Savings and Investments thread

Premium bonds.

A disappointing £25 for me, £150 for Mrs R7L both on max holding. Daughter zero on around half max holding.

£75 on max holding…

£250 on £80k joint , best month in a while .

Rob7Lee said:

redman said:

Rob7Lee said:

golfaddick said:

In a different vein it was good to get Dan Neidle's view on the Budget on Peston on Wednesday night. 

Great take on the new Pension Tax Allowance  (you know, the jolly wheeze the Treasury have come up with to make sure anyone with pension income just above the Personal Allowance not to pay tax, even though any other person of the working population with the same income will). He said that the problem with this new Allowance is that it will now be around for ever. It will be increased year on year and/or tinkered with but ultimately will just become another tax allowance ' instead of just bloody increasing the PA for everyone. And this is how these things start. Like the actual Pension Allowance & the Lifetime Allowance (which although is now defunct still has the 25% TFC limit linked to it) that were brought in by Labour in 2006 and subsequently massively reduced under the Coalition in the name of austerity. 

Our tax system is over complicated and in my lifetime all successive governments have done is add to that complexity.

It should be easy to have a single tax allowance that everyone has whether you earn £1 or £10m.

likewise get rid of NI for employees and have a single income tax (obviously various bands) at whatever rate is required.

its really not that difficult.

such as things like winter fuel allowance, just add it to the state pension or to the tax code so everyone receives.

The benefit system is also over complicated and surely could be simplified.

im sure there are huge cost savings to be had by simplifying all this.

Although I would agree with this the big problem would be the raft of winners and losers. Currently an employee below £50k pays 28% (20% IT plus 8% NI) whereas a pensioner (or landlord) pays 20%. I'm not going to argue the rights and wrongs or how we got to this point, but combinimg those 2 atm would not be politically possible. 

Landlord is increasing to 24% from next April. But frankly it's ridiculous, there should be one 'income tax' whether you are retired or not, whether your income comes from 'working' or investing, having NI on (broadly) only those who get paid for their work is a little ridiculous, also on the self employed/lower rates. We are making it worse by giving some people a higher personal allowance simply by virtue of the idiots in charge making decisions like increasing the pension to a higher amount than the frozen personal allowance.

Give everyone a Personal allowance (and it should be more than current, say £15-18k)
Change the tax rates to take into account NI being 'merged' in (so something like, 24%, 44%, 49% funnily enough)
Adjust the start/end point of the bands to adjust for the personal allowance increase
Move bands and the personal allowance annually in line with some form of inflation.
CGT align with Income tax.
Remove savings allowance (taken into account with the personal allowance)

Slowly work with industry to diminish the need for in work benefits, to me this was one of the worst things Labour did back in the 90's, we moved away from employers paying and moving it onto the state. Minimum wage should be more regional and be a lot higher in certain regions.

Overhaul the benefit system and bring it back to what it was meant to be, a short safety net (of course there are long term safety nets for disabled etc which should continue and probably go up).

valleynick66 said:

Is that 10% of all adults pay (some) tax at 40% or 10% of working adults?

Strikes me as low when it’s said the average salary is quoted as c£30k. 

The danger of averages. 

The figures I saw say it is 10% of all adults So if we take the figures at face value only 62% of all adults pay income tax - 38% do not. Figures adjusted for that (I may have the maths wrong of course) would mean roughly 16% of working adults who pay tax pay some at 40%.

bobmunro said:

valleynick66 said:

Is that 10% of all adults pay (some) tax at 40% or 10% of working adults?

Strikes me as low when it’s said the average salary is quoted as c£30k. 

The danger of averages. 

The figures I saw say it is 10% of all adults So if we take the figures at face value only 62% of all adults pay income tax - 38% do not. Figures adjusted for that (I may have the maths wrong of course) would mean roughly 16% of working adults who pay tax pay some at 40%.

Thanks. Likewise when it says 40% tax payers = £87.7bn is that all the tax they (as individuals) pay or just the part taxed at  40%?

Not being awkward just curious how it breaks down. 

Rob7Lee said:

redman said:

Rob7Lee said:

golfaddick said:

In a different vein it was good to get Dan Neidle's view on the Budget on Peston on Wednesday night. 

Great take on the new Pension Tax Allowance  (you know, the jolly wheeze the Treasury have come up with to make sure anyone with pension income just above the Personal Allowance not to pay tax, even though any other person of the working population with the same income will). He said that the problem with this new Allowance is that it will now be around for ever. It will be increased year on year and/or tinkered with but ultimately will just become another tax allowance ' instead of just bloody increasing the PA for everyone. And this is how these things start. Like the actual Pension Allowance & the Lifetime Allowance (which although is now defunct still has the 25% TFC limit linked to it) that were brought in by Labour in 2006 and subsequently massively reduced under the Coalition in the name of austerity. 

Our tax system is over complicated and in my lifetime all successive governments have done is add to that complexity.

It should be easy to have a single tax allowance that everyone has whether you earn £1 or £10m.

likewise get rid of NI for employees and have a single income tax (obviously various bands) at whatever rate is required.

its really not that difficult.

such as things like winter fuel allowance, just add it to the state pension or to the tax code so everyone receives.

The benefit system is also over complicated and surely could be simplified.

im sure there are huge cost savings to be had by simplifying all this.

Although I would agree with this the big problem would be the raft of winners and losers. Currently an employee below £50k pays 28% (20% IT plus 8% NI) whereas a pensioner (or landlord) pays 20%. I'm not going to argue the rights and wrongs or how we got to this point, but combinimg those 2 atm would not be politically possible. 

Landlord is increasing to 24% from next April. But frankly it's ridiculous, there should be one 'income tax' whether you are retired or not, whether your income comes from 'working' or investing, having NI on (broadly) only those who get paid for their work is a little ridiculous, also on the self employed/lower rates. We are making it worse by giving some people a higher personal allowance simply by virtue of the idiots in charge making decisions like increasing the pension to a higher amount than the frozen personal allowance.

Give everyone a Personal allowance (and it should be more than current, say £15-18k)
Change the tax rates to take into account NI being 'merged' in (so something like, 24%, 44%, 49% funnily enough)
Adjust the start/end point of the bands to adjust for the personal allowance increase
Move bands and the personal allowance annually in line with some form of inflation.
CGT align with Income tax.
Remove savings allowance (taken into account with the personal allowance)

Slowly work with industry to diminish the need for in work benefits, to me this was one of the worst things Labour did back in the 90's, we moved away from employers paying and moving it onto the state. Minimum wage should be more regional and be a lot higher in certain regions.

Overhaul the benefit system and bring it back to what it was meant to be, a short safety net (of course there are long term safety nets for disabled etc which should continue and probably go up).

I agree. It is ridiculous. My point was it is politically impossible. 

£275 on the Premium Bonds this morning on a £40k.  

Rob7Lee said:

TelMc32 said:

£275 on the Premium Bonds this morning on a £40k.  

Forgot to tell them that dad had passed away recently and he’s won £150 😔

You can stay in for 6 months post death (sorry to hear of your loss).

That's handy to know & must tell @LargeAddick as our mother sadly passed away on Sunday and she had the max holding. 

Bugger all for me £100 for ‘Er Indoors both approx 50%. One of the grandsons won £50 on £750 or thereabouts.

golfaddick said:

Rob7Lee said:

TelMc32 said:

£275 on the Premium Bonds this morning on a £40k.  

Forgot to tell them that dad had passed away recently and he’s won £150 😔

You can stay in for 6 months post death (sorry to hear of your loss).

That's handy to know & must tell @LargeAddick as our mother passed away on Sunday and she had the max holding. 

I'm very sorry for all of your loss. I lost my mum a few years ago and my dad this year. Nobody is ever old enough or ready to lose a parent. This sort of thing, premium bonds wins, and the lack of messages between me and my parents on PB day is a stark reminder each calendar month of my own personal loss. All 3 of you are such key players in this forum yet seemingly such very different characters. 

£0 on £30k for the second month running 

Rob7Lee said:

TelMc32 said:

£275 on the Premium Bonds this morning on a £40k.  

Forgot to tell them that dad had passed away recently and he’s won £150 😔

You can stay in for 6 months post death (sorry to hear of your loss).

It's actually 12 months.

Nothing on Max. Might be time for a change methinks.

mcgrandall said:

Rob7Lee said:

mcgrandall said:

valleynick66 said:

bobmunro said:

valleynick66 said:

Is that 10% of all adults pay (some) tax at 40% or 10% of working adults?

Strikes me as low when it’s said the average salary is quoted as c£30k. 

The danger of averages. 

The figures I saw say it is 10% of all adults So if we take the figures at face value only 62% of all adults pay income tax - 38% do not. Figures adjusted for that (I may have the maths wrong of course) would mean roughly 16% of working adults who pay tax pay some at 40%.

Thanks. Likewise when it says 40% tax payers = £87.7bn is that all the tax they (as individuals) pay or just the part taxed at  40%?

Not being awkward just curious how it breaks down. 

I find increasingly ‘average’ is a very misleading figure sometimes. 

The point I’m making is that fiscal drag means more pay tax at 40% but that headline analysis can suggest the ‘wealthiest’ are already paying more than enough when perception is likely somewhere else. 

As we’ve said we have evolved to a complex set up that is very unwieldy. 

Looking at income tax alone has a distorting effect as it does not take account things like regressive taxes or income like capital gains, which is paid at a lower rate. 

It is better to look at something like proportion of total household income that is paid on taxes. I think it is something like the poorest 10% pay 50% of their income on tax, where the richest 10% pay only 40%. The vast majority of that difference will be made up by VAT and council tax. 

As it will always be, based on the fact that the poorest 10% will spend almost every penny whereas the richest 10% will not. You also have the nuance of age. If you take the top 10% of earners by age will be very different as at very different stages of career and experience. At 21 you need to earn £33k to be in the top 10% of that age, at 50 £85k. 

I'm also not sure on your numbers there (but don't know where the 10%  either end falls), I can't see any way that the top 10% only pay 40% tax in totality, before I have spent a penny of my salary, my income tax and NI is nearly 44%, by the time you add on the other taxes on what I then spend I suspect it's well over 50 possibly into the 60's (and I'm tight so don't spend enough or my salary! :-))

What is the point of having a progressive income tax then? Is it to counteract regressive taxes or is it because people on higher taxes can afford to pay more? IMO, if you think it is the second, it is a bit crazy say that the people who can afford to pay more are in effect paying a smaller proportion of their income on all taxes.

You are only really thinking of your salary as income, there are other forms that are taxed at a lower rate, such as capital gains (18-24%). Also wonder if you are taking things in to account like pensions, salary sacrifice or share save schemes, which are parts of your salary that are not taxed. 

As to the figures: UK Still Taxes the Poorest More Than the Richest - Equality Trust this is from 2024. I don't think it takes into account age. You have to appreciate that they are an average, so what you may be experiencing might be very different to someone with a higher income than you in the same bracket. Those households also probably have a disproportionate effect on these figures as well.

When you look at tax breaks/ income taxed at a lower rate that are worth the most (pensions and capital gains) they are only really available to higher income households in reality. The system is very much set up that it is easier to pay less tax if you are a higher earner. 

We have progressive income tax, but you aren't talking about just income tax!

I agree CGT should be equalised with your marginal income tax rate BTW.

Very little of my income benefits from salary sacrifice (and thats changing to) as the naughty people in Westminster cap what I can pay in. Share save schemes are not payable by salary sacrifice, comes out of already taxed income so if I invest £250 a month, thats almost £500 gross earnings, i'll then pay CGT on any gain over the allowance. My last tax return shows my tax rate to be 43.34% purely on PAYE after a small pension salary sacrifice, before I spend a penny in the shops or on bills etc.

Don't disagree with a lot of your points, but come back to this is hugely relative to disposable income, if someone spends 100% (or near) their income whatever level it is, and someone else spends 75%, then likely the one spending 100% is going to be a higher tax payer as a % of income (all taxes) by virtue of what they spend. If I spent every penny i'd hazard my % of gross income spent on tax would dwarf the lowest 10% earners, i'd be in the 70%'s+.

Short of taxing the 'wealthy' 75% plus on all income the dial is not going to move (unless you do something radical like no income tax on salaries below £50k), it's a nature of the beast! 

Lastly, please let me know of ways with being a higher earner I can pay less tax, it's not via pension as I can only pay in less than 1%, it's not having a personal allowance (as I don't get one).......