Lib Dems target 40 per cent tax relief on pensions

[AtW]

The party is to call formally for the Coalition to cut tax relief on pension contributions by higher-rate taxpayers, arguing that current rules give them an unfair benefit.

The party’s spring conference in Gateshead next month is also expected to reiterate the demand for a "mansion tax" on high-value properties.

The conference is likely to endorse a motion demanding that ministers take "immediate steps to ensure that wealthy individuals and businesses pay their fair share of tax". The motion calls for policies including "further limiting tax relief for payments into pension funds, which currently offers the greatest benefit to higher-rate taxpayers".

Workers who pay 40 per cent tax get 40 per cent relief on their pension contributions. Effectively, for every £1 invested in their pension fund, a worker only pays 60p.

The Treasury estimates that scrapping the 40 per cent relief would cost workers £70 billion a year.

It would also mean that someone earning £60,000 and paying 5 per cent of salary into a company pension plan would lose £600 a year.

The relief is in place to prevent "double taxation", where high-earners are taxed on the income they pay into a pension and on the pension payments they take out.

Source: Lib Dems target 40 per cent tax relief on pensions - Telegraph



Stupid Lib Dems - it's not 40% tax relief, it's 100% tax on money that otherwise would not be made available to prop up otherwise bankrupt pension system: a nominal discount is given to capture lots of cash with Treasury knowing full well that in 20-30 years time inflation will do the job.

[d000hg]

AtW, where do YOU think the government should get the extra money they need?

[AtW]

AtW, where do YOU think the government should get the extra money they need?

Why do you think the Govt needs extra money?

It already gets plenty, what it needs to do is to spend them more wisely and a lot less of it.

Treasury will never accept Lib Dems proposal because it would hit this voluntary tax known as pensions.

[vetran]

wAtws

[Freamon]

Stupid Lib Dems - it's not 40% tax relief, it's 100% tax on money that otherwise would not be made available to prop up otherwise bankrupt pension system: a nominal discount is given to capture lots of cash with Treasury knowing full well that in 20-30 years time inflation will do the job.

But again, the money doesn't go to the Treasury, so why should they care? The only money the Treasury sees of a private pension is when you pay income tax when take the money OUT again 20-30 years later. So surely inflation is bad for the Treasury in this case?

[BrilloPad]

Why do you think the Govt needs extra money?

It already gets plenty, what it needs to do is to spend them more wisely and a lot less of it.

Treasury will never accept Lib Dems proposal because it would hit this voluntary tax known as pensions.

WAtWS

But just to add there is a danger of some higher rate tax payers moving abroad.

[centurian]

The party is to call formally for the Coalition to cut tax relief on pension contributions by higher-rate taxpayers, arguing that current rules give them an unfair benefit.

This is what winds me up about this argument.

I think pensions tax relief is listed as a "cost" in Treasury documents - as if the government simply hands out the money to people - which actually it does in the case of the extremely low paid who don't pay any income tax.

But for the 98%, this is not a "benefit" which is paid out - it's just the Treasury deferring its seizure of your own earnings.

Also I wonder what will happen to higher rate public sector pensions - would they be exempt from these changes, because they get relief as well. Getting them to pay an extra 3% is proving hard enough - hitting them with an extra 20% !!!!

[Gonzo]

But just to add there is a danger of some higher rate tax payers moving abroad.

Exactly.

Since 2006 it has been possible for people that move overseas permanently to transfer their defined contributions pension money over there.

I would have done it too if the pound wasn't so worthless.

[DodgyAgent]

Why do you think the Govt needs extra money?

It already gets plenty, what it needs to do is to spend them more wisely and a lot less of it.

Treasury will never accept Lib Dems proposal because it would hit this voluntary tax known as pensions.

The private sector fulfills its side of the bargain in stumping up 50% of what it earns. Now the public sector needs to fulfill its side of the bargain spend it effectively.
In fact we have a moral duty to deny the government every penny of tax until it realises how hard it is to make money