Retirement...when, how old and how much??

halfmist said:
It’s good to see someone put a very reasoned case together without becoming abusive.
Just to deal with the points you make.
Human nature being what it is everyone wants more, there just isn’t enough to give everyone what they want.
As regards the pension changes, we know why the Government brought that change in, the NHS consultants refused to work additional hours as their effective tax Tate became 55%.
Some additional tax will be recovered when they get around to drawing their pension.
Capital Gains Tax. It was proven last time they raised the rates the tax take went down.
Dividends rates in line with income tax, the main losers there would be the pension funds and ultimately those with a private pension fund so less incentive to save and hence become more reliant on the State.
I think the evidence says the wealthy are paying a higher percentage rate than they have ever done before.
Tax them even further and then why would they bother taking risks, employing others, putting their wealth on the line etc with personal bank guarantees.
Some might not like it but it’s a fact the market determines what your worth as an employee
Click to expand...
The whole purpose of government and civilisation for that matter is to ensure everyone is provided for and to ensure balance.

To address your responses -
  • The changes to pension limits have little to do with doctors and more to do with a wealth tax break. If it was purely doctors then the limit would have been increased rather than abolished or purely targeted at doctors. Whilst you do pay income tax when you withdraw money, you pay it at a future rate which will have a higher threshold than todays income tax bands. Furthermore you also avoid national insurance so the overall tax rate is much less and you can withdraw 25% tax free.
  • The argument that the tax rate is effectively 55% once you exceeded the threshold is also not really valid. I would have exceeded the limit but any way you look at it, if you are employed by a company it’s effectively free money being payed in, just the benefit is not as substantial.
  • To quote the late Nigel Lawson, who I have a great deal of respect for, “there is little economic difference between income and capital gains tax”, between 1988 and 98, contrary to the claim that tax take reduced, it didn’t, it actually increased and the administration costs were also much lower, what did happen is that CGT could no longer be used as a loop hole so CGT revenue went down but income tax receipts increased. Most economists agree that aligning CGT is the right thing to do, including the IFS (Institute for Fiscal Studies). CGT is a progressive tax, however it does require some thought about how it’s implemented. You need to avoid taxing the increase in the value of an asset due purely to inflation (indexation) and only tax the net gain. The bigger target needs to be the taxing more of the share-based rewards arising from employment, and of the accumulated retained earnings in smaller companies. Likewise ensuring that hedge and wealth managers don’t get paid using the “carried interest” loophole which means their income is only taxed at CGT rates and not income tax rates.
  • Pension funds are exempt from dividend tax.
  • Regarding entrepreneurship there are already existing tax incentives that encourage investment e.g Business Asset Disposal Relief. However I do agree that risk based investment should be incentivised but not using the broad brush tools currently applied. Something much more targeted that incentivises the growth of smaller business that offer skilled employment and training, not just minimum wage jobs. This would prevent the use of small companies as a way to avoid tax and as a wrapper for assets.
Yes there is always going to be a disparity between what people earn and rightly so, should someone who has studied for years and become a doctor be paid the same as someone who decided that they couldn’t be bothered, of course not. Likewise those that have truly taken financial risks with their own money should be wealthier.

The problem is when that disparity grows to the level that we are at now, where many have little to no disposable income and the few can spend almost without consequence.

Sorry everyone if I have derailed the thread a little here. I will go back in my box.
 
Kompany Car said:
The whole purpose of government and civilisation for that matter is to ensure everyone is provided for and to ensure balance.

To address your responses -
  • The changes to pension limits have little to do with doctors and more to do with a wealth tax break. If it was purely doctors then the limit would have been increased rather than abolished or purely targeted at doctors. Whilst you do pay income tax when you withdraw money, you pay it at a future rate which will have a higher threshold than todays income tax bands. Furthermore you also avoid national insurance so the overall tax rate is much less and you can withdraw 25% tax free.
  • The argument that the tax rate is effectively 55% once you exceeded the threshold is also not really valid. I would have exceeded the limit but any way you look at it, if you are employed by a company it’s effectively free money being payed in, just the benefit is not as substantial.
  • To quote the late Nigel Lawson, who I have a great deal of respect for, “there is little economic difference between income and capital gains tax”, between 1988 and 98, contrary to the claim that tax take reduced, it didn’t, it actually increased and the administration costs were also much lower, what did happen is that CGT could no longer be used as a loop hole so CGT revenue went down but income tax receipts increased. Most economists agree that aligning CGT is the right thing to do, including the IFS (Institute for Fiscal Studies). CGT is a progressive tax, however it does require some thought about how it’s implemented. You need to avoid taxing the increase in the value of an asset due purely to inflation (indexation) and only tax the net gain. The bigger target needs to be the taxing more of the share-based rewards arising from employment, and of the accumulated retained earnings in smaller companies. Likewise ensuring that hedge and wealth managers don’t get paid using the “carried interest” loophole which means their income is only taxed at CGT rates and not income tax rates.
  • Pension funds are exempt from dividend tax.
  • Regarding entrepreneurship there are already existing tax incentives that encourage investment e.g Business Asset Disposal Relief. However I do agree that risk based investment should be incentivised but not using the broad brush tools currently applied. Something much more targeted that incentivises the growth of smaller business that offer skilled employment and training, not just minimum wage jobs. This would prevent the use of small companies as a way to avoid tax and as a wrapper for assets.
Yes there is always going to be a disparity between what people earn and rightly so, should someone who has studied for years and become a doctor be paid the same as someone who decided that they couldn’t be bothered, of course not. Likewise those that have truly taken financial risks with their own money should be wealthier.

The problem is when that disparity grows to the level that we are at now, where many have little to no disposable income and the few can spend almost without consequence.

Sorry everyone if I have derailed the thread a little here. I will go back in my box.
Click to expand...
I could reply in detail to your very good well thought out points but like you have said we are getting a little bit off thread and also I am off out in the next 10 minutes.
My overall point is who ever is in power has a massive problem in trying to redistribute wealth through the tax system.
For example if tax payers had to list a change in value on every capital item they had over £1000 on a tax return annually it would run in to 10’s of pages.
Assets easy to hide or dispose of would never be declared.
Then there is the problem with valuation, I own land next to a housing estate.
Without planning it’s worth Jack shit, with it, it’s worth several million.
How is that dealt with in wealth redistribution.
I would obviously not apply for planning permission until any rules were changed back.
What would you do with individual homes. If they remained the only tax free asset everyone would plough everything in to them and prices would shoot up.
Best of luck to any Party who genuinely tries to tackle the problem of wealth redistribution.
Finally whilst there are tax incentives and exemptions from any tax there will always be legal tax avoidance and I doubt there will be any mention of removing incentives in either parties manifesto’s
 
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I think part of not enjoying retirement or feeling you want to go back to work is a bit like when they release a whale from captivity. You're so used to your old way of life that you can't adapt to being free. In the same fashion, you even hear about people being released from long prison sentences who want to go back in.
 
halfmist said:
It’s good to see someone put a very reasoned case together without becoming abusive.
Just to deal with the points you make.
Human nature being what it is everyone wants more, there just isn’t enough to give everyone what they want.
As regards the pension changes, we know why the Government brought that change in, the NHS consultants refused to work additional hours as their effective tax Tate became 55%.
Some additional tax will be recovered when they get around to drawing their pension.
Capital Gains Tax. It was proven last time they raised the rates the tax take went down.
Dividends rates in line with income tax, the main losers there would be the pension funds and ultimately those with a private pension fund so less incentive to save and hence become more reliant on the State.
I think the evidence says the wealthy are paying a higher percentage rate than they have ever done before.
Tax them even further and then why would they bother taking risks, employing others, putting their wealth on the line etc with personal bank guarantees.
Some might not like it but it’s a fact the market determines what your worth as an employee
Click to expand...
Spot on, it's bloody hard running a small business these days. The corporation tax hike will put an end to tens of thousands of small buiness aspirations. Those that don't run a small business think it's allsweetness and light. Far from it.

There is very little financial incentive to start a small buiness these days and an awful lot of hassle and hoops to jump through that wernt there 30 years ago.
 
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