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Lifetime allowance increase

Vote winner for middle England.

further spoke in equities to follow with more money chasing stocks and funds? 

Hi Lawperson - The pension limit for those earning more than 312k is now down to 4k a year, not 10k. That changed a few years ago, with tapering now starting at 240k

What dux said. This is basically just a further sop to Boomers and people with DB pensions. Mainly doctors. The great thing is once the current crisis is past they can reduce it again to make sure everyone currently under 50 or without a ponzi pension still gets fooked.

What people under 50 (most of whom wont get anywhere near the lifetime allowance by the time theyve paid off vast mortgages, uni fees, filled all the gaps in our shite public services etc)  need is either a tax cut or reinstatement of full annual allowances.  That might actually be helpful to them.

So I can almost guarantee that it wont happen.

I pay increasingly little attenton tk budgets other then jumping on here for a quick therapeutic bitch. Doenst matter who is in power or what the latest issues are - I know there will be a lot if hot air and that at the end of it they will have fooked me over again.

So predictable as to be boring. 

It may mainly affect doctors, but the fact remains we have a shortage and if it encourages qualified doctors to increase their hours or postpone retirement then it should be worth it. Yes DB pensions are anachronistic and very expensive, but the alternative is paying them better upfront, which is also politically difficult to achieve.

 

Well quite. If they paid them more they might have to pay other people properly and we can have that!

Its more patching up of our decrepit income socialism that makes everyone poor save for Boomers, leveraged homeowners and those with unfunded pensions worth over a £million pounds.

IncSoc at its finest.

This doesn't mainly affect doctors.  Anyone in a status profession (who doesn't make it to the top of that profession) is likely to hit the current LTA.  It's not fit for purpose.

Wonckworth, the main difference is that in the private sector you can just choose to reduce your pension contributions and take more of your remuneration as (taxed) pay. Doctors (and other public sector workers with DB pensions) don't generally have that option. If it weren't for that, you might take the public policy view not to bother giving tax incentives for retirement savings over the current LTA

Boomers are now between 59 and 68.  This policy won’t benefit them. It will benefit those in their 30s and 40s now who want to save and have a meaningful income in retirement.  Those in their 40s now might not retire for 20 or more years. It’s not hard to compound to a million if you started at 23. 

It's a massive benefit to a boomer on £210k that is thinking about retiring. If they have given up accumulating due to LA, they can get a further advance on their mortgage, pay £88k into their SIPP, have it put up to £110k in there, and collect another £30k off HMRC to put into whatever they like. 

They can then repeat the trick to save £18k in tax every year they struggle on.  

So if I was a £210k earner today that had given up contributing 4+ years ago due to LA, I'd get my £100k in now to claim year T-3's carry forward plus new £60k allowance. I'd then put in £100k next year to get T-2's carry forward and the £60k. In 2024/25 another £100k to use up T-1's carry forward and that year's AA. 

I'd then use the tax rebates to blow on some shitty overfeed VCT/EIS or give them to my wife to SIPP them and repeat the trick if a higher rate taxpayer but not mega earner. 

So Hunt has either gifted away about £150k in tax relief to this person, or clawed back the IT they continue to pay cos they didn't want to just give up.

Taper min up to £10k and taper only kicks in at £260k. Allowance changes only start next tax year, so in the meantime make a contribution this year of £80k to save your t-3 carry forward. Then next year you can SiPP the remaining £80k plus that year's allowance. If you are an NQ at a US firm you should be maxing this out as they will have to shut off higher rate tax relief at some point.

good to know that this conservative government is looking out for the highest earners during this cost of living crisis

Many ROFers who identify as on the left, and doctors, said that this was necessary to encourage senior doctors not to give up work or come back to work.  Do you agree with them, and if this isn't satisfactory what would you have done?

Doctors ‘coming back to work’ - what does that mean? Contracting in ppl who’ve retired so they can choose their hours per week with no abatement to their DB pension? Dead cat. This is a sop to people who’ve still got surplus cash but nowhere to put it and have been polled as trusting starmer. 

Doctors ‘coming back to work’ - what does that mean?

Doctors who don't do extra shifts because they get tax bills as a result of accruing additional DB benefits by doing so.

Doctors who have retired or semi-retired for the same reason.

You can look up the ROF threads if you like for a fuller explanation from New Chimp and others.

If you think achieving the objective of getting more doctors in this position into work for the NHS, would you have approached this any differently? 

TF, do you mean the minimum tapered allowance specifically?  I'm happy about it, personally.

I don't think it's a good look for the tories to give a tax cut to the top 0.2% (roughly) of earners during a cost of living crisis.

For a given level of spending+deficit, less tax for one group of people means more tax for another group.  I think lobbing another tax break to rich people is terrible, but on the other hand having a lifetime and an annual allowance was stupid.

I'm more concerned about the difference in tax rates on earned Vs unearned income and capital gains.  And the various tax shields that assist with that.

That's more regressive than pension tax breaks.

The only measure relevant to most city law firm partners is the increase in the min tapered allowance.  The £4k minimum already made it all but impossible to reach the LTA.

If the main aim of this is to help doctors avoid pension tax charges then it seems strange that they wouldn't somehow try to shoehorn this into the current junior doctor negotiations 

Yeah, the sort of doctor benefiting from this is the consultant surgeon I saw privately yesterday who was grumbling about having to head off to the local NHS hospital to cover for junior doctors on strike.

Got to smart a bit if you were one of these people and retired in the last couple of years, taking maybe a £100-300k LTA charge. 

"immediately" benefit but its still the equivalent of saying to an industry that were' going to improve your pension without getting anything in return. Also aren't consultants also balloting for industrial action?

 

It does seem surprisingly bold and generous given what a soft target pensions have been over the last 15 years for tax grabs.

What I'm more surprised about is that it hasn't been tied to higher taxation of death benefits from these schemes, which is surely on the horizon.

No problem with the idea personally. You can pile up as much as you want for your own/your spouse's retirement but can't pass it down tax free. 

Also would get round the administrative complexity of inheritors having to draw down the scheme. Just liquidate it, pay the IHT and move on.

Maybe awkward for the folks that have put a bunch of commercial property into a SIPP I guess

If memory serves it was Osborne who brought this in? One of many things on which I don't think history will judge him kindly. 

Anyway, I never got why a lifetime limit was a good idea. 

Is this therefore a stunningly rare example of this Govt doing something sensible?

It was brought in as a tax raising measure obviously that they thought would not meet with much opposition because they thought the optics were that it would only have an impact on the ‘rich’, but then they got greedy and chipped it and also let fiscal drag go to work on it as well and suddenly it became an issue.

This seems to me to be far far more regressive that Truss’ proposals.

Tax on someone on £150K without pension (or other) wealth has just gone up.

Those with pensions worth £1m+ have just had a massive tax cut

To those who have more shall be given.

classic IncSoc

V good tactical move as surely Labour will have to commit to reducing the lta as part of its manifesto and campaign. Which will now be a tax on hardworking Brits and keyworker doctors….

That's the bear trap Bertha, but it won't work with Starmer because he will promise not to reduce the lifetime limit for doctors and then when he is elected he will come up with a new pledge.

 

On day one sir beer will say ‘we’ve looked at the books and things are worse than we were told’. To be fair, national debt nearly 100pc of gdp. Shocking. 

They halso haven't thought about how much 1miion is going to be worth by the time they retire (even if theyre already middle aged)  and how much money they will actually need to finance being alive for the last 20 years of their lives.

Sir beer has said he’ll reverse it - but does that mean he’ll actually reverse it - leading to tax charges for those using it in the meantime or does it mean he’ll introduce a new cap but grandfather those already above the cap

it’s an interesting moral dilemma generally - benefitting the rich to benefit the doctors so that doctors keep working because we don’t have enough doctors.  And the pension benefits are sooo good for doctors that they inadvertently are treated like rich people (even though in retirement they are rich people)

The economy needs other professionals to keep working too. Unemployment remains very low. 

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