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Politics 2023 (Read 465788 times)

Johnny Brown

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#3675 Re: Politics 2023
March 19, 2023, 11:08:40 am
And don’t forget - you specifically came on here to defend a tax cut for the extremely wealthy.

No he didn't. He came on to point out that 'Fuck me people are dumb' for falling for the popular narrative that it is a tax cut at all. Despite being repeatedly corrected by a professional he offered no acknowledgement or apology for this misinformation. But I'm the wanker for using his own words against him.

Wellsy

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#3676 Re: Politics 2023
March 19, 2023, 11:10:59 am
On housing policy we are definitely agreed, the way that people have been squeezed off being able to access the ladder is terrible and the access to huge amounts of cheap borrowing has seemingly benefited the landlord class much more than ordinary people.

We need to make buying to let a much more difficult and less profitable investment. But once again good policy runs afoul of powerful interests and frankly ignorant and selfish voting blocks.

Wellsy

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#3677 Re: Politics 2023
March 19, 2023, 11:20:00 am
Also if you're curious if you have a pension worth 1.5 million then you'll pay more tax as a hard sum without the LTA than with it (if you minimise the LTA charge rather than taking the LTAXSLS) somewhere between 40 and 50 years of retirement (although you'll still pay less tax as a proportion of your income). That doesn't take into account inflation or changes in tax brackets because I'm not an economist and can't be arsed but I'm going to throw in an assumption that these would on some level cancel each other out, especially as I'd need to calc PIs then and its a Sunday and I already do that all week.

I think one thing that should be mentioned here is the prevalence of UURBs "schemes" which essentially meant many wealthy people ignored the LTA anyway as long as they could persuade the company to give em a free not-pension. There aren't any figures on how many people that is mind cos running pension schemes that aren't schemes is legal but tends to arouse unpleasant attention from HMRC etc. So really when it comes to the pension tax arrangements of the wealthy it's more complex than it seems. I do certainly feel like this is a tax cut on the wealthy in a time of squeezed public finances which is pretty inexcusable. If they want consultants to come back to work change the NHS scheme rules to work like how they already do for Judges etc.

petejh

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#3678 Re: Politics 2023
March 19, 2023, 11:57:33 am

No he didn't. He came on to point out that 'Fuck me people are dumb' for falling for the popular narrative that it is a tax cut at all. Despite being repeatedly corrected by a professional he offered no acknowledgement or apology for this misinformation. But I'm the wanker for using his own words against him.

I came on to point out this, (why don't you have a go crunching the numbers and at least acknowledge there are more nuanced ways of looking at it JB?) -


Quote from: me
What do you make of my point that these policy changes mean a pension pot of £10m (which probably would never occurred previously because of the LTA charge above £1m) would now pay deferred tax on £10million minus the new 'frozen' £268k tax-free allowance (which will reduce in value with inflation) versus a pension pot of £500k would now pay deferred tax on 25% of £500k?
 
i.e. a tax-free element of 2.68% for the super wealthy, versus a tax-free element of 25% for the person with the £500k pot. That's my point about this potentially being proportionally more taxing for the super rich pensioner.

Quote from: me
look at the difference in tax/free allowance between the doctor or airline pilot with a £1m pot - getting a 25% tax break, and the super-rich hedge fund manager with a £10m pot -getting a approx 2.86% tax break. Also bearing in mind the marginal tax rates paid are higher. It might only be progressive once you’re above a certain level, but it is progressive above that level.

Quote from: me
the net effect of this policy is, longer term, higher taxes for high earners, deferred from today into their future. Quite rightly many will say, looking on enviously at these big pensions that the young of today will find impossible to build due to the high cost of living - you'll get no argument from me on that point, life is far more expensive for the young of today then it was for the boomers. But many people would argue that the sensible solution to that inequality is to try to scrape back some from the boomers in a way that doesn't destroy current and future enterprise or penalise risk and hard work. Tough problem to solve with no right answer.

Quote from: me
Is it the best policy I can imagine for all sections of society, no of course it isn't. The world wasn't perfect or fair the last time I looked - a higher tax benefit for low-earners making pension contributions would be a good thing.

Quote from: me
Also the direction of wages is clearly upward which will take more and more people into this zone of being able to benefit.

The last point is important to consider. Most people on this forum would argue that we should be paying higher wages to people currently on low and middle-incomes. While this year's pay rises aren't keeping up with inflation for most people, they are still chunky in nominal terms. That might not be much comfort against 10% inflation but it's important in this context because even now more people than last year will have been raised into being able to make use of this annual allowance, a few more years of low single % rises will see a lot more of the population benefitting from the annual pension allowance threshold which you're all currently pissed at. Following this year and next year's rises, even normal inflation is going to bring a lot more of the population into being able to benefit from this increase. Could the gov have delayed raising the allowance until more people had floated up toward needing it due to inflation over time? Of course they could. Politics hey. Labour would have had to do it in a few years anyway.

That's it, I've made my points. Nothing further to add. It isn't as one-sided as portrayed by the headlines but I do acknowledge the other side of the argument and think it's completely valid to feel pissed.


Wellsy

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#3679 Re: Politics 2023
March 19, 2023, 12:03:08 pm
The idea that anyone on an average or even above average wage is going to benefit from the changes is frankly absurd. If you earned double the national average and paid a massive 25% of your wage into your pension they wouldn't affect you. If you earned TRIPLE the average it wouldn't affect you.

This idea that it's disincentivising hard work is fucking mental. How many people are earning well over a 100k? How many people have the chance to? The entire premise of the criticism of the criticism of the gov's policy is based on a fucking mental idea of how much money people have.

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#3680 Re: Politics 2023
March 20, 2023, 08:04:10 am
Whatever you think about the budget, it would probably help the average person if Johnson is found to have knowingly mislead parliament and suspended. It would be even better if Trump is in prison for a few years at least. Sadly, I suspect that both are just a bit too much to hope for.

Nigel

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#3681 Re: Politics 2023
March 20, 2023, 11:46:45 am
a few more years of low single % rises will see a lot more of the population benefitting from the annual pension allowance threshold which you're all currently pissed at. Following this year and next year's rises, even normal inflation is going to bring a lot more of the population into being able to benefit from this increase.

Really? As I understand it there are two parts to these pension changes: 1) increase of annual pension contribution allowance from £40,000 to £60,000, and 2) scrapping lifetime limit of £1.073 million - now unlimited.

You are referencing part 1) here, so on a fag packet and making assumptions which I suspect are very generous to your argument....  if we assume someone who contributes 50% of their annual income to their pension then they would only feel a benefit now if their income was over £80K. That would put them in the 95% percentile of income at least - https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/datasets/adminbasedincomestatisticsdataforindividualsenglandandwales

If you are on £50K now (85% percentile) then if we again generously assume a 10% rise this year, then 3% every year after (your "low single figures") then you will be on £80K in 12 years time. All you have to do then is contribute >50% of your income to your pension to benefit. So even for the top 15% this change is a distant dream!

For this to benefit you "in a couple of years" due to inflation then under my assumptions you would need to be on about £70K already. 93% percentile.

For reference the median (50% percentile) UK salary from that same dataset is £26,300. If we use the same assumptions on inflation then it would take them 36 years to hit £80K.

I suspect the lifetime limit thing may include more "normal" people as it includes pension pot growth. But I agree with Wellsy, the annual limit change is for rich people only, no two ways about it. It will only get more so if Wellsy has a ballpark figure for usual pension contributions, which I suspect are a lot less than 50%?


Wellsy

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#3682 Re: Politics 2023
March 20, 2023, 12:06:21 pm
Auto enrolment is 3% employee and 5% employer. The standard guidance is half your age as a percentage plus that employee 5% will result in a "decent" income at 65 although that's questionable imo. Realistically if you're putting in 25% including employee contributions you're a very rare outlier and you probably have a very generous employer. If you put in that, and say a third comes from the employer (so they put in 9, and you put in 16 let's say), you wouldn't be contributing 40k a year until you earned like, 140k. So if you earn that and put in that much... you don't benefit from this change cos you're right up against what it was.

There is a pensions crisis in this country, absolutely. Many people in their 20s and 30s at this rate won't retire. Not retire late, not retire but be poor, they won't retire. They'll die in work. But these changes don't touch those people, they don't touch over 95% of people, probably more like 9y-98% of people. They're just a joke. People seem to want to defend them cos... I dunno? I'm not sure why. It seems very contrarian.

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#3683 Re: Politics 2023
March 20, 2023, 12:47:58 pm
I'd hazard a guess that the % contribution doesn't stay static as incomes rise though.. If I was on 20k I would be putting in that 8%; at my current salary I put in about 15%; if I were given a big pay rise to say 80-100k I imagine I'd be putting in everything I was earning above the 40% tax threshold up to the annual limit.

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#3684 Re: Politics 2023
March 20, 2023, 12:50:00 pm
I'd been writing something similar to Nige when he made his post and that pretty much sums it up. 99th gentile salary is approx. £168k per annum and those folks would have to contribute 25% of salary to see any benefit. To give you the benefit of the doubt, maybe some people in their 50s/60s who've paid off mortgages and aren't supporting kids could afford higher contributions, but to use current high inflation to support your argument that this is going to be beneficial to anyone other than the already very wealthy comes across as ridiculous.

Also to pick up on one of your previous points :-

Quote from: Pete
What do you make of my point that these policy changes mean a pension pot of £10m (which probably would never occurred previously because of the LTA charge above £1m) would now pay deferred tax on £10million minus the new 'frozen' £268k tax-free allowance (which will reduce in value with inflation) versus a pension pot of £500k would now pay deferred tax on 25% of £500k?
 
i.e. a tax-free element of 2.68% for the super wealthy, versus a tax-free element of 25% for the person with the £500k pot. That's my point about this potentially being proportionally more taxing for the super rich pensioner.

Pointing out that the new pensions tax regime is progressive doesn't really tell the full story - the point should be is it more or less progressive than it was previously when the LTA was in place? Pretty sure the answer to that is that it's significantly less progressive, but haven't had time to actually calculate - Wellsy made a similar point a few posts back.

Also if you're curious if you have a pension worth 1.5 million then you'll pay more tax as a hard sum without the LTA than with it (if you minimise the LTA charge rather than taking the LTAXSLS) somewhere between 40 and 50 years of retirement (although you'll still pay less tax as a proportion of your income). That doesn't take into account inflation or changes in tax brackets because I'm not an economist and can't be arsed but I'm going to throw in an assumption that these would on some level cancel each other out, especially as I'd need to calc PIs then and its a Sunday and I already do that all week.

The holder of the £10m pot would have been paying 55% LTA charge on any lump sum over the LTA or 25% on any pension in addition to income tax (I think, Wellsy would need to confirm!) which works out at the same 55% if you're taxed at higher rate. What happens now is they pay income tax so, as everyone has been trying to point out, it's a tax cut for the wealthy.

petejh

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#3685 Re: Politics 2023
March 20, 2023, 12:57:48 pm
No, they wouldn't. That's one of your errors.

The person 'over the LTA' likely either wouldn't be working, or if they were still earning they wouldn't be contributing anything to their pension - they put their money elsewhere in other more tax-efficient investment/saving vehicles. They opt out because nobody works to be taxed 55% in a pension on top of their normal marginal rate of income tax. This is why folk just calling this a tax cut from 55% for the rich are wrong (or at least technically it's a cut, but a cut of something that virtually nobody uses and is a barrier to paying into a pension is a good thing) - virtually nobody works for that incentive.

I will reply to your point Nige.
« Last Edit: March 20, 2023, 01:08:16 pm by petejh »

Wellsy

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#3686 Re: Politics 2023
March 20, 2023, 01:26:06 pm
"Technically its a cut" Jesus fucking Christ pete

You've gone from "it isn't a cut, god people are SO STUPID" to "okay it is technically a cut but nobody actually pays LTA charges anyway" which is also wrong, and also if there are these alternate provisions everyone was using (which yes there was) then getting rid of the LTA is pointless because its not actually affecting anything (other than the people who are paying LTA charges... who do exist and I know because I calculate them).

Just admit you came unto the thread to throw your weight around and call people stupid despite not knowing what you're talking about and then rowing back and changing the goalposts later.

Nigel

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#3687 Re: Politics 2023
March 20, 2023, 05:29:12 pm
Going back to the tax discussion which was much more interesting, there are lots of iniquities that need to be resolved to mitigate the hoarding of wealth by the top few percent. IHT is one avenue. Wealth taxes another. There is another area which hasn't been mentioned yet - taxes on property / land. Currently we tax property in 3 specific ways - council tax, business rates, stamp duty, and 2 secondary ways (CGT on non-primary residence, IHT on estates). All have issues. For example (not exhaustive!):
 
Council tax bands were calculated based on house prices 30 years ago and are regressive. We now have a situation whereby you could have someone in Morecambe (near where I grew up, not affluent) paying the same council tax on a modest house as someone in London in a multi-million pound gaff. Once again the rich are getting a proportional benefit (as with NI dropping to 2% for them). This is low hanging fruit for "Levelling Up" but then again you don't hear much about that now...

Business rates are not payable on land on which the buildings have been demolished, which incentivises degeneration on urban brownfield sites.

Stamp duty is a tax on moving home, as such it is a barrier to the efficient allocation of housing. There is a theory that there would be plenty of housing stock in the UK already if we were all billeted efficiently. If like most people on here you are middle class with boomer parents you probably feel this as you or quite a few people you know will have parents rattling about in the house you and your siblings grew up in, instead of downsizing, while you and your contemporaries, often with kids, are squeezed into a terrace.

Proposals exist to replace all of the above property taxes with a land value tax. If implementable it would theoretically solve a lot of the iniquities with the current system. To my mind the most egregious is land banking speculation, where big developers sit on land. With an LVT there would be an incentive to either develop or sell it otherwise it is a liability. As it is they sit on land drip-feeding houses onto the market to keep prices elevated - cartel stuff. The worst insult is if they buy land speculatively pre-planning, then planning is granted. Here they receive the ultimate in unearned profits - effectively being handed a huge windfall at the stroke of the pen. The pen is held by the state (us) and we just hand this act of fiat windfall over wholesale to the private sector no questions asked. They also accrue unearned profit from any state developments e.g. local transport infrastructure development, local schools, doctor's surgeries etc. This is seen in London where the owners of houses near Crossrail have paid nothing specific towards its development, yet have got a nice quick train and seen their property values skyrocket (+100%). Our modest homeowner in Morecambe also paid for Crossrail and gets nothing. LVT reclaims these private windfalls for the public.

If there was a way to restrict this LVT only to *new* development and landlords of rentals then you wouldn't have to then deal with the politically impossible fact that existing homeowners would also be liable, which of course would fall into the "that affects me = not happening" category. If applied universally it would affect everyone who owns a home, and of course the Daily Mail will always find the edge case of a poor old penniless London pensioner still in their family home which now has a market value of millions. But long term it needs some honest thinking from people. Think about it - if you bought a house 5 years ago and did nothing except maybe repainting inside, the asset on the land - the house - is basically unchanged. Arguably its actually worth less (older structure, boiler, electrics etc). Yet if you sold up now and pocketed the money you would have made a 27%ish profit (UK average). You know yourself you didn't earn that, no amount of new paint is worth that. That is the increase in land value which has been bid up by out of control credit creation by banks over the past decades of artificially low interest rates. Notwithstanding that no-one does actually pocket it as they usually buy another house so all of this is just paper gains which only serve to pull the ladder further out of reach of the bottom. There has been no brake on that until the last year of rocketing interest rates, but unless there is a house price crash all that does is increase buying costs. LVT may potentially be a more long term solution to reducing house price speculation. It also has the potential to encourage mobility, and incentivise development of idle sites. It may also provide a more progressive alternative to the existing property taxes - some estimates are that 80% of council tax payers would get reduced bills, while the current upper bands in the SE would see a 15% increase (waah).  Obviously there are practical problems...nothing's ideal but we are where we are, which is a situation in which a lot of younger people can't afford to buy a house, and on current trajectory never will.

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#3688 Re: Politics 2023
March 21, 2023, 10:46:43 am
Going back to the tax discussion which was much more interesting, there are lots of iniquities that need to be resolved to mitigate the hoarding of wealth by the top few percent. IHT is one avenue. Wealth taxes another. There is another area which hasn't been mentioned yet - taxes on property / land. Currently we tax property in 3 specific ways - council tax, business rates, stamp duty, and 2 secondary ways (CGT on non-primary residence, IHT on estates). All have issues. For example (not exhaustive!):
 
Council tax bands were calculated based on house prices 30 years ago and are regressive. We now have a situation whereby you could have someone in Morecambe (near where I grew up, not affluent) paying the same council tax on a modest house as someone in London in a multi-million pound gaff. Once again the rich are getting a proportional benefit (as with NI dropping to 2% for them). This is low hanging fruit for "Levelling Up" but then again you don't hear much about that now...

Business rates are not payable on land on which the buildings have been demolished, which incentivises degeneration on urban brownfield sites.

Stamp duty is a tax on moving home, as such it is a barrier to the efficient allocation of housing. There is a theory that there would be plenty of housing stock in the UK already if we were all billeted efficiently. If like most people on here you are middle class with boomer parents you probably feel this as you or quite a few people you know will have parents rattling about in the house you and your siblings grew up in, instead of downsizing, while you and your contemporaries, often with kids, are squeezed into a terrace.

Proposals exist to replace all of the above property taxes with a land value tax. If implementable it would theoretically solve a lot of the iniquities with the current system. To my mind the most egregious is land banking speculation, where big developers sit on land. With an LVT there would be an incentive to either develop or sell it otherwise it is a liability. As it is they sit on land drip-feeding houses onto the market to keep prices elevated - cartel stuff. The worst insult is if they buy land speculatively pre-planning, then planning is granted. Here they receive the ultimate in unearned profits - effectively being handed a huge windfall at the stroke of the pen. The pen is held by the state (us) and we just hand this act of fiat windfall over wholesale to the private sector no questions asked. They also accrue unearned profit from any state developments e.g. local transport infrastructure development, local schools, doctor's surgeries etc. This is seen in London where the owners of houses near Crossrail have paid nothing specific towards its development, yet have got a nice quick train and seen their property values skyrocket (+100%). Our modest homeowner in Morecambe also paid for Crossrail and gets nothing. LVT reclaims these private windfalls for the public.

If there was a way to restrict this LVT only to *new* development and landlords of rentals then you wouldn't have to then deal with the politically impossible fact that existing homeowners would also be liable, which of course would fall into the "that affects me = not happening" category. If applied universally it would affect everyone who owns a home, and of course the Daily Mail will always find the edge case of a poor old penniless London pensioner still in their family home which now has a market value of millions. But long term it needs some honest thinking from people. Think about it - if you bought a house 5 years ago and did nothing except maybe repainting inside, the asset on the land - the house - is basically unchanged. Arguably its actually worth less (older structure, boiler, electrics etc). Yet if you sold up now and pocketed the money you would have made a 27%ish profit (UK average). You know yourself you didn't earn that, no amount of new paint is worth that. That is the increase in land value which has been bid up by out of control credit creation by banks over the past decades of artificially low interest rates. Notwithstanding that no-one does actually pocket it as they usually buy another house so all of this is just paper gains which only serve to pull the ladder further out of reach of the bottom. There has been no brake on that until the last year of rocketing interest rates, but unless there is a house price crash all that does is increase buying costs. LVT may potentially be a more long term solution to reducing house price speculation. It also has the potential to encourage mobility, and incentivise development of idle sites. It may also provide a more progressive alternative to the existing property taxes - some estimates are that 80% of council tax payers would get reduced bills, while the current upper bands in the SE would see a 15% increase (waah).  Obviously there are practical problems...nothing's ideal but we are where we are, which is a situation in which a lot of younger people can't afford to buy a house, and on current trajectory never will.

I like the idea of land value tax. I said somewhere else I think stamp duty is crazy, you basically pay more tax based on the seller's capital gain. Very strange and doesn't work like this on other assets. You should pay tax based on the benefits you receive.

They have implemented land value tax in some states of Australia, must be some analysis on it out there somewhere.

It's hard to assess the relative benefits of different taxes, but I believe that we have been misdirected by papers etc to focus on high incomes vs wealth. High incomes can be (theoretically at least) achieved by people from any background; but only a tiny percentage of very privileged people have massive wealth that passes across generation (the sort of wealth that enables you to own a media empire). I remember a stat from work that 13% of wealth crosses more than 2 generations. If I was in charge it would be that wealth that I'd be going after vs penalising people who have worked hard and contributed to businesses, entertainment and economy and managed to earn high incomes. Practically don't know how - but to get a fairer society you have to have your principles right first I think.
 

(Edited in brackets to clarify my thoughts)

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#3689 Re: Politics 2023
March 21, 2023, 11:05:59 am
Stamp duty is a tax on moving home, as such it is a barrier to the efficient allocation of housing.

It's worth remembering* that during the pandemic there was a stamp duty holiday and that benefit didn't seem to be realised as lower house prices.

*having completed a fortnight or so before this happened I remember it bitterly.



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#3690 Re: Politics 2023
March 21, 2023, 11:45:21 am
I personally don’t think taxation has much to do with house price increase. Cheap credit has facilitated the rise, but I think the main driver of house price inflation is because the desirability of owning a home has massively increased. And that is because the alternatives to owning a home are as bad as they probably have been for a hundred years. No council housing to speak of, the stigmatisation of council housing and a rental market that’s like the wild west.

In my view the best option to deflate the housing market gradually would be to massively increase the stock of council houses and regulate the private rental sector so tenants have security like they do in many parts of Europe.

If it was up to me, i’d tax BTL to make it basically unprofitable for landlords, but then offer to buy their equity at above market value and give the houses to local authorities. I’m not sure what the recent rate rises have meant for this, but in 2019 it would have been possible for the government to borrow to buy every single rental property in the uk, and the interest on it would still have been less than the housing benefit bill.

Also, to counter Nemo’s moan about Labour’s borrowing last election, a large proportion of that was to go towards capital spending. So yes, there’s interest payments on the loan which is paid for by taxation, but then you get for your money offshore wind farms, council housing, utility companies, rail companies, mail etc which would pay for them selves. All of which currently send huge amounts of taxpayers money offshore in the form of subsidies towards profits. Definitely not in the same bracket as borrowing for tax cuts imo.


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#3692 Re: Politics 2023
March 23, 2023, 02:51:26 pm
Quote from: Nigel
But I agree with Wellsy, the annual limit change is for rich people only, no two ways about it. It will only get more so if Wellsy has a ballpark figure for usual pension contributions, which I suspect are a lot less than 50%?

Was going to reply to this earlier Nige then got a stomach bug. In response, your typical earnings calcs seem about right - I accept that point. You and Wellsey the pension professional aren’t considering the whole picture though - if you were correct that only our pantomime villains ‘the rich’ are the ones who benefit from the increased annual allowance, then I’d be inclined to agree that these weren’t positive changes. But you aren’t correct, because there ‘are’ more than 2 ways about it, I'll show some examples. I think if you analyse this you’ll come to the same conclusion I have that it's beneficial to have increased headroom because it provides more flexibility for flexible life circumstances. I’m guessing Labour came to the same conclusion too - perhaps why Labour haven’t said they’d reverse the increased Annual Allowance - as far as I can see they've only said that they’d reverse the LTA… (which is also dumb imo because it's progressive and provides low-hanging tax fruit for reducing further in future).

Before looking at who does benefit from the Annual Allowance let’s be clear about who doesn’t. A short list covering a lot of people:
1. Everyone earning under £40k per year AND who doesn't foresee in their lifetime ever earning over £40k.

These people can sit back safe in the knowledge that no, the annual allowance increasing doesn't change anything for them. I acknowledged this and think something much better could be done for lower earners. More than that, I think the pension system shouldn't be allowed to be changed by any one political party of any stripe. It should be a cross-party issue. The whole point about pensions is by definition they use a very long-term outlook because they're supposed to be an aid for people to plan their retirement savings. When long-term planning you want some certainty that the tax treatment you plan for will look something like what you actually get. It's the same in business investment or with buying long-term bonds - you don't invest with a 20-50 years view based on the assumption of a volatile landscape. Turning pensions into another political toy as Labour and the Tories have done benefits nobody, and risks turning people off saving into pensions if they think the other side are going change it again at will in a populist pantomime. Obviously some changes do need to be made sometimes.

A better and fairer system all-round might be a flat rate of 30% tax relief on everyone’s pension contributions, whether they’re a 20% taxpayer or 45% tax-payer. With an Annual Allowance set to say around £60k, with no lifetime limit. With the same progressive taper on the tax-free lump sum that’s currently in place of £268 – or say knock it down to £200k (which is what’s going to happen over time imo, writing’s on the wall). That’s a system that would benefit more people at the lower end of earnings than at the higher end and would be redistributive – high-tax-payers would be paying to subsidise pensions of low-tax-payers.

That isn’t  10 million miles from where we are - the unfair element in my view is no tax-relief % rate boost for low-earners, and a boost on tax-relief rate for 40/45% earners (but bear in mind most of that's going to be paid back by a lot of high earners with savings over £1m, and progressively more and more of it will end up being paid back).

Are Labour campaigning for something like this as the alternative? That’s a genuine question - I don't actually follow politics closely enough to know for certain. From what I know I don’t think Labour are, probably because it would generate too much outcry from a great many of the supposedly ‘good’ types of rich people such as doctors and civil servants not to mention the supposedly ‘wrong sort‘ of rich people such as bankers, businesspeople, investors and assorted asset-owning layabouts. If Labour aren’t actually campaigning for a better alternative policy, where’s good about them playing populist class warfare politics over this set of changes by saying they'd reverse the LTA? The LTA which the current lot have just made progressive, by freezing and separating the 25% tax-free sum frozen. From here:
Quote
The intention seems to be to hardcode this limit so that over time the scope for drawing tax-free cash will reduce in real terms.

A narrative that focusses only on 'the unfairness of group x benefiting', but excludes considering who else benefits isn't a useful frame to understand an issue; secondly in this case it's logically incoherent - because Labour are actually arguing that they want some already rich people - senior medics - to benefit more than everyone else, by singling them out for a system that would be even more unequal than the system that they're complaining isn't fair!
The perceived problem can't be that it's unfair that 'the rich benefit out of this'. Your/Labour's issue is partly to do with the rich doing well as usual but also partly, in your opinion 'the wrong sort of rich' are doing well in addition to the 'good' sort of rich. But that road leads quickly to a world of horrible profession/class warfare.. something we're very good at doing in Britain.   

By my calcs the below 3 groups benefit from the increased Annual Allowance. They aren’t ‘the rich’ that you and Wellsey are claiming are the only ones to benefit:
Group 1. Anyone who receives lumpy annual income from periods of work fluctuating between high annual pay and no or low annual pay. This group benefit from the 3-years of unused allowance/100% of wages rule.

Group 2. Anyone who finds themselves at any time in the future after April 6th, in both of the following circumstances:
Earning over £40k.
AND
Receive any lump sum of money that if contributed to a pension would take their annual contribution over the old annual allowance of £40k.
This group benefit from the 3-years of unused allowance/100% of wages rule.

Group 3. Anyone returning to work after they’ve started to draw a private pension. This one’s simple – these people now have a £6k better annual allowance over the old £4k maximum allowance. They’ll benefit at lower overall amounts of money.

Examples,
Group 1 is an increasing trend in the workforce as work becomes more flexible. an uncommon type to find in the climbing scene – the ‘smart young’, well-educated climbing/surfing/lifestyle bum of the 21st century. It comprises people doing highly-paid contracting work between periods of low earnings, e.g. say a 20 or 30-something tech contractor, earning say £5k one year, £81k the next, £5k the next, £81k the year after. Low outgoings. That’s an average wage over 4 years of £43k – not ‘the rich’. Or try the calcs with £10k, 10k, £10k, £100k – an average wage over 4 years of £32.5k. You could call them the time rich maybe, taking time off between high-paying projects. High numbers in the Labour demographic.

Group 2. Many people reading ukb will be in group 2. This situation is going be increasingly common as the boomer generation are in the late stage of their lives and this generation own an infamously outsized pool of asset wealth. So significant lump-sums of money from proceeds of the sale of this asset pool are going to be passed down to offspring over the next 30 years. Slowly at first, but increasingly so. Lets say you ended up receiving for e.g. an £85,000 lump-sum inheritance from sale of a family house. With the new allowance a person on a £43k wage can max out their pension by £3k more per year than they could under the old allowance of £40k. They could do this each year @ a maximum of 100% of their wage (up to a wage of £60k) until any lump-sum of money had been put into their pension. All contributions received tax relief so using 20% each £3,000 increased allowance requires £2,500 from you and £500 comes from the taxman.
Obviously someone could still do the same as the above under the £40k annual allowance - and/or do so on a lower wage than £40k - but depending on the specific amounts involved and on the specific wage, it could take more years to pay in the full amount under the old system then it would under the new higher annual allowance.
This cohort is the middle class, 30-something to late-middle aged. Many are Labour’s typical demographic, perhaps a 60/40 split Labour/Tory?

Group 3 has also become increasingly common recently - all those 50-something middle-classes who’ve retired from full-time work but keep on doing a bit of work. A cohort I’d a guess are broadly evenly Labour and Tory, maybe skew 60/40 to Tory?

None of the people in the above 3 groups necessarily fit into the category of ‘the rich’.

It’s beyond doubt the rich - say millionaires with high levels of asset wealth or regular earners on £80+k year-in year out - will benefit from the increased annual allowance. That’s almost inevitable when some people have more surplus money than others to allocate. If it isn't pension contributions then it's put into something else, you can't stop people spending their money unless you take it all off them. And if you look closely you can see this is actually a stealthy increase of deferred income tax on the very highly paid.

As I say I don’t see Labour advocating for any serious tweaking of the pension system? If I were a political party that was claiming to want a better system for low-earners I'd be arguing for something along the lines of the 30% all-round system as per above.


« Last Edit: March 23, 2023, 03:02:46 pm by petejh »

Wellsy

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#3693 Re: Politics 2023
March 23, 2023, 04:18:10 pm
If you earned 5k then 81k then 5k then 81k then 1) that's very unusual but whatever and 2) you can carry forward your annual allowance from year to year so under current rules they could put in £0 then 80k then 0k then 80k (in the mad scenario where you took home 2k in four years to pay for your entire life but whatever)
without exceeding the annual allowance before it goes up and see no additional tax charge, ergo, this is not a tax cut for such people

Again, anyone who can afford to put 40k into their pension on average across three years is a high earner OR is inheriting lots of money. It is essentially only a benefit for people in a very small minority that most of us will never be in.

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#3694 Re: Politics 2023
March 23, 2023, 04:46:03 pm
If you earned 5k then 81k then 5k then 81k then 1) that's very unusual but whatever and 2) you can carry forward your annual allowance from year to year so under current rules they could put in £0 then 80k then 0k then 80k (in the mad scenario where you took home 2k in four years to pay for your entire life but whatever)
without exceeding the annual allowance before it goes up and see no additional tax charge, ergo, this is not a tax cut for such people

Again, anyone who can afford to put 40k into their pension on average across three years is a high earner OR is inheriting lots of money. It is essentially only a benefit for people in a very small minority that most of us will never be in.

You’ve never been a consultant/contractor have you? :tease:

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#3695 Re: Politics 2023
March 23, 2023, 04:52:14 pm
Thanks for explaining that Pete. So basically I need to work every other year but twice as hard or get an inheritance and it's a great change. Doesn't seem particularly likely I'm going to benefit.

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#3696 Re: Politics 2023
March 23, 2023, 05:24:09 pm
Heres what is the case

If across 3 years, between you and your employer, you have 120 grand spare to whack into your pension, then you are not quite well off enough to be at the point where the change benefits you.

I dunno about anyone else but I feel like if having 120 gees going spare is just below the point where a tax adjustment is beneficial to you, then that's an adjustment that only benefits people earning a lot of money.

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#3697 Re: Politics 2023
March 23, 2023, 07:05:55 pm
Edit. Forget it. There are still situations where it's a benefit!

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#3698 Re: Politics 2023
March 23, 2023, 07:30:21 pm
Pete - you seem to be going to  extraordinary lengths to try and defend this policy.

Yes some people on UKB might benefit from it through inheritance (me included). Same with other tech surf bums you know or know about with very high earning potential choosing to work part time, so aren’t what you define as ‘the rich’. Is that representative of the workforce as a whole? Is it fuck. So is it the right policy to introduce given the state of most people’s finances currently? No.

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#3699 Re: Politics 2023
December 20, 2023, 06:27:23 pm
Incredible interview with Michelle Mone on the PPE Medpro scandal.

https://www.bbc.co.uk/iplayer/episode/m001v97h/michelle-mone-admits-she-lied-but-says-shes-a-scapegoat

Choice quote:

Quote
I don't honestly see there is a case to answer. I can't see what we've done wrong. Doug and the consortium have simply delivered a contract.

Interviewer: [but you've admitted today that you lied to the press]

That's not a crime. Saying to the press that Im not involved, to protect my family, it's not a crime. The press have got nothing to do with my family. I was protecting my family.

She's completely delusional!

 

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