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The Tories had a manifesto commitment not to raise the income tax rate, this would seem like a very sneaky way of getting round that. It effectively increases the % of income tax paid by everyone in the 40% tax bracket. Also a kick in the balls for a generations that have lost final salary pensions and had their retirement kicked into the long grass anyway. There could also be some perverse incentives for people to reduce their working hours (this combined with loss of child benefit for those earning over £50k)
That seems a good idea to me.If it affects 14% of people , that is the top earners who can afford a slight tax on their pension contributions. (From what Ive read, they are only going to be taxed on their pension contributions, so, they are still gaining by paying into a pension, rather than taking their wages as cash).
It has nothing to do with final salary schemes, that is down to individual companies stopping that entitlement.
People on 50k+ cutting their hours so that they can claim £20+ a week in child benefit.
Really?
You really think people will do that? Its fantasy, people on £50k+ a year are not bothered about £20 a week from the Govt.They can work an extra hour and get more from their employer.
You really think people will do that? Its fantasy, people on £50k+ a year are not bothered about £20 a week from the Govt.They can work an extra hour and get more from their employer.
With three children, the child benefit charge is a marginal tax rate of about 25% (on top of the 43% tax & NI). So yeah, when over two thirds of your extra hour goes to the government you might not work it or you might put in all in a pension to avoid paying tax on it. High marginal tax rates change behaviour.
getting rid of the upper rate tax relief on pension contributions.
I don't think this can be done fairly. If you apply it only to employee contributions, salary sacrifice and other non-contributory schemes escape scot free. If you apply it to employer contributions too, you have to PROPERLY value defined benefit schemes which is hard and won't go down well in the public sector. A lot of basic rate taxpayers would suddenly find that they are actually higher rate based on total employer contributions.
As above Alan it is a real issue, as in real people from my experience are dropping a day a week as it's a waste of time.
The final salary thing is relevant because there is increasing unfairness between generations and the government seems only too happy to heap the burden onto working people rather than go for great vast unearned wealth of the boomers.