Pension stuff, how's it all looking ? HAve you prepared ?

[Potter]

I had a dig into the doc. Yeah, it'll probably end up like the PEP. They clearly want to include stuff like companies on AIMs but are steering clear of where the majority of a company trade is, which makes sense.

Watch this space I guess.

Having looked at it a bit more it looks like a pretty poor token effort, the limit is peanuts and the gains will be the price of a cup of coffee a day at Pret.
I doubt I'll be bothering.

They should have raised the ISA limit across the board and had done with it.
Or at least something inventive, where the limit is scaled based on age and any tax advantage is scaled depending on how long you leave it there.

E.g. if you're over fifty-five your limit per year is a hundred grand and gains are non-taxable, giving older people somewhere to put their money to help them provision for the near future. Whereas a twenty-five year old could have a limit of twenty-five grand with no tax to pay as long as they don't withdraw the capital for ten years, or something.
I haven't really thought the above out properly, but if you're twenty-five you need quite a different plan and benefits than if you're fifty-five or sixty where you might not be able to put your money in and wait it out for a couple of decades.

[JackyJoll]

They should have raised the ISA limit across the board and had done with it..

Failure to raise ISA limits during or after a period of inflation looks like another example of a tax rise through fiscal drag.

[Potter]

They should have raised the ISA limit across the board and had done with it..

Failure to raise ISA limits during or after a period of inflation looks like another example of a tax rise through fiscal drag.

Not to mention the income tax threshold when wages are skyrocketing.

[weeksy]

They should have raised the ISA limit across the board and had done with it..

Failure to raise ISA limits during or after a period of inflation looks like another example of a tax rise through fiscal drag.

Not to mention the income tax threshold when wages are skyrocketing.

That's a decent point. When were they last changed for Tax rates? I recall when my salary went just over the 40% threshold and it freaked me out

[Count Steer]

I had a dig into the doc. Yeah, it'll probably end up like the PEP. They clearly want to include stuff like companies on AIMs but are steering clear of where the majority of a company trade is, which makes sense.

Watch this space I guess.

Having looked at it a bit more it looks like a pretty poor token effort, the limit is peanuts and the gains will be the price of a cup of coffee a day at Pret.
I doubt I'll be bothering.

They should have raised the ISA limit across the board and had done with it.
Or at least something inventive, where the limit is scaled based on age and any tax advantage is scaled depending on how long you leave it there.

I think the potential benefits we look for in these things is sort of secondary to the intention. When PEPS were introduced the motivation was to expand share ownership...the 'share owning democracy' thing and that fitted in with the sale of shares in British Gas, Rolls Royce etc etc. The tax status was the carrot.

TESSAs/ISAs were more about encouraging people to save generally. I guess they saw the pension problems coming down the track.

The driver behind the British ISA appears to be a fear that the UK stock market is losing ground as it gets easier to invest elsewhere and to address the lack of investment in productivity in the UK. In which case it's a sticking plaster/token gesture as the problem is structural.

As an aside it always struck me as a bit that you work/earn, pay your taxes and, from what you save, you stash it for a rainy day....and pay more tax on the benefits. At least with pensions you get relief on what you put in even if you pay tax on what you get out.

[Potter]

That's a decent point. When were they last changed for Tax rates? I recall when my salary went just over the 40% threshold and it freaked me out

They have changed but IIRC over the last ten years the threshold has gone up a couple of grand, whereas I bet even with just inflation rises you're probably earning a lot more than a couple of grand more? I'm ok with the higher levels of personal allowance, but I'd like to see the basic rate of personal allowance upwards of £15k to raise the levels of the people on the lowest wages.

IIRC though tax rates in the 80's were something crazy like 30% for the bottom rate?

[Count Steer]

Failure to raise ISA limits during or after a period of inflation looks like another example of a tax rise through fiscal drag.

Not to mention the income tax threshold when wages are skyrocketing.

That's a decent point. When were they last changed for Tax rates? I recall when my salary went just over the 40% threshold and it freaked me out

It's why they say the NI decrease is swamped by the extra tax take from pushing people through the fixed thresholds. I read something along the lines of people on minimum wage would pay something like 47% less tax if the thresholds hadn't been frozen. (I'll have a rummage, but the frozen thresholds was an 'austerity' measure and it's become a real disincentive. It's one if the main reasons our total taxation is so high. Highest since 1940-something.

Address that and they might actually get the economy moving, people into work etc etc etc.

[Potter]

In which case it's a sticking plaster/token gesture as the problem is structural.

Yeah that's my point, who will bother.
Make it £100k tax-free and I might risk some money.

And there is no way the poorest people will have a punt because they can't afford to lose the money, they'll put it in a regular saver and unless rates go to 10%+ then they won't pay tax anyway.

[Mr. Dazzle]

As an aside it always struck me as a bit that you work/earn, pay your taxes and, from what you save, you stash it for a rainy day....and pay more tax on the benefits. At least with pensions you get relief on what you put in even if you pay tax on what you get out.

That's the point of Premium Bonds and latterly ISAs though right? Make it so "ordinary people" can save a chunk without being 'double taxed' but put a limit on how much you can save so it's not just a total tax dodge for millionaires. The general idea makes a lot of sense.

When they started 20k was a much bigger chunk than it is now. 20k seems the arbitrary figure for what constitutes a pretty big annual sum for said "ordinary person" to save, for the most part that's true.

This is why I save in both a SIPP and Stocks/Shares ISAs. I put more in the SIPP to be fair 'cause I get tax relief now, but now I've got a decent chunk of my salary going into a SIPP I'm putting future pay rises into an ISA. I pay tax on the ISA money now, but I won't (hopefully ) have to pay tax on that money in 20 years time - unlike the SIPP money. Main reason I do it though is to hedge my bets, 'cause almost certainly pension and ISA rules will change (more than once) in the next ~25 years.

[Potter]

As an aside it always struck me as a bit that you work/earn, pay your taxes and, from what you save, you stash it for a rainy day....and pay more tax on the benefits. At least with pensions you get relief on what you put in even if you pay tax on what you get out.

That's the point of Premium Bonds and latterly ISAs though right? Make it so "ordinary people" can save a chunk without being 'double taxed' but put a limit on how much you can save so it's not just a tax dodge. The general idea makes a lot of sense.

When they started 20k was a much bigger chunk than it is now. 20k seems the arbitrary figure for what constitutes a pretty big annual sum for said "ordinary person" to save, for the most part that's true.

But £20k a year now isn't going to build enough of a pot if you've reached fifty-odd. Most people can't save anywhere near that until the kids have left home and you're in a position to actually save some proper money, hence why I reckon they should raise the limits dependent on age.

I had no chance of getting near that limit in my thirties and even early forties and I was doing well, so it's of very limited use for your average working person. But once your kids are self dependent and (hopefully) one's career has improved, it would be very helpful to have a tax-free place to build a pot without the restrictions of a traditional pension.

Or create a window, between fifty and sixty-seven you can save whatever you want and pay no tax on the gains.

[Mr. Dazzle]

Or maybe they could make your ISA allowance - or some portion of it - cumulative, rather than reset every year?

[Count Steer]

As an aside it always struck me as a bit that you work/earn, pay your taxes and, from what you save, you stash it for a rainy day....and pay more tax on the benefits. At least with pensions you get relief on what you put in even if you pay tax on what you get out.

That's the point of Premium Bonds and latterly ISAs though right? Make it so "ordinary people" can save a chunk without being 'double taxed' but put a limit on how much you can save so it's not just a total tax dodge for millionaires. The general idea makes a lot of sense.

Oh, absolutely it shouldn't be a tax dodge for stashing £millions. I'm thinking more of the situation like:

State pension is paid sans tax and deducted from your tax allowance so after deducting your £11760 pension from your Personal Allowance you get a tax code of...81 ie you can have another £810 income before the tax man cometh. Fair enough if you're drawing another pension that you got tax relief on the money going in, but otherwise people dependant on share dividends/savings can get £1000 tax free and/or are dependent on wheezes like ISAs to get to the equivalent of a living wage before getting hit for tax. It just seems all wrong to me.

[Mr. Dazzle]

Can't have it every which way though, gotta give them that pound of flesh Either now, or later. But not typically both if you plan vaguely sensibly.

That's the key really, which I probably mentioned on page 1! Think well ahead and do stuff now.

[Count Steer]

Can't have it every which way though, gotta give them that pound of flesh Either now, or later. But not typically both if you plan vaguely sensibly.

That's the key really, which I probably mentioned on page 1! Think well ahead and do stuff now.

That's fine for some of us that did/had the opportunity to but there's definitely something fundamentally wrong at the sticky end of the spectrum. Paying tax on over £12750-ish doesn't leave much scope for wise investing if you're on £20k/stuck in the 'gig economy' or are living on a state pension + a small workplace pension so you end up struggling, needing benefits that are paid for out of taxation while the state pension system slowly fails. It's like picking yourself up by the socks.

So, scrap NI, cut VAT, bump up the bottom tax threshold to £20k, balance the tax take at the other levels etc.

I realise I'd never get elected on my manifesto but really the whole personal tax/benefit system needs a drains up simplification exercise.

[Mr. Dazzle]

Or get the government to stop spending so much money

[Count Steer]

Or get governments to stop wasting so much money

FTFY.

It would be interesting to design a society from scratch and see what the tax/spend options might be. I suspect it would be a bit like an exercise we did at school to see if we could beat evolution....come up with an improvement to the human body. It had to be feasible ie you can't be bulletproof etc. Every proposed 'improvement' had a downside and I guess the same is true of societies and governance.

[Mr. Dazzle]

Prof. Alice Roberts did a documentary about that once, it was pretty good. Might be on iPlayer.

Beating evolution that is, not redesigning society. Although come to think of it, there's probably some overlap

[JackyJoll]

Or get governments to stop wasting so much money

FTFY.

It would be interesting to design a society from scratch and see what the tax/spend options might be. I suspect it would be a bit like an exercise we did at school to see if we could beat evolution....come up with an improvement to the human body. It had to be feasible ie you can't be bulletproof etc. Every proposed 'improvement' had a downside and I guess the same is true of societies and governance.

If there had been guns before there were people, Mankind might have evolved to be bulletproof.

[Taipan]

Well the ex-pats tell us your money goes further in warmer climes,, which is good news as last night my Wife told me she does want to retire to the sun but possibly keep a small place here as well. I still think she'll change her mind if grandkids come along but she is adamant that we'll be Nanny and Grandad Spain and a villa with a pool will be good bait to get them over...

[mangocrazy]

Well the ex-pats tell us your money goes further in warmer climes,, which is good news as last night my Wife told me she does want to retire to the sun but possibly keep a small place here as well. I still think she'll change her mind if grandkids come along but she is adamant that we'll be Nanny and Grandad Spain and a villa with a pool will be good bait to get them over...

Strike while the iron is hot. Decide which part of Spain you prefer and start hassling estate agents. Once it's a done deal it's much harder to back out...