Proposed new pension system will make future tax raids easier
The Government's proposal for tax-free pension income is high risk, says Steve Levin. The simple answer is to move to "buy two get one free"
The Chancellor faces a stark choice in the coming months, with the outcome of a Government review of the pension tax system likely to have a dramatic impact on both public finances and attitudes toward long-term savings.
Under today’s system, individuals are exempt from paying tax on anything they invest into a pension. Instead, pension income is taxed in retirement, creating a deferral that sees the Government forgo income tax until individuals start spending their retirement savings.
This system is often referred to as "exempt-exempt-taxed" (abbreviated to EET), with contributions and investment growth exempt from tax, while withdrawals are subject to income tax.
The net cost to the Exchequer from pensions tax relief in 2013-14 was £21.2bn. Bringing tax receipts forward would create a net tax gain for the Government since more income tax would be taken during savers' working lives, when for many their rate of income tax will be greater (the majority of retirees pay no more than the basic rate of income tax). "
Source: Proposed new pension system will make future tax raids easier - Telegraph
DOOOMED!!!
The Government's proposal for tax-free pension income is high risk, says Steve Levin. The simple answer is to move to "buy two get one free"
The Chancellor faces a stark choice in the coming months, with the outcome of a Government review of the pension tax system likely to have a dramatic impact on both public finances and attitudes toward long-term savings.
Under today’s system, individuals are exempt from paying tax on anything they invest into a pension. Instead, pension income is taxed in retirement, creating a deferral that sees the Government forgo income tax until individuals start spending their retirement savings.
This system is often referred to as "exempt-exempt-taxed" (abbreviated to EET), with contributions and investment growth exempt from tax, while withdrawals are subject to income tax.
The net cost to the Exchequer from pensions tax relief in 2013-14 was £21.2bn. Bringing tax receipts forward would create a net tax gain for the Government since more income tax would be taken during savers' working lives, when for many their rate of income tax will be greater (the majority of retirees pay no more than the basic rate of income tax). "
Source: Proposed new pension system will make future tax raids easier - Telegraph
DOOOMED!!!
Comment