Far be it from me to ever moan about an increase in my income, but. The Tories have pledged to freeze personal tax allowances until 2028. Although, hopefully they wont be there beyond this year. The current level is £12,570.
My increase takes my pension up to £236 per week. Therefore £12,272 per annum. So you can see where this is going.
A reasonable increase next year will mean a bit of tax on it. And a bit more each year unless the personal allowance is increased.
If you have additional income, then obviously more of it will become taxable, as the state pension increases.
I am obviously glad of any increase, but the freezing of tax allowances affects people on the lowest incomes the most.
The last available statistics showed that roughly 31 million adults paid income tax and 23 million did not. Let's assume that 1 million of that 23 million start paying tax as a result of the freeze on personal tax allowances.
The poorest 22 million do not include you. And they are unaffected. Not saying that is right-just that "the people on the lowest incomes" are unaffected.
In my case, I was merely making the points. My state pension is likely to be taxable from next year. I will pay more tax on my additional income. Any increases to the state pension will in future be diluted by both of the above.
You are making the points in the way that best suits you. Which everyone does. Pretty much everyone believes that everyone else needs to pay more tax. While they need to pay less. Not having a pop at you-everyone does the same.
Let's give the opposite side of the coin. For the sake of argument (and my basic maths) let's assume that your pension increases by a flat £250 a year.
So-when you say "my state pension is likely to be taxable from next year" that is correct. Because your pension would increase to £12,522. Meaning you would get a tax bill of...£4.40.
Even if your pension were to increase by £1000 by 2028, you would be paying tax at the marginal rate of 20%. But you would still only be paying tax of £200-about 1.5% of your total income.
Everyone suffers. People on benefits don't get a "triple lock"-and are facing ever more stringent checks. People in work face a far higher tax burden.
The only thing that every group has in common is that they think the increased tax burden should not fall on them.
I wasnt offering an opinion. I was merely stating facts. As I said initially, I am glad of any increase to my state pension. Although while the tax threshold remains frozen, I will pay increasing amounts of tax, both on my state pension, and my additional income. Therefore a £250 increase to my state pension would become increasingly diluted, by both the above. That is a fact. I am not pleading poverty, or being ungrateful for any increase.
But what you are saying us that you should be exempt from paying tax on your increased income.
No I am clearly not. I will repeat myself yet again. Any increases are diluted by the effects of freezing the tax allowance, and will increase the amount of tax payable on any additional income. Thats it, end of.
Just like the young don't feel they should be paying £9k + a year for an education. While living with their parents for an extra 10 years before they can afford to buy a house. Or workers shouldn't pay an ever-increasing amount of tax, routinely including both income tax and NI on any increase. Or the wealthy elderly think that £1 million is far too small an IHT exemption.
Not really relevant.
I get that you don't want to pay any income tax. Same is true for all of us. Who do you think should pay more so you can pay less?
I didnt say that I dont want to pay income tax. I do pay income tax. I will repeat myself yet again. Any increases are diluted by the effects of freezing the tax allowance, and will increase the amount of tax payable on any additional income. Thats it, end of Your earlier calculation was incorrect, as the increase also affects my additional income. My additional income will not increase. My state pension last year was around 11k. So I received 1,5k of my additional income tax free.. If my state pension reaches the tax threshold next year, then I will pay an extra £300 tax on the 1.5k. The state pension increases beyond next year will mean that I will also pay increasing amounts of tax on the state pension. This will be in addition to the £300 every year.
You do not look at taxation in the same way as the Government. Or HMRC.
The tax system usually does not differentiate between differing types of income. It tends to look at total income, and taxes accordingly. So:-
0-12,570-0% 12,571-50,270-20% 50,271+-40% Etc
Now-as you rightly say-those thresholds could go up in line with inflation. But, if they did, then the income from tax drops. So-returning to my unanswered question-
Who do you think should pay more so you can pay less?
I am merely drawing attention to one aspect of income tax. The triple lock is in place to protect pensioners from inflation. This worked when the state pension was considerably below the personal allowance. As it moves closer to, and exceeds the personal allowance it is less effective. It will also decrease the value of any additional income.
It just seems silly to put a plan like the triple lock in place, when freezing the personal allowance threshold clearly undermines it.
I will make another point which is completely different from the last one. The Tories are threatening to reduce income tax by 1% in the budget. Lets take someone on 30k per year. Lets say they have just had a 5% increase. The 1% reduction would mean they would be better off by £174. Yet the 19% of their £1,500 increase is £285.
Far be it from me to ever moan about an increase in my income, but. The Tories have pledged to freeze personal tax allowances until 2028. Although, hopefully they wont be there beyond this year. The current level is £12,570.
My increase takes my pension up to £236 per week. Therefore £12,272 per annum. So you can see where this is going.
A reasonable increase next year will mean a bit of tax on it. And a bit more each year unless the personal allowance is increased.
If you have additional income, then obviously more of it will become taxable, as the state pension increases.
I am obviously glad of any increase, but the freezing of tax allowances affects people on the lowest incomes the most.
The last available statistics showed that roughly 31 million adults paid income tax and 23 million did not. Let's assume that 1 million of that 23 million start paying tax as a result of the freeze on personal tax allowances.
The poorest 22 million do not include you. And they are unaffected. Not saying that is right-just that "the people on the lowest incomes" are unaffected.
In my case, I was merely making the points. My state pension is likely to be taxable from next year. I will pay more tax on my additional income. Any increases to the state pension will in future be diluted by both of the above.
You are making the points in the way that best suits you. Which everyone does. Pretty much everyone believes that everyone else needs to pay more tax. While they need to pay less. Not having a pop at you-everyone does the same.
Let's give the opposite side of the coin. For the sake of argument (and my basic maths) let's assume that your pension increases by a flat £250 a year.
So-when you say "my state pension is likely to be taxable from next year" that is correct. Because your pension would increase to £12,522. Meaning you would get a tax bill of...£4.40.
Even if your pension were to increase by £1000 by 2028, you would be paying tax at the marginal rate of 20%. But you would still only be paying tax of £200-about 1.5% of your total income.
Everyone suffers. People on benefits don't get a "triple lock"-and are facing ever more stringent checks. People in work face a far higher tax burden.
The only thing that every group has in common is that they think the increased tax burden should not fall on them.
I wasnt offering an opinion. I was merely stating facts. As I said initially, I am glad of any increase to my state pension. Although while the tax threshold remains frozen, I will pay increasing amounts of tax, both on my state pension, and my additional income. Therefore a £250 increase to my state pension would become increasingly diluted, by both the above. That is a fact. I am not pleading poverty, or being ungrateful for any increase.
But what you are saying us that you should be exempt from paying tax on your increased income.
Just like the young don't feel they should be paying £9k + a year for an education. While living with their parents for an extra 10 years before they can afford to buy a house. Or workers shouldn't pay an ever-increasing amount of tax, routinely including both income tax and NI on any increase. Or the wealthy elderly think that £1 million is far too small an IHT exemption.
I get that you don't want to pay any income tax. Same is true for all of us. Who do you think should pay more so you can pay less?
TUC boss and retail chief call for action on wealthy tax dodgers
Far be it from me to ever moan about an increase in my income, but. The Tories have pledged to freeze personal tax allowances until 2028. Although, hopefully they wont be there beyond this year. The current level is £12,570.
My increase takes my pension up to £236 per week. Therefore £12,272 per annum. So you can see where this is going.
A reasonable increase next year will mean a bit of tax on it. And a bit more each year unless the personal allowance is increased.
If you have additional income, then obviously more of it will become taxable, as the state pension increases.
I am obviously glad of any increase, but the freezing of tax allowances affects people on the lowest incomes the most.
The last available statistics showed that roughly 31 million adults paid income tax and 23 million did not. Let's assume that 1 million of that 23 million start paying tax as a result of the freeze on personal tax allowances.
The poorest 22 million do not include you. And they are unaffected. Not saying that is right-just that "the people on the lowest incomes" are unaffected.
In my case, I was merely making the points. My state pension is likely to be taxable from next year. I will pay more tax on my additional income. Any increases to the state pension will in future be diluted by both of the above.
You are making the points in the way that best suits you. Which everyone does. Pretty much everyone believes that everyone else needs to pay more tax. While they need to pay less. Not having a pop at you-everyone does the same.
Let's give the opposite side of the coin. For the sake of argument (and my basic maths) let's assume that your pension increases by a flat £250 a year.
So-when you say "my state pension is likely to be taxable from next year" that is correct. Because your pension would increase to £12,522. Meaning you would get a tax bill of...£4.40.
Even if your pension were to increase by £1000 by 2028, you would be paying tax at the marginal rate of 20%. But you would still only be paying tax of £200-about 1.5% of your total income.
Everyone suffers. People on benefits don't get a "triple lock"-and are facing ever more stringent checks. People in work face a far higher tax burden.
The only thing that every group has in common is that they think the increased tax burden should not fall on them.
I wasnt offering an opinion. I was merely stating facts. As I said initially, I am glad of any increase to my state pension. Although while the tax threshold remains frozen, I will pay increasing amounts of tax, both on my state pension, and my additional income. Therefore a £250 increase to my state pension would become increasingly diluted, by both the above. That is a fact. I am not pleading poverty, or being ungrateful for any increase.
But what you are saying us that you should be exempt from paying tax on your increased income.
Just like the young don't feel they should be paying £9k + a year for an education. While living with their parents for an extra 10 years before they can afford to buy a house. Or workers shouldn't pay an ever-increasing amount of tax, routinely including both income tax and NI on any increase. Or the wealthy elderly think that £1 million is far too small an IHT exemption.
I get that you don't want to pay any income tax. Same is true for all of us. Who do you think should pay more so you can pay less?
TUC boss and retail chief call for action on wealthy tax dodgers
Millions of pensioners stung by income tax as ‘perverse’ state pension situation looms
Jon Greer, head of retirement policy at Quilter, warned: “There will no doubt be a considerable number of pensioners who have additional retirement income dragged into paying tax.
“What’s more, the reality is that we are soon set to be in the perverse situation where pensioners might have to start paying back their state pension to HMRC because of frozen allowances.”
He added: “Given that state pensions will shortly eradicate someone’s personal allowance, any private pension provision other than the tax-free cash lump sum will therefore become taxable at their highest marginal rate.
“For many that could mean big tax bills depending on how much they draw down.
“Pensioners are often worst hit by frozen tax allowances because they typically will be getting their income from a number of different investments and therefore lean heavily on CGT and dividend allowances to help create a retirement income in addition to their pension.
Miles better off than the generation above them. Miles better off than the generation below them.
Paid in less. Received more. Never paid their fair share. Before retirement or after retirement.
Yet still moan.
I am not sure how much of that is correct. The only comparison I have is my Father. He lived comfortably his whole life. He had a really good pension, and retired in his mid fifties. I havent a clue how much his state pension was, but he would have been comfortable without it. Although he wouldnt have ever paid tax on it. He bought his first house when I was two. He paid £2,250 for it, and his mortgage ended up at £20 per month. I have paid substantially more income tax, and NI contributions, over my lifetime than he ever did.
I am fairly happy with both my own pension arrangements, and the state pension. I wish I was aware that I could have topped up my wifes NI stamps earlier, but I am not blaming anyone else for that.
I was merely making the point earlier that I donrt see the point in money being given out with one hand and taken back with the other. That is exactly what freezing personal allowances does.
I assume that when you refer to "todays pensioners" you are referring to those in their sixties, rather than those in their eighties, and nineties? The article below disputes your assumptions.
Millennials set to become ‘richest generation in history’ – but only when their parents die
Baby boomers are often said to be the luckiest generation financially — but millennials will be better off than their parents in retirement, survey finds
Miles better off than the generation above them. Miles better off than the generation below them.
Paid in less. Received more. Never paid their fair share. Before retirement or after retirement.
Yet still moan.
So double the number of over 65s are now paying income tax, compared to when the Tories came into power. This has been caused by the continuing freeze on personal allowances. A proposed further cut to NI will be of no benefit to pensioners.
Miles better off than the generation above them. Miles better off than the generation below them.
Paid in less. Received more. Never paid their fair share. Before retirement or after retirement.
Yet still moan.
So double the number of over 65s are now paying income tax, compared to when the Tories came into power. This has been caused by the continuing freeze on personal allowances. A proposed further cut to NI will be of no benefit to pensioners.
Incidentally, this is apparently a fact, rather than a moan.
Miles better off than the generation above them. Miles better off than the generation below them.
Paid in less. Received more. Never paid their fair share. Before retirement or after retirement.
Yet still moan.
This got me thinking about my own family. The only bit that is true is "received more". I suppose that as the state pension will rise over time, then each generation will receive more than the previous one.
"Double the amount of pensioners paying tax"? Twice as many pensioners receiving sufficient income to pay.
"Millenials will be better off in retirement". Only if the generation above them is successful in passing on its vast, unprecedented, collective wealth. Main problem being the 100% tax rate applied to people in Care Homes
"Cut in NI will not help pensioners". Only because retired pensioners, unlike everyone else, don't pay NI to start with. Do you want to pay less than 0%?
Your thread title sums it up. Why is it "perverse" that part of a pensioner's income is treated the same for tax purposes as people who are working? That, for example, people who no longer have a Mortgage or Dependant kids gets to keep more of their money than a 30-year-old with 2 kids and a Mortgage? On Income Tax on top of NI? With a £1 million IHT tax break?
Finally, the "grey vote". It always comes back to the grey vote. Which always seems to revolve solely around what is best for Pensioners.
Look at the state this country is in. I'm not a great fan of the USA, but 1 thing I have always liked is the "American Dream". The part that says we should be better off than our Parents were, and that our Kids should be better off than we are.
I look at the World my kids are in, and I see a World that is considerably less attractive. Unable to buy houses for, on average, an extra Decade. Less attractive Pensions. Far less secure jobs. Waiting for their Parents to die, and preferably not contracting life limiting conditions that necessitate Care Homes, so they can have wealth.
I'm 61. Do I care that, say, a 71 year old gets more tax breaks than me? No.
I do care that today's pensioners are being subsidised by today's workers. Who are, on average, considerably less well off than you or me.
Comments
The triple lock is in place to protect pensioners from inflation.
This worked when the state pension was considerably below the personal allowance.
As it moves closer to, and exceeds the personal allowance it is less effective.
It will also decrease the value of any additional income.
It just seems silly to put a plan like the triple lock in place, when freezing the personal allowance threshold clearly undermines it.
The Tories are threatening to reduce income tax by 1% in the budget.
Lets take someone on 30k per year.
Lets say they have just had a 5% increase.
The 1% reduction would mean they would be better off by £174.
Yet the 19% of their £1,500 increase is £285.
https://uk.yahoo.com/news/tuc-boss-retail-chief-call-060018526.html
https://www.msn.com/en-gb/money/other/tory-mps-beg-jeremy-hunt-to-abandon-tax-cuts-that-will-only-help-the-rich/ar-BB1iSoB2?ocid=msedgntp&pc=NMTS&cvid=2b9f5e2c18ac4a28bbfd419c337d0a85&ei=83
https://www.msn.com/en-gb/money/other/a-state-pension-age-hike-to-71-could-leave-millions-of-britons-with-only-one-source-of-income/ar-BB1iUhAQ?ocid=msedgntp&pc=NMTS&cvid=1b821121cad74ca5a3a830b4922c738f&ei=120
https://www.msn.com/en-gb/money/other/pension-age-rise-is-71-the-new-65/ar-BB1j1Xp9?ocid=msedgntp&pc=NMTS&cvid=a6c60312e0274e5f8ae4874029694980&ei=123
https://www.msn.com/en-gb/money/other/tidal-wave-of-pensioner-poverty-with-almost-half-of-over-50s-terrified-of-retiring/ar-BB1j4uf6?ocid=msedgntp&pc=NMTS&cvid=a6c60312e0274e5f8ae4874029694980&ei=143
https://www.msn.com/en-gb/money/other/state-pension-option-can-hike-income-by-665-a-year-but-a-quarter-don-t-know-it-s-there/ar-BB1j5j89?ocid=msedgntp&pc=NMTS&cvid=b41866fbc8894a31b374466eab4f3fdb&ei=12
Jon Greer, head of retirement policy at Quilter, warned: “There will no doubt be a considerable number of pensioners who have additional retirement income dragged into paying tax.
“What’s more, the reality is that we are soon set to be in the perverse situation where pensioners might have to start paying back their state pension to HMRC because of frozen allowances.”
He added: “Given that state pensions will shortly eradicate someone’s personal allowance, any private pension provision other than the tax-free cash lump sum will therefore become taxable at their highest marginal rate.
“For many that could mean big tax bills depending on how much they draw down.
“Pensioners are often worst hit by frozen tax allowances because they typically will be getting their income from a number of different investments and therefore lean heavily on CGT and dividend allowances to help create a retirement income in addition to their pension.
https://www.msn.com/en-gb/money/other/millions-of-pensioners-stung-by-income-tax-as-perverse-state-pension-situation-looms/ar-BB1j6YXu?ocid=msedgntp&pc=NMTS&cvid=42f0ae4f616b4d37b60e703ff0048ce5&ei=85
Miles better off than the generation above them.
Miles better off than the generation below them.
Paid in less. Received more. Never paid their fair share. Before retirement or after retirement.
Yet still moan.
The only comparison I have is my Father.
He lived comfortably his whole life.
He had a really good pension, and retired in his mid fifties.
I havent a clue how much his state pension was, but he would have been comfortable without it.
Although he wouldnt have ever paid tax on it.
He bought his first house when I was two.
He paid £2,250 for it, and his mortgage ended up at £20 per month.
I have paid substantially more income tax, and NI contributions, over my lifetime than he ever did.
I am fairly happy with both my own pension arrangements, and the state pension.
I wish I was aware that I could have topped up my wifes NI stamps earlier, but I am not blaming anyone else for that.
I was merely making the point earlier that I donrt see the point in money being given out with one hand and taken back with the other.
That is exactly what freezing personal allowances does.
I assume that when you refer to "todays pensioners" you are referring to those in their sixties, rather than those in their eighties, and nineties?
The article below disputes your assumptions.
Millennials set to become ‘richest generation in history’ – but only when their parents die
https://uk.style.yahoo.com/millennials-set-become-richest-generation-172923394.html#:~:text=Millennials will become the richest generation in history,their parents have died, according to a study.
https://finance.yahoo.com/news/baby-boomers-often-said-luckiest-203628347.html
This has been caused by the continuing freeze on personal allowances.
A proposed further cut to NI will be of no benefit to pensioners.
The only bit that is true is "received more".
I suppose that as the state pension will rise over time, then each generation will receive more than the previous one.
https://www.msn.com/en-gb/money/other/dwp-state-pension-payments-to-hit-13-200-a-year-but-triple-lock-under-fire/ar-BB1jjNTO?ocid=msedgntp&pc=NMTS&cvid=14782b668ae44314a338e804ab979f4e&ei=11
"Double the amount of pensioners paying tax"? Twice as many pensioners receiving sufficient income to pay.
"Millenials will be better off in retirement". Only if the generation above them is successful in passing on its vast, unprecedented, collective wealth. Main problem being the 100% tax rate applied to people in Care Homes
"Cut in NI will not help pensioners". Only because retired pensioners, unlike everyone else, don't pay NI to start with. Do you want to pay less than 0%?
Your thread title sums it up. Why is it "perverse" that part of a pensioner's income is treated the same for tax purposes as people who are working? That, for example, people who no longer have a Mortgage or Dependant kids gets to keep more of their money than a 30-year-old with 2 kids and a Mortgage? On Income Tax on top of NI? With a £1 million IHT tax break?
Finally, the "grey vote". It always comes back to the grey vote. Which always seems to revolve solely around what is best for Pensioners.
Look at the state this country is in. I'm not a great fan of the USA, but 1 thing I have always liked is the "American Dream". The part that says we should be better off than our Parents were, and that our Kids should be better off than we are.
I look at the World my kids are in, and I see a World that is considerably less attractive. Unable to buy houses for, on average, an extra Decade. Less attractive Pensions. Far less secure jobs. Waiting for their Parents to die, and preferably not contracting life limiting conditions that necessitate Care Homes, so they can have wealth.
I'm 61. Do I care that, say, a 71 year old gets more tax breaks than me? No.
I do care that today's pensioners are being subsidised by today's workers. Who are, on average, considerably less well off than you or me.
The Bank of Mum & Dad becomes the bank of Nan & Grandad....... cough!