Savings and Investments thread

Budget leaks from The Government/Teeasury saying the Lifetime Allowance will be increased to £1.8m and the Annual Allowance increased to £60k. 

Mainly due to the Government trying to lure the early retirees back into work as many retired/took their pension early and are now not working when the economy needs a boost.

Sectors it has affected the most includes the NHS with many Doctors having to retire/ take their pensions before 60 due to excess tax charges.

Yes, the same NHS where Doctors are currently on strike for more pay !!!

Oh, the irony.

golfaddick said:

Budget leaks from The Government/Teeasury saying the Lifetime Allowance will be increased to £1.8m and the Annual Allowance increased to £60k. 

Mainly due to the Government trying to lure the early retirees back into work as many retired/took their pension early and are now not working when the economy needs a boost.

Sectors it has affected the most includes the NHS with many Doctors having to retire/ take their pensions before 60 due to excess tax charges.

Yes, the same NHS where Doctors are currently on strike for more pay !!!

Oh, the irony.

But then those doctors that are striking are the young ones that are on £14.09 an hour. Those that have retired probably didn't have to carry the sort of debt that new recruits do when qualifying nowadays and many of those that have retired have had the benefit of private work to enhance their retirement pot too. It will be interesting to see quite how many will be persuaded to come out of retirement.

Interesting thing about the changes to the LTA (and will have to see the detail tomorrow) but if you've already taken a pension since 2006 then you will have already used up a % of your LTA......some Doctors I know have used up 100%+ of theirs. That means they have no more spare even if the LTA increases by £600k. 

That won't get them back working!!

golfaddick said:

Interesting thing about the changes to the LTA (and will have to see the detail tomorrow) but if you've already taken a pension since 2006 then you will have already used up a % of your LTA......some Doctors I know have used up 100%+ of theirs. That means they have no more spare even if the LTA increases by £600k. 

That won't get them back working!!

I wonder if it's as much to stop/make think the next set of retiree's in their 50's than it is to get back to work those already retired.

Pension LTA scrapped totally. 

Not sure when that comes in (assume from April 6th) and not sure how that would affect anyone who has already taken pension benefits & have a LTA %.  

golfaddick said:

Pension LTA scrapped totally. 

Not sure when that comes in (assume from April 6th) and not sure how that would affect anyone who has already taken pension benefits & have a LTA %.  

He would need to scrap the MPAA for it to make any significant difference..

meldrew66 said:

bobmunro said:

golfaddick said:

Pension LTA scrapped totally. 

Not sure when that comes in (assume from April 6th) and not sure how that would affect anyone who has already taken pension benefits & have a LTA %.  

He would need to scrap the MPAA for it to make any significant difference..

So, what's the difference between the 2 then? I've Googled both and they seem to be saying the same thing from the perspective of the amount of tax payable based on the value of your pension pot?!

It was in reply to Golfie.

The MPAA kicks in once you've started to draw down a pension. The current annual limit for contributions to get tax relief on is £40k (now rising to £60k). But if the MPAA kicks in that is (currently) reduced to £4k - it makes no sense to pay into a pension pot without the tax relief on contributions and if the MPAA stays as is then it is less likely to attract those already retired and drawing money from returning to work.

Yes, weird that he capped the tax-free Allowance at 25% of the current LTA - so £268,275. 

It seems the unlimited LTA doesn't take effect until the 2024/25 tax year. Next tax year it seems to suggest that any excess tax charges will somply not be payable/collected. 

Also, tapering has increased to £260k (from £240k)

I dont think the £10k MPAA cap will hinder it too much. Those who had a problem & have taken pension benefits probably have a sizeable pension anyway. And £10k in pension contributions per tax year isnt too shabby. 

Addick Addict said:

According to the OBR, this policy will only keep 15,000 extra people in work at an annual cost of £1bn so the Treasury is spending more than £66,000 per annum on each of those individuals. One other benefit for those beneficiaries of the relaxation of the rules is that the extra monies going into their pension pot will fall outside IHT if they die before reaching 75.

I'm sure those junior doctors who are striking because they are being paid £14.09 per hour are ecstatic that the Government can afford to reward their seniors in such a generous way.  

Today's "junior" doctors are tomorrow's Consultants, who will be very thankful that there is no LTA and a bigger Annual Allowance.

Looks like I could be very busy over the next weeks & months catching up with my DR clients who will be mightily relieved about this. My only annoyance is that I have spent the best part of 6 years detailing to them how we could mitigate these tax charges only now to be seen to have wasted my breath. 

Thanks Chancellors.....past & present.

Rob7Lee said:

golfaddick said:

Addick Addict said:

According to the OBR, this policy will only keep 15,000 extra people in work at an annual cost of £1bn so the Treasury is spending more than £66,000 per annum on each of those individuals. One other benefit for those beneficiaries of the relaxation of the rules is that the extra monies going into their pension pot will fall outside IHT if they die before reaching 75.

I'm sure those junior doctors who are striking because they are being paid £14.09 per hour are ecstatic that the Government can afford to reward their seniors in such a generous way.  

Today's "junior" doctors are tomorrow's Consultants, who will be very thankful that there is no LTA and a bigger Annual Allowance.

Looks like I could be very busy over the next weeks & months catching up with my DR clients who will be mightily relieved about this. My only annoyance is that I have spent the best part of 6 years detailing to them how we could mitigate these tax charges only now to be seen to have wasted my breath. 

Thanks Chancellors.....past & present.

Don't worry, I fully expect it to be reversed when Labour get in!

…..out of interest, if it is reversed when Labour get in, does that mean that those who came back to work/carried on working and now breach the £1m LTA cap would be caught out? If so, then assuming the high likelihood of Labour getting in some time soon, these workers would be mad to come back/continue now, wouldn’t they?

Addick Addict said:

golfaddick said:

Addick Addict said:

According to the OBR, this policy will only keep 15,000 extra people in work at an annual cost of £1bn so the Treasury is spending more than £66,000 per annum on each of those individuals. One other benefit for those beneficiaries of the relaxation of the rules is that the extra monies going into their pension pot will fall outside IHT if they die before reaching 75.

I'm sure those junior doctors who are striking because they are being paid £14.09 per hour are ecstatic that the Government can afford to reward their seniors in such a generous way.  

Today's "junior" doctors are tomorrow's Consultants, who will be very thankful that there is no LTA and a bigger Annual Allowance.

Looks like I could be very busy over the next weeks & months catching up with my DR clients who will be mightily relieved about this. My only annoyance is that I have spent the best part of 6 years detailing to them how we could mitigate these tax charges only now to be seen to have wasted my breath. 

Thanks Chancellors.....past & present.

But today's junior doctors won't be here on that money - either because they will make the decision that it isn't worth incurring £100k debt training to become doctors or that it is better for them to emigrate, once qualified, to the likes of Australia where they can earn 50% more. There are 50k junior doctors so that £1bn shared between them equates to an extra £20k per annum. So, let's say 10k return to work but that many leave the country. We've gained nothing bar older doctors who have relatively short working span. 

I have no idea how many qualified doctors will want to emigrate, or how many will want to qualify in the first place. 

But I do know a hell of a lot about the NHS Pension scheme & the career paths of doctors. I was employed by the BMA's financial services arm back in 2000 and have many clients that are doctors. The issue with the AA & the LTA has been a major problem ever since they were both dramatically reduced by George Osborne & then frozen at those limits by successive Chancellors. 

golfaddick said:

Addick Addict said:

golfaddick said:

Addick Addict said:

According to the OBR, this policy will only keep 15,000 extra people in work at an annual cost of £1bn so the Treasury is spending more than £66,000 per annum on each of those individuals. One other benefit for those beneficiaries of the relaxation of the rules is that the extra monies going into their pension pot will fall outside IHT if they die before reaching 75.

I'm sure those junior doctors who are striking because they are being paid £14.09 per hour are ecstatic that the Government can afford to reward their seniors in such a generous way.  

Today's "junior" doctors are tomorrow's Consultants, who will be very thankful that there is no LTA and a bigger Annual Allowance.

Looks like I could be very busy over the next weeks & months catching up with my DR clients who will be mightily relieved about this. My only annoyance is that I have spent the best part of 6 years detailing to them how we could mitigate these tax charges only now to be seen to have wasted my breath. 

Thanks Chancellors.....past & present.

But today's junior doctors won't be here on that money - either because they will make the decision that it isn't worth incurring £100k debt training to become doctors or that it is better for them to emigrate, once qualified, to the likes of Australia where they can earn 50% more. There are 50k junior doctors so that £1bn shared between them equates to an extra £20k per annum. So, let's say 10k return to work but that many leave the country. We've gained nothing bar older doctors who have relatively short working span. 

I have no idea how many qualified doctors will want to emigrate, or how many will want to qualify in the first place. 

But I do know a hell of a lot about the NHS Pension scheme & the career paths of doctors. I was employed by the BMA's financial services arm back in 2000 and have many clients that are doctors. The issue with the AA & the LTA has been a major problem ever since they were both dramatically reduced by George Osborne & then frozen at those limits by successive Chancellors. 

40% intend to leave the NHS once their qualified. That is why the Government have made this desperate move. 

Many of those doctors wanting to quit the NHS plan to work as doctors abroad. According to the survey, a third of junior doctors (33%) are planning to work as doctors in another country in the next twelve months, with Australia being the top choice of destination.

https://www.bma.org.uk/bma-media-centre/four-in-ten-junior-doctors-plan-to-leave-the-nhs-as-soon-as-they-can-find-another-job-bma-council-chair-reveals-in-new-years-message-to-the-country

meldrew66 said:

Rob7Lee said:

golfaddick said:

Addick Addict said:

According to the OBR, this policy will only keep 15,000 extra people in work at an annual cost of £1bn so the Treasury is spending more than £66,000 per annum on each of those individuals. One other benefit for those beneficiaries of the relaxation of the rules is that the extra monies going into their pension pot will fall outside IHT if they die before reaching 75.

I'm sure those junior doctors who are striking because they are being paid £14.09 per hour are ecstatic that the Government can afford to reward their seniors in such a generous way.  

Today's "junior" doctors are tomorrow's Consultants, who will be very thankful that there is no LTA and a bigger Annual Allowance.

Looks like I could be very busy over the next weeks & months catching up with my DR clients who will be mightily relieved about this. My only annoyance is that I have spent the best part of 6 years detailing to them how we could mitigate these tax charges only now to be seen to have wasted my breath. 

Thanks Chancellors.....past & present.

Don't worry, I fully expect it to be reversed when Labour get in!

…..out of interest, if it is reversed when Labour get in, does that mean that those who came back to work/carried on working and now breach the £1m LTA cap would be caught out? If so, then assuming the high likelihood of Labour getting in some time soon, these workers would be mad to come back/continue now, wouldn’t they?

You'd hope it wasn't retrospective but you never can 100% know/predict. Labour have already come out and said they will reverse it (except for Doctors!). That's why I said it may hasten my retirement as I suspect once drawing they won't change or will freeze it, not so sure if not drawing.

Personally I think it's a bit of a storm in a tea cup the negativity, there's lot of bits around the edges that people forget (or don't know) such as if someone earns north of 150k, they start to lose the allowance down to £10k by about £210k anyway, so anyone on a salary at that level or above and paying in more than £10k is not receiving any tax benefit in and will be hammered on the way out, hence why most don't bother. I've not seen anything yet that says that's changing under the new proposals but may have missed it.