Huge marginal taxes, inflation and TAAR forcing us into a pension turkey shoot?

[Fred Bloggs]

It's even worse if you are already drawing pension income that takes you up to the higher rate threshold. I have gone from semi retired to fully retired despite there being huge demand for my skill set. I would only retain 40p for every £1 invoiced, at best. So my part time consulting activity has stopped.

[alphadog]

By my estimation, the marginal tax on a typical ltd contractor who takes on some extra work to take annual revenue from say 100k to 120k is the order of 51%, assuming they aren't contributing to a pension and taking maximum dividends.

We all know that cpi is over 10% and has been that way for some time. The old strategy for someone with sporadic contracts to build up retained profits over time is now rather unwise. And unless you are about to retire or permanently emigrate, TAAR pretty much rules out the liquidation and 10% ERCGT route.

So it seems that all roads (either by coincidence or design) lead towards maxing out the 60k per year pension route. Only thing is, pension extraction ages and taxes on extraction are a moving feast. It seems to me that governments can just change the rules, including retrospectively, at any time, potentially even to the point of ruining the apparent tax benefits of pensions at the moment.

Are we all being herded into a pension turkey shoot?