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Pension tax relief "costs" £40bn
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https://www.theguardian.com/business/2019/oct/10/pensions-tax-relief-set-to-cost-government-almost-40bn

This is a lie. You get tax relief when you pay into a pension and pay tax when you take it out, so you are leveling out the tax over a lifetime, but greedy gov.uk don't want to account for all the tax they raise from pensions, especially those cashing in pension pots and paying 40% or even 45% tax.

Anyway if they do limit or stop the tax relief I will stop working and they won't get any tax at all. Well, except VAT and alcohol duty. Hard to avoid that.



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Loudmouth

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Ongoing, aged debate. Majority of people who get 40% relief in accumulation only pay 20% on decumulation particularly if they have a good financial adviser. Govt have been limiting the tax relief for years. The annual allowance was cut from £255k to £50k in 2010 and has been cut further since. The feeling, particularly amongst the left liberals is that it is perverse to give the most tax incentive to those who need it least. However, the counter argument is that people earning six figure salaries put a hell of a lot of tax into the system in the first place. And if Jezza sweeps into power with ex-lover Abbott, it will only get worse for them. If the Tories retain power (!) I can see them creating a flat 25% relief across the board, maybe 30% max. Govt will need to make savings to pay for Boris's 20000 extra Police! Perhaps the absurd Abbott if she gets in will help everyone out because she is only paying them £3000 a year!! 

 



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Mark L wrote:

Majority of people who get 40% relief in accumulation only pay 20% on decumulation  


Many people only get 40% plus tax relief for a short period of their working lives and pay 20% tax for the whole of their retirement on pretty much every thing if they retire at state pension age as the state pension takes most of the personal allowance. And as the investment has grown (hopefully) the tax paid on the way out is cumulatively more than the relief on the way in.  

 



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Loudmouth

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Life can be unfair. Some hard working people die before they draw anything, state or private pension, having paid in a fortune. Some wasters pay nothing in and draw from the state all their very long lives. And all shades in between are possible. If we all knew when we were going to die, we could plan a lot better but there's the rub. Nobody knows and few want to know. 

Some people died and some people were born. Some stayed the same and some went insane. Especially after June 23rd 2016 biggrin

 



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Mark L wrote:

The feeling, particularly amongst the left liberals is that it is perverse to give the most tax incentive to those who need it least. However, the counter argument is that people earning six figure salaries put a hell of a lot of tax into the system in the first place. And if Jezza sweeps into power with ex-lover Abbott, it will only get worse for them. If the Tories retain power (!) I can see them creating a flat 25% relief across the board, maybe 30% max. Govt will need to make savings to pay for Boris's 20000 extra Police! Perhaps the absurd Abbott if she gets in will help everyone out because she is only paying them £3000 a year!!  


If you earn over £110,000 in all likelihood the amount you can contribute will be tapered down. Earn over £210k and you can only put in £10k/annum. So those earning six figure salaries dont get much tax relief.  The sweet spot is between £50k and £100k, good 5 figure salaries, where you can put in up to £40k/annum. For many that is just for a few years at the peak of their earning power.

Quite complex to introduce a flat relief as is the case with the current adjusted/threshold incomes for annual allowances. Currently few people know if they have to pay tax on their pension contributions and it is only a minority impacted. If everyone is impacted it will be chaos.  The adjusted/threshold incomes is making doctors refuse paid overtime as they pay an effective tax rate of over 100%.

If Jezza gets in I am heading to Portugal sooner than planned.

 



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Mark L wrote:

 Some hard working people die before they draw anything, state or private pension, having paid in a fortune.  


 With a private pension, your family can get it all. Tax free if you die before 75.



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Loudmouth

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I'd go to the Canaries, Portugal not reliable enough in the winter.  Yes, higher earners pay the most amount of tax anyway so this is the reason why they get the higher relief, but higher earners (£110k or more) can put less in their pensions than basic rate tax payers!

I know someone who worked uninterrupted from 15 to 65, three days into retirement heart attack. He struggled on for two weeks and then died but was copus mentis enough in that fortnight to express how unfair it all was. I didn't know him well enough to know how effective his inheritance tax planning had been, but no retirement with his family and watching his grandchildren growing up was the biggest unfairness. 



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Mark L wrote:

I'd go to the Canaries, Portugal not reliable enough in the winter.  


Maybe but Portugal is a tax haven for 10 years if you are a non habitual resident.  I could go to Madeira as an alternative, but not sure that Living in an Island would suit me (ho ho).

Anyway, my plans for the winter are to head to Andorra or Sierra Nevada.  Feck all skiing in Madeira.



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Mark L wrote:

I know someone who worked uninterrupted from 15 to 65, three days into retirement heart attack. He struggled on for two weeks and then died but was copus mentis enough in that fortnight to express how unfair it all was. I didn't know him well enough to know how effective his inheritance tax planning had been, but no retirement with his family and watching his grandchildren growing up was the biggest unfairness. 


Which is why I am planning to retire in my fifties.  Only reason I get up at the moment is my wife and daughter do to get to work and school, but in less than 3 years time, that will be done and I will be heading down under to Kiwi land for a long vacation.  Health permitting.



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Loudmouth

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Definitely some fiscal advantages to the Canaries, plus better climate. Retiring in 50s? I'm on it!

As you say, health permitting. You never know what's around the corner, apart from more corners. 



-- Edited by Mark L on Friday 11th of October 2019 10:23:26 AM

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Mark L wrote:

Retiring in 50s? I'm on it!


 So you have already retired? Kudos to you. 



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Loudmouth

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ArrGee wrote:
Mark L wrote:

Retiring in 50s? I'm on it!


 So you have already retired? Kudos to you. 


 Working still, and should be for the next Olympics but not the next World Cup.

However, if Abbott and Corstellobyn sweep in with Venezuelan type visions, who knows where we'll all be? 



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2Mark L wrote:
ArrGee wrote:
Mark L wrote:

Retiring in 50s? I'm on it!


 So you have already retired? Kudos to you. 


 Working still, and should be for the next Olympics but not the next World Cup.


 Ditto.  Unless I get redundancy in the interim. In which case I will retire instantly.



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Loudmouth

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ArrGee wrote:
2Mark L wrote:
ArrGee wrote:
Mark L wrote:

Retiring in 50s? I'm on it!


 So you have already retired? Kudos to you. 


 Working still, and should be for the next Olympics but not the next World Cup.


 Ditto.  Unless I get redundancy in the interim. In which case I will retire instantly.


 100% same. Unfortunately, a recent round of redundancies did not include my area, but nearly did. It would be a bonus, but I am budgeting for no redundancy. Its not the money spinner it once was, with the 3 weeks pay for every year worked cut back to 1.5 weeks. I have 34 years continuous service with my employers. 



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Mark L wrote:

 100% same. Unfortunately, a recent round of redundancies did not include my area, but nearly did. It would be a bonus, but I am budgeting for no redundancy. Its not the money spinner it once was, with the 3 weeks pay for every year worked cut back to 1.5 weeks. I have 34 years continuous service with my employers. 


A good few got put at risk of redundancy at my place in July. They have got the full monty with 3 months consultation then 3 months gardening leave followed by 4 weeks for every year up to £100k maximum.  They will all be gone by end of month.  I am far too important to get rid of



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Loudmouth

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1.5 week's pay for each full year of service where your age is 41 or above is the legal minimum anyway, so no great shakes from my employer there. 

In practice, many employers will opt to pay more. Some will pay two weeks per year with the more generous considering three weeks and so four weeks is absolutely fantastic.

If you want it and if you are considered for it, that is. 

The glory days are long gone. In the late 80s it was so alluring that for many the elusive "golden handshake" was like winning the Lottery: the chance to change your life, pay off the mortgage, see more of the kids, start a little business from home, get out of the rat race. Indeed, one of the best ways to get rich as an executive still is to be sacked several times from senior positions. With the right pay- offs, that has set several people up for life with farms in the country, houses abroad and no real need to carry on working. The rewards for failure have become so lucrative that many over-stressed residents of rungs further down the corporate ladder hope for a chance to pick up a lump sum and sail off into the sunset. To Portugal or the Canaries, for instance. 



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