Budget Day

Thanks growstuff! 😊

On another note, generally -
I thought all our pensions (state & private) are taxed at source if their total is higher than our personal allowance - which as been capped for the NEXT SIX YEARS at the current level of £12,600 (thereabouts).

Instead of giving us sweeties why don’t the Treasury increase our allowances thereby giving us some autonomy in how we’d like to spend our money?

I think it’s the only way the Average Joe (me) with no ISAs, PEPs, shares, whatever - get some kind of bona fide increase.

Or am I missing something here??
Admittedly I only ever got an average GCE ‘O’ level in maths back in the day.

Urmstongran private pensions are definitely taxed at source if you have exceeded the personal allowance.

The state pension is not taxed. Other pensions and sources of income are taxed to compensate.

I have a number of pensions and, until recently, I was self-employed as well. I pay 20% tax (with no tax-free allowance) on two of my pensions and any other employment income. My tax code is adjusted to take that into account.

Direct from HMRC

Increasing the personal allowance is expensive and actually benefits people right up the scale. Some very low earners don't benefit at all because they don't even reach the tax threshold.

It depends what the government wants to do. If it wants to target low earners and those who are really struggling, it's more efficient to increase benefits and/or increase the minimum wage, although the latter has consequences.

Obviously you did not see the smiley emoji MaizieD

You must have missed mine, too, GG13

(and I thought I was being consolatory when I said you'd get at least half...)

The government is doing nothing to incentivise nurseries to expand. It's hard enough to recruit qualified staff, who can earn more in Aldi for a much less responsible job. Instead they've made their job harder by increasing the staff ratios so that one member of staff can care for 5 toddlers instead of 4- well that will get people queuing up, that's not really supportive. Maybe they should go to Scandinavia and look how the state supports childcare there.

MaizieD

^Obviously you did not see the smiley emoji MaizieD^

You must have missed mine, too, GG13

(and I thought I was being consolatory when I said you'd get at least half...)

MaizieD truce x

MaizieD

^Obviously you did not see the smiley emoji MaizieD^

You must have missed mine, too, GG13

(and I thought I was being consolatory when I said you'd get at least half...)

I'm now very 😪 at being misunderstood

If the amount of your state pension is more than the personal allowance, it will be taxed. My IFA confirmed this to me.

MaizieD

MaizieD

Obviously you did not see the smiley emoji MaizieD

You must have missed mine, too, GG13

(and I thought I was being consolatory when I said you'd get at least half...)

I'm now very 😪 at being misunderstood

MaizieD I lived with four sons and a DH I am totally used to being misunderstood (DD arrived 7 years later) 🤣🤣🤣

Susie42

If the amount of your state pension is more than the personal allowance, it will be taxed. My IFA confirmed this to me.

It's highly unlikely that your state pension is higher than your personal allowance, unless your personal allowance has been adjusted downwards for some reason and/ore you have another source of income.

Susie42

If the amount of your state pension is more than the personal allowance, it will be taxed. My IFA confirmed this to me.

The personal allowance is £12,570 though, and state pension is £203.85 per week, (£10,600pa) from April, so if you survive on the state pension alone you won’t have to pay tax. The only circumstances I can think of where it would apply is if you have a long deferred pension which had increased your rate above the tax threshold, but that wouldn’t apply to many people. I’m sure there are tax experts on here who know much more about this though.

People don't pay tax on pension contributions, so it's right that it should be taxed when people receive it. Generally, it's a tax efficient way of saving, especially for people who pay 40% tax because they'll possibly not be in a higher tax bracket after retirement. That's what the lifetime allowance is all about - it's to stop people avoiding tax when they're working.

Maybe the should go to Scandinavia and look how the state supports childcare there
It wouldn't surprise me if they have looked. They would have been impressed, and on their return home would have said "oh well, not really for us...easier to leave things as they are."

The government has ignored childcare for years. One can't help but wondering why it has suddenly become such a hot topic.

Casdon, some state pensioners (those who paid SERPs or SP2) get above the base rate full state pension. It is possible to have a full new pension and an additional protected amount, and the latter depends on earnings and length of time you paid into the additional scheme.

It’s possible that in a few cases this will be over the tax threshold now. Others of us will certainly get to that point if the threshold freeze lasts 5 years.

Thanks Siope, that explains it. It seems unlikely that the personal allowance will remain frozen for 5 years, but I guess you never know. Presumably in the scenario you describe, the tax would be at basic rate on the amount of the pension above the personal allowance limit, unless an individual also had a private pension?

Casdon, yes, that’s right. I also doubt a five year freeze - I imagine either Hunt will be looking at a tax-cutting budget next year, ahead of an election, or there’ll be a change of government and policy before that.

But it wouldn’t take five years, of course, for some more to creep into paying tax, even if all they have is the enhanced pension.

I certainly pay tax on the state pension because my modest occupational pension takes me over the allowance threshold.

Susie42

If the amount of your state pension is more than the personal allowance, it will be taxed. My IFA confirmed this to me.

Only the excess above the PA unless you have other income. Then it will depend upon whether the correct amount of tax is deducted from that other income.