The size of that effect would be very difficult to predict but it certainly isn't zero impact.

[Scunnered]

IMO there hasn't been nearly enough discussion on how these "new powers" will affect the block grant. How is the adjustment calculated? If you are an expert on the "Holtham index reduction method" perhaps you could explain to us why you are so confident that the block grant won't be affected.

"Professor Holtham himself commented that the Holtham model "might not be in Scotland's interests if the Scottish tax base grows more slowly than the rest of the UK""

Increasing the income tax rate in Scotland would lead to at least some folk moving their tax base south of the border. This would undoubtedly have the impact of reducing Scotland's tax base relative to the rest of the UK. The size of that effect would be very difficult to predict but it certainly isn't zero impact.

You don't have to be an expert in anything... It's perfectly understandable. The block grant was reduced to allow for the SG to raise income tax... Setting the income tax at UK level would raise receipts equal to that of the block grant decrease... Anything above this collected will be added to the block grant. There was loads of discussion on it... Hunners! I know this because I joined in, there was even a local public consultation... They served Marks and Spencer's cakes. The results were published in a Memorandum of understanding which is available on the Scottish government website.

Tax receipts from Srit will NOT affect the block grant.