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Savings and Investments thread
Comments
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In the telegraph today it talks of 'Pension Raid to pay for pandemic'
Muted are;
Single rate relief for contributions
Tax on employer contributions
Lowering the LTA.
Personally I think it will be number 1, single rate tax relief, but wouldn't surprise me if it was more than one to include LTA as well.0 -
Ffs. Just as I’ve set up my SIPP as well.Rob7Lee said:In the telegraph today it talks of 'Pension Raid to pay for pandemic'
Muted are;
Single rate relief for contributions
Tax on employer contributions
Lowering the LTA.
Personally I think it will be number 1, single rate tax relief, but wouldn't surprise me if it was more than one to include LTA as well.0 -
Closing day for the competition? Isn't it 30 June, just over a week to go?
Currently 7040, think I put in 7110, so I'm quite comfortable with that, as it looks like the markets are treading water trying to work out inflation trends etc. But as i recall, a lot of punters were bunched in around this level, so it should be another exciting finish.!
I've always thought that a good result for anyone is to be within 2.5% of the final figure, assuming your investment decisions reflected your forecast of course...anyway, I'll be on holiday then so I'll be monitoring the excitement from my Strandkorb (weather permitting) :-)
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Yes, 30th June, not long to go.......0
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The LTA has been frozen for 5 years so I doubt that they will tinker with that again, especially as by rights it should be closer to £2m.Rob7Lee said:In the telegraph today it talks of 'Pension Raid to pay for pandemic'
Muted are;
Single rate relief for contributions
Tax on employer contributions
Lowering the LTA.
Personally I think it will be number 1, single rate tax relief, but wouldn't surprise me if it was more than one to include LTA as well.
It has been on the cards for the past few years that there should be a single rate of tax relief. It was mooted a lot before the Budget in March that it was going to happen this year, so I suspect that is the pension tax raid that will take place next. Just depends on whether they go for a flat 25%,30% or even 33%. To me 25% is so much easier to compute & explain.
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golfaddick said:
The LTA has been frozen for 5 years so I doubt that they will tinker with that again, especially as by rights it should be closer to £2m.Rob7Lee said:In the telegraph today it talks of 'Pension Raid to pay for pandemic'
Muted are;
Single rate relief for contributions
Tax on employer contributions
Lowering the LTA.
Personally I think it will be number 1, single rate tax relief, but wouldn't surprise me if it was more than one to include LTA as well.
It has been on the cards for the past few years that there should be a single rate of tax relief. It was mooted a lot before the Budget in March that it was going to happen this year, so I suspect that is the pension tax raid that will take place next. Just depends on whether they go for a flat 25%,30% or even 33%. To me 25% is so much easier to compute & explain.
This, as I've said previously, has been raised as potentially happening for at least the last 30 years. The rumour usually starts about February/March time pre tax year end as a "buy now while stocks last" by the Industry. If it does happen, I would expect the flat rate to be 20% otherwise wouldn't the gain made by the Government on the lesser number of higher rate tax payers be offset by the increase to 25% for the basic rate payers?1 -
I think dropping the 40% band/allowance will far outweigh any increase from 20-25% for those currently getting 10% relief. As generally higher earners will be paying far more into pension than lower earners.Addick Addict said:golfaddick said:
The LTA has been frozen for 5 years so I doubt that they will tinker with that again, especially as by rights it should be closer to £2m.Rob7Lee said:In the telegraph today it talks of 'Pension Raid to pay for pandemic'
Muted are;
Single rate relief for contributions
Tax on employer contributions
Lowering the LTA.
Personally I think it will be number 1, single rate tax relief, but wouldn't surprise me if it was more than one to include LTA as well.
It has been on the cards for the past few years that there should be a single rate of tax relief. It was mooted a lot before the Budget in March that it was going to happen this year, so I suspect that is the pension tax raid that will take place next. Just depends on whether they go for a flat 25%,30% or even 33%. To me 25% is so much easier to compute & explain.
This, as I've said previously, has been raised as potentially happening for at least the last 30 years. The rumour usually starts about February/March time pre tax year end as a "buy now while stocks last" by the Industry. If it does happen, I would expect the flat rate to be 20% otherwise wouldn't the gain made by the Government on the lesser number of higher rate tax payers be offset by the increase to 25% for the basic rate payers?
I think it's a real possibility this time under the banner of one way of paying some towards COVID debt. Think it would be a shame, we already have an over complicated Taxation system that needs simplifying. Also not sure how it'd work for those that salary sacrifice.0 -
The last meaningful discussion / debate I've been at around this topic was hosted by Royal London who had Steve Webb working for them at that time. Steve Webb was previously the Pensions minister under the coalition Government & so was in a great position to dispel myths & explain the treasury's thinking (if there was any). His view was that ISA's were The Treasurys main aim for mass savings (see how much the ISA allowance has increased over the years compared to how much the pension limits have decreased) and that tinkering of the LTA & AA was easy because the layman had no idea what it all meant & how it affected them. The changes to the LTA & AA over the past 5 years has been massive imo but there has hardly been a murmer in the press. 2 years ago the reduced AA & the tapering effect hit the headlines when it started to affect Doctors, but very minor adjustments were made (mostly by NHS Trusts saying that they would pay any excess tax charge) so it all went quiet again. Last autumn Rishi Sunek did increase the point at which tapering came in (not that many people noticed) and this has massively reduced the immediate problem of exceeding the AA & large tax bills, but there are still many issues around the LTA and its now 5 year fixed value.Addick Addict said:golfaddick said:
The LTA has been frozen for 5 years so I doubt that they will tinker with that again, especially as by rights it should be closer to £2m.Rob7Lee said:In the telegraph today it talks of 'Pension Raid to pay for pandemic'
Muted are;
Single rate relief for contributions
Tax on employer contributions
Lowering the LTA.
Personally I think it will be number 1, single rate tax relief, but wouldn't surprise me if it was more than one to include LTA as well.
It has been on the cards for the past few years that there should be a single rate of tax relief. It was mooted a lot before the Budget in March that it was going to happen this year, so I suspect that is the pension tax raid that will take place next. Just depends on whether they go for a flat 25%,30% or even 33%. To me 25% is so much easier to compute & explain.
This, as I've said previously, has been raised as potentially happening for at least the last 30 years. The rumour usually starts about February/March time pre tax year end as a "buy now while stocks last" by the Industry. If it does happen, I would expect the flat rate to be 20% otherwise wouldn't the gain made by the Government on the lesser number of higher rate tax payers be offset by the increase to 25% for the basic rate payers?
Non & Basic rate taxpayers see higher rate tax relief as a "perk" & are quite happy to see it scrapped & so is a vote winner if you are wanting to get the masses onside. I agree the scrapping if it is mooted every year but I don't think its put out there by pension providers or unscrupulous advisers 🤔😉. Its a fact that the system needs to be changed, but its just having the will & the guts to do it. I'm pretty sure in this Parliament we will see a single rate of pension tax relief.
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Can someone explain what might happen if we do get a single rate of pension tax relief. It sounds to me that that someone could get relief at one rate (be it 20%, 25% or 33%) but then when it is paid out as benefit could be taxed at 40%. doesn't this make pensions a bad investment above a certain level? Although it will get very complicated having to forecast future tax bands and I do realise there is the 25% tax free to take into account.0
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Yes it is possible to get less tax relief going in than the rate you will pay on income coming out. But you also need to factor in employers' contributions.redman said:Can someone explain what might happen if we do get a single rate of pension tax relief. It sounds to me that that someone could get relief at one rate (be it 20%, 25% or 33%) but then when it is paid out as benefit could be taxed at 40%. doesn't this make pensions a bad investment above a certain level? Although it will get very complicated having to forecast future tax bands and I do realise there is the 25% tax free to take into account.
Ignoring growth - and assuming your contributions are matched by your employer, every £10 you put in costs you £8 (assuming 20% relief) plus £10 from employer = £18
£18 coming out as income, taxed at 40%, would net you £10.80 - a net return on investment of 35%
Based on the above, it still makes economic sense, but not as good of course - tax relief at 40% going in would mean it would cost you £6 for every £10 contributed - so a net return on investment of 80% assuming you're paying 40% on income coming out.0 -
golfaddick said:
The last meaningful discussion / debate I've been at around this topic was hosted by Royal London who had Steve Webb working for them at that time. Steve Webb was previously the Pensions minister under the coalition Government & so was in a great position to dispel myths & explain the treasury's thinking (if there was any). His view was that ISA's were The Treasurys main aim for mass savings (see how much the ISA allowance has increased over the years compared to how much the pension limits have decreased) and that tinkering of the LTA & AA was easy because the layman had no idea what it all meant & how it affected them. The changes to the LTA & AA over the past 5 years has been massive imo but there has hardly been a murmer in the press. 2 years ago the reduced AA & the tapering effect hit the headlines when it started to affect Doctors, but very minor adjustments were made (mostly by NHS Trusts saying that they would pay any excess tax charge) so it all went quiet again. Last autumn Rishi Sunek did increase the point at which tapering came in (not that many people noticed) and this has massively reduced the immediate problem of exceeding the AA & large tax bills, but there are still many issues around the LTA and its now 5 year fixed value.Addick Addict said:golfaddick said:
The LTA has been frozen for 5 years so I doubt that they will tinker with that again, especially as by rights it should be closer to £2m.Rob7Lee said:In the telegraph today it talks of 'Pension Raid to pay for pandemic'
Muted are;
Single rate relief for contributions
Tax on employer contributions
Lowering the LTA.
Personally I think it will be number 1, single rate tax relief, but wouldn't surprise me if it was more than one to include LTA as well.
It has been on the cards for the past few years that there should be a single rate of tax relief. It was mooted a lot before the Budget in March that it was going to happen this year, so I suspect that is the pension tax raid that will take place next. Just depends on whether they go for a flat 25%,30% or even 33%. To me 25% is so much easier to compute & explain.
This, as I've said previously, has been raised as potentially happening for at least the last 30 years. The rumour usually starts about February/March time pre tax year end as a "buy now while stocks last" by the Industry. If it does happen, I would expect the flat rate to be 20% otherwise wouldn't the gain made by the Government on the lesser number of higher rate tax payers be offset by the increase to 25% for the basic rate payers?
Non & Basic rate taxpayers see higher rate tax relief as a "perk" & are quite happy to see it scrapped & so is a vote winner if you are wanting to get the masses onside. I agree the scrapping if it is mooted every year but I don't think its put out there by pension providers or unscrupulous advisers 🤔😉. Its a fact that the system needs to be changed, but its just having the will & the guts to do it. I'm pretty sure in this Parliament we will see a single rate of pension tax relief.
As someone who was an IFA Broker Consultant (going back 30 years plus) and then an IFA I can assure you that the "rumours" were prevalent most years - and it didn't take much of a rumour for the Industry to put it at the top of the list of buying opportunities. Which is why I am slightly cynical when it rears its ugly head although I dare say, if I put money on it not happening this year, I would almost certainly lose!0 -
Assuming the 40% tax band remains at £50k pa you would need a very good pension pot or DB scheme to be getting in excess of £50k pa. I do have a few clients in this position but all are Doctors who took their pensions pre 2010 so before the LTA & AA were changed. I doubt anyone solely in DC schemes will have built up enough in their pension pot to receive an income above the 40% tax threshold......and if they do there are ways you can take the pension to minimise the tax take. Likewise with anyone in a DB scheme with pension benefits above £50k there are ways of reducing the pension & maximising the lump sum.redman said:Can someone explain what might happen if we do get a single rate of pension tax relief. It sounds to me that that someone could get relief at one rate (be it 20%, 25% or 33%) but then when it is paid out as benefit could be taxed at 40%. doesn't this make pensions a bad investment above a certain level? Although it will get very complicated having to forecast future tax bands and I do realise there is the 25% tax free to take into account.0 -
Don't forget with modern drawdown people can draw what they like, so you don't have to have a huge pot to hit 40% (although you'd likely be silly to take that much a year unless you had a large pot).golfaddick said:
Assuming the 40% tax band remains at £50k pa you would need a very good pension pot or DB scheme to be getting in excess of £50k pa. I do have a few clients in this position but all are Doctors who took their pensions pre 2010 so before the LTA & AA were changed. I doubt anyone solely in DC schemes will have built up enough in their pension pot to receive an income above the 40% tax threshold......and if they do there are ways you can take the pension to minimise the tax take. Likewise with anyone in a DB scheme with pension benefits above £50k there are ways of reducing the pension & maximising the lump sum.redman said:Can someone explain what might happen if we do get a single rate of pension tax relief. It sounds to me that that someone could get relief at one rate (be it 20%, 25% or 33%) but then when it is paid out as benefit could be taxed at 40%. doesn't this make pensions a bad investment above a certain level? Although it will get very complicated having to forecast future tax bands and I do realise there is the 25% tax free to take into account.0 -
Most senior and many semi senior people can have flexible benefits and can take the employer pension contributions as cash (taxed). It is quite a complicated scenario which means forecasting a lot of factors many years ahead.bobmunro said:
Yes it is possible to get less tax relief going in than the rate you will pay on income coming out. But you also need to factor in employers' contributions.redman said:Can someone explain what might happen if we do get a single rate of pension tax relief. It sounds to me that that someone could get relief at one rate (be it 20%, 25% or 33%) but then when it is paid out as benefit could be taxed at 40%. doesn't this make pensions a bad investment above a certain level? Although it will get very complicated having to forecast future tax bands and I do realise there is the 25% tax free to take into account.
Ignoring growth - and assuming your contributions are matched by your employer, every £10 you put in costs you £8 (assuming 20% relief) plus £10 from employer = £18
£18 coming out as income, taxed at 40%, would net you £10.80 - a net return on investment of 35%
Based on the above, it still makes economic sense, but not as good of course - tax relief at 40% going in would mean it would cost you £6 for every £10 contributed - so a net return on investment of 80% assuming you're paying 40% on income coming out.
You also assume that other employers continue with their current policies and either don't offer flexible benefits or just move to a system where they cap at a certain £ level and pay the rest as salary.0 -
As do I - very little benefit in doing otherwise. But the LTA and tapering changes only affect a very small proportion of occupational pension savers.redman said:
Most senior and many semi senior people can have flexible benefits and can take the employer pension contributions as cash (taxed). It is quite a complicated scenario which means forecasting a lot of factors many years ahead.bobmunro said:
Yes it is possible to get less tax relief going in than the rate you will pay on income coming out. But you also need to factor in employers' contributions.redman said:Can someone explain what might happen if we do get a single rate of pension tax relief. It sounds to me that that someone could get relief at one rate (be it 20%, 25% or 33%) but then when it is paid out as benefit could be taxed at 40%. doesn't this make pensions a bad investment above a certain level? Although it will get very complicated having to forecast future tax bands and I do realise there is the 25% tax free to take into account.
Ignoring growth - and assuming your contributions are matched by your employer, every £10 you put in costs you £8 (assuming 20% relief) plus £10 from employer = £18
£18 coming out as income, taxed at 40%, would net you £10.80 - a net return on investment of 35%
Based on the above, it still makes economic sense, but not as good of course - tax relief at 40% going in would mean it would cost you £6 for every £10 contributed - so a net return on investment of 80% assuming you're paying 40% on income coming out.
You also assume that other employers continue with their current policies and either don't offer flexible benefits or just move to a system where they cap at a certain £ level and pay the rest as salary.0 -
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One week to go ...0
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And I'm currently just 40 points adrift.....WishIdStayedinthePub said:One week to go ...0 -
I need a 300 odd swing the other way!0
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40? Me I’m just 14 adrift.golfaddick said:
And I'm currently just 40 points adrift.....WishIdStayedinthePub said:One week to go ...
peaked too early this time, I fear0 -
I need about 25 points more. Another day of trading & then I need the Queen to pass away & everything then shuts down for a period of mourning 🙂.bobmunro said:
* obviously just joking.....0 -
Came on to say that I've had an email saying that the Premier Miton UK Smaller Companies fund is waiving its 5% entrance charge (bid-offer spread 🤔) as from next month. Might only be a temporary measure but it's good to see it's back in the fold.1
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Tesla looks like it’s gonna break out of a descending triangle it’s been in since January. Bought some Prosus stock as well as it seems undervalued right now, great quarterly and is printing a bullish divergence on the daily.0
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Still all to play for, at close of play today (7074.06) with a week to go or there about;
Name Level Variance % Variance @TelMc32 7080 5.94 0.08% LargeAddick 7047 27.06 0.38% Exiledin Manchester 7106 31.94 0.45% PragueAddick 7110 35.94 0.51% valleynick66 7121 46.94 0.66% Bangkokaddick 7025 49.06 0.69% gunnessaddick 7021 53.06 0.75% golfaddick 7132 57.94 0.82% WishIdStayedInThe Pub 7150 75.94 1.07% Morboe 6990.5 83.56 1.18%
Less than 80 points separates the top 10, anything could happen...........1 -
Especially as the market had been up 20-30 points most of the day & fell during the last 90 mins of trading. It was looking odds on to be above 7100 this evening. Bloody market traders !!Rob7Lee said:Still all to play for, at close of play today (7074.06) with a week to go or there about;Name Level Variance % Variance @TelMc32 7080 5.94 0.08% LargeAddick 7047 27.06 0.38% Exiledin Manchester 7106 31.94 0.45% PragueAddick 7110 35.94 0.51% valleynick66 7121 46.94 0.66% Bangkokaddick 7025 49.06 0.69% gunnessaddick 7021 53.06 0.75% golfaddick 7132 57.94 0.82% WishIdStayedInThe Pub 7150 75.94 1.07% Morboe 6990.5 83.56 1.18%
Less than 80 points separates the top 10, anything could happen...........1 -
The amazing thing there is, how many of us are so close. If you had ten "professional commentators" doing the same forecast, I wonder how many of them would be able to claim 99% accuracy...
I reckon we should start selling our forecasts to the industry, guys
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