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Non-motoring > Budget	Miscellaneous
Thread Author: sooty123	Replies: 46

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Wed 15 Mar 23 07:18

Budget - sooty123

Two big things already leaked, increase in pension lifetime allowance and an increase in free childcare hours.

Any surprises I wonder?

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Wed 15 Mar 23 08:17

Budget - Boxsterboy

I read that the maximum pension lifetime allowance was to be increased from £1m to £1.8m. How many people in the real world have pension pots of £1m? A real vote winner that!

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Wed 15 Mar 23 09:21

Budget - Manatee

It can't be unusual to bust the £1m LTA. Rates are up a bit at the moment, but when I was sorting out my pensions, an annuity of £25k with up to 5% inflation protection would have cost that.

It has been £1.8m before - it was in 2012 when I was chucked out of my last proper job.

The consultant thing needed solving. But it could have been done differently.

I do think it's a pity that, when absolutely everything is broken, they prioritise putting money into something that only benefits people who are comfortably off.

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Wed 15 Mar 23 08:17

Budget - Boxsterboy

I read that the maximum pension lifetime allowance was to be increased from £1m to £1.8m. How many people in the real world have pension pots of £1m? A real vote winner that!

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Wed 15 Mar 23 08:40

Budget - Bromptonaut

>> I read that the maximum pension lifetime allowance was to be increased from £1m to
>> £1.8m. How many people in the real world have pension pots of £1m? A real
>> vote winner that!

It will be interesting to see how it is framed.

The real world effect has been on relatively ordinary folks in well paid jobs and with a Defined Benefit pension. In that case the 'pot' is valued based on 20 times the pension payable in the first year plus any lump sum. Senior doctors in the NHS have been amongst those charged massively penal rates of tax as a result.

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Wed 15 Mar 23 09:23

Budget - smokie

Yes this is exactly why some doctors said they were cutting back on hours or leaving the NHS - so they didn't breach the lifetime allowance.

However I guess there are many who would welcome the additional income that would trigger a higher tax rate.

Seems a good thing though n the whole, if it indirectly assists the NHS situation.

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Wed 15 Mar 23 10:17

Budget - CGNorwich

"However I guess there are many who would welcome the additional income that would trigger a higher tax rate."

Perhaps but it does seem harsh to tax the money you pu into the pension pot at the higher rate and tax it again gain when it is paid to you as a pension. Hardly an incentive to continue saving.

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Wed 15 Mar 23 10:58

Budget - smokie

Have they stopped pension contributions being free of tax, or is my memory failing me? ISTR being not averse to stuffing additional money into my pension because he tax man paid some of it.

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Wed 15 Mar 23 13:33

Budget - CGNorwich

There it’s an annual limit, now being abolished. Lifetime limit remains. You of course still get taxed on the pension when it is paid.

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Wed 15 Mar 23 14:08

Budget - Manatee

>>There it's an annual limit, now being abolished. Lifetime limit remains.

T'other way round. LTA abolished, annual allowance up from £40k to £60k. That should fix it for the NHS consultants, and incidentally the very well off generally. Can't see a wheeze there for the super-rich at the moment but there will probably be 'unintended' consequences of totally removing the LTA.

What I always thought would be fairer would be to impute higher rate tax relief to contributions by lower rate taxpayers.

HR payers can shove money into pensions with 40% relief, and if they limit their drawdown they can get it back out later 25% tax free and with only lower rate tax on the rest. I am certainly doing the second part of that, having shoved the maximum into a SIPP in my last few years of working. Tough on the lower paid who only benefit much from the tax free lump sum.

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Wed 15 Mar 23 11:07

Budget - How Words Shift - Bromptonaut

Guardian's analysis of the Chancellor's options has the headline From pensions to pools: what to expect from Hunt’s spring budget.

My first thought was about the football pools and how they're taxed.

Turns out it's swimming pools!!

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Wed 15 Mar 23 13:25

Budget - How Words Shift - Manatee

Same here yesterday when there was a letter in the paper headed "Demise of the pools".

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Wed 15 Mar 23 14:44

Budget - How Words Shift - smokie

At the time I missed whatever the story was over Rishi's new pool which came up in PMQs and was why the House LOLd when Hunt mentioned swimming pools.

It turned out he's paid for additional grid equipment to provide enough power to heat his pool, and didn't get prioritised. Bit of a non-story actually, from the Grauniad

www.theguardian.com/politics/2023/mar/12/rishi-sunak-has-electricity-grid-upgraded-to-heat-his-private-pool

Anyway, I watched the Budget and I felt quite impressed with Hunt and also with what he was laying out. I was desperately trying to have a sympathetic ear to Starmer's response but I think he must have been listening to a different budget.

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Wed 15 Mar 23 16:46

Budget - How Words Shift - Zero

>> Anyway, I watched the Budget

Seems to me to be of benefit to the richest in the country. But no-one else.

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Wed 15 Mar 23 17:03

Budget - How Words Shift - Manatee

>>
>> >> Anyway, I watched the Budget
>>
>> Seems to me to be of benefit to the richest in the country. But no-one
>> else.

Slightly to the detriment of everyone else in fact, since we will be funding them.

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Wed 15 Mar 23 17:44

Budget - How Words Shift - Duncan

>> >> Seems to me to be of benefit to the richest in the country. But
>> no-one
>> >> else.
>>
>> Slightly to the detriment of everyone else in fact, since we will be funding them.
>>

Rich people are still disproportionately funding the country.

Even if they, say, pay less tax next year than this year, they are still paying more than their share of the cost of running the country.

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Wed 15 Mar 23 17:18

Budget - How Words Shift - Bobby

>>Seems to me to be of benefit to the richest in the country. But no-one else.

from the Tories? Who'd have thunk it!

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Wed 15 Mar 23 17:32

Budget - How Words Shift - CGNorwich

Are the childcare provisions and three months extension for the fuel subsidy exclusively for the rich then? I suppose the freeze on fuel,and alcohol duties are the same. Will the extra defence spending be only spent on defending the rich?

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Wed 15 Mar 23 18:01

Budget - How Words Shift - Zero

Well I am sure the less well off are delighted to have the tax free allowance frozen for 5 years despite a 10% rise in inflation. And I am sure they are delighted they can look forward to stashing over a million in their pension pots.

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Wed 15 Mar 23 17:08

Budget - How Words Shift - Manatee

>>Anyway, I watched the Budget and I felt quite impressed with Hunt

He's amazingly plausible. He'd be a real asset to Labour if he could be recruited.

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Wed 15 Mar 23 17:24

Budget - sooty123

I'm not sure the childcare was aimed at the rich, I don't think anyone can claim the free part if you own over 100k.

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Wed 15 Mar 23 17:48

Budget - CGNorwich

Probably the most significant story of the day. Following the failure of Silicon Valley Bank could be another massive banking crisis is looming.

www.cnbc.com/2023/03/15/credit-suisse-shares-slide-after-saudi-backer-rules-out-further-assistance.html

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Wed 15 Mar 23 18:23

Budget - smokie

Seemed to me quite a few capital investment plans which will create jobs for the workers, and hopefully wealth for the country. Also there seemed to be some improvements in the benefits system for disabled who want to work, for people on low incomes to encourage them to work and for parents of all school children with the wrap around child care pre and post school hours.

And for over 50 people who would like to return to work (presumably not the rich ones, though many of them still seem to be heading up fairly large companies like newspapers and stuff well into their nineties).

Given that the doctors were the ones who moaned loudest about the lifetime allowance I suppose you could say that parts were aimed at the rich, but I thought they had support here?

Actually other than that I can't recall anything much on a personal level aimed at the rich.

I'm not so sure one could have expected much different in a budget. When Truss decided to give it all away no-one approved. I was hoping Starmer might have mentioned what Labour might have done better but instead he just knocked the Tories.

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Wed 15 Mar 23 18:41

Budget - sooty123

Given that the doctors were the ones who moaned loudest about the lifetime allowance I suppose you could say that parts were aimed at the rich, but I thought they had support here?

It's interesting that the government haven't framed in that way at all.

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Wed 15 Mar 23 18:51

Budget - Manatee

Doctors will be a minority, and could easily have been dealt with exceptionally as judges already have been for some time.

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Thu 16 Mar 23 06:31

Budget - sooty123

I think pension rules are pretty complicated but judges have their own separate lifetime pension pot allowance?

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Wed 15 Mar 23 19:14

Budget - smokie

The govt wouldn't would they, it doesn't benefit just doctors of course but they have been the loudest complainants.

E.G www.bma.org.uk/our-campaigns/consultant-campaigns/pension/end-the-pension-tax-trap#:~:text=High%20contribution%20rates%2C%20significant%20pay,early%20or%20reducing%20their%20hours.

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Thu 16 Mar 23 10:11

Budget - smokie

I see the reporting today talks about how scrapping the pension cap was particularly targeted at doctors.

www.bbc.com/news/uk-politics-64972143

Though there must be plenty of others on similar salaries who would benefit, so why shouldn't it apply to all?

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Wed 15 Mar 23 18:56

Budget - Terry

The pension changes clearly benefit the better off - but it is a solution to senior doctors in particular choosing part time or early retirement. That some people earn more than others may be regarded by some as unpalatable - but it happens and get used to it.

Much of the budget benefits all - not just the wealthy:

- childcare
- fixing personal allowance levels - higher paid will suffer 40% tax on higher earnings.
- energy cap benefits all.
- pre-payment meter pricing benefits mainly the poorest - not many millionaires pre-pay!
. no increase in fuel duties may benefit all with cars - less for the wealthy who can afford EVs

Objectively - it was a sensible and fair budget. No major giveaways aside from childcare. No disproportionate benefit to the better off.

I thought Starmers response was uninspiring - empty, predictable criticism with little positive or innovative alternative ideas. He is a John Major Spitting Image category of politician - decent, unimaginative and utterly boring inn shades of grey.

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Wed 15 Mar 23 20:20

Budget - Bobby

The pensions change seem to have opened a huge loophole for inheritance tax avoidance.

(Un)intended consequences??

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Wed 15 Mar 23 21:04

Budget - Manatee

>> The pensions change seem to have opened a huge loophole for inheritance tax avoidance.
>>
>> (Un)intended consequences??

There is still the annual allowance. But I imagine the super rich will maximise on that. They are probably already fantasising about putting their investments in their pension plans with leverage and ending up with all their wealth in it which can pass to their heirs tax free if they snuff it before 75.

And a future (non-Conservative) government can change the law at a stroke:)

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Wed 15 Mar 23 21:07

Budget - smokie

"The pensions change seem to have opened a huge loophole for inheritance tax avoidance."

In what way? There is still a cap on how much you can put into your pension each year and I don't believe the rules have changed about how it's taxed after your death.

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Wed 15 Mar 23 22:08

Budget - Manatee

>> In what way? There is still a cap on how much you can put into
>> your pension each year and I don't believe the rules have changed about how it's
>> taxed after your death.

That's the point. e.g. I have some savings in ISAs and I have a SIPP. I haven't touched either since we finished building but I will want about £10,000 a year out of somewhere for the forseeable.

My plan is to use ISAs first because I pay no tax, and because if I kick the bucket in the next 5 years my SIPP money can go to my family outside of IHT and without them paying any tax on the money they receive. If I leave them ISA money it's subject to IHT.

If I last beyond 75, they will have to pay income tax on it but it will still be outside IHT.

I can't put any more money into pension but the very well off can now think in terms of using pensions to pass on money outside of IHT. They could leave a very large amount outside the IHT net.

I suspect this change will actually hurt my family financially because there is already talk of changing the treatment of pension savings at death.

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Wed 15 Mar 23 23:46

Budget - smokie

Are the rich not subject to the same annual contribution limits as the rest of us? I think it was £40k before you started paying tax on contributions but is now £60k pa.

I know that could add up to a lot but 20 years of it is "only" £1.2m, same as many better off employees.

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Wed 15 Mar 23 20:50

Budget - Bromptonaut

>> Objectively - it was a sensible and fair budget. No major giveaways aside from childcare.
>> No disproportionate benefit to the better off.

What do you think about the changes to the Work Capability Assessment for people with health problems that prevent them from working?

Last edited by: Bromptonaut on Wed 15 Mar 23 at 20:50

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Thu 16 Mar 23 01:21

Budget - Terry

Economically inactive due to long term sickness has increased by 0.5m over the last few years. The cause is unclear - long term covid, NHS waiting lists etc may be partly responsible

The proposition that people should be supported into work where possible rather than receive benefits because they can't is positive.

The new system will rely on that for personal independence payments to determine benefit eligibility. I am not clear if this is more demanding than the current work assessment.

Opinions and experiences will be polarised:

- that taxpayers should not fund those capable of work - a sentiment with which I agree.
- see any negative change as a deliberate attack on the least able - not acceptable if true

Summary - I think it depends how it is implemented. The intent is good - getting people back into work with positive support benefits economically, individual self esteem and respect.

The outcome remains to be seen.

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Thu 16 Mar 23 07:47

Budget - Rudedog

Not mentioned when the changes to free childcare are discussed but for the vast majority you can only take the 30 free hours during school term time.

Not sure how this is meant to encourage mothers back to work.

This affects my daughter, I didn't believe it at first, but she also works in the NHS (part-time) and has to pay for nursery outside of term-time.

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Thu 16 Mar 23 09:22

Budget - smokie

Without wishing to come across too tough or old-fashioned, when we decided to start a family one of the major considerations was whether we could then how we would we afford it.

That was the main reason why our first wasn't born until we were about 10 years into marriage, at about age 30 (us, not her :-) ), and even then we struggled a bit with the full time childminder fees (and no government help) - we were only on average salaries with a mortgage and travel costs into London every day, a minimum 10 hour day from leaving home to coming back. We certainly went through a few years of no holidays and our own form of "austerity"

I know times are different, which is fine, but 30 hours of free child care ( - yes, I know that's the headline and the actuality is probably different) doesn't sound so bad in my view, along with paternity and maternity leave - all of which are good things but people really do need to also take some of the responsibility themselves.

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Thu 16 Mar 23 10:07

Budget - sooty123

but people really do need to also take some of the
>> responsibility themselves.
>>

And are people currently not with regards childcare?

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Thu 16 Mar 23 14:40

Budget - Manatee

Almost any improvement in child care support is welcome.

The proposals are that for households with two adults working at least 16 hours -
- from April 24, there will be 15 hours for children 2+
- from Sept 24, there will be 15 hours for 9m+
- from Sept 25, up to 30 hours for all parents of under 5's (currently only 3 & 4 year olds)

So the 30 hours will only come in the tenure of the next government, whoever that might be.

Re the removal of pension LTA - the government will remove tax charges from next month and intends to remove the LTA from April 24.

The OBR estimates the change will cost 1bn. a year and bring 15,000 boomers and gen-xers back into work. This doesn't seem be very good value. For £1bn. they could for example meet the junior doctors' pay claim in full, which might not be desirable but gives an idea of the scale.

I think this will evolve a bit when they think about it. Despite the annual allowance there's a lot of scope for IHT avoidance and a consequence is that what there is already might be shut down. As things stand I could be leaving the £300k in my SIPP to the grandchildren outside of IHT if I don't consume it in care home fees.

The big news for nearly everybody should be the freeze on personal tax allowances, which will cost everybody paying tax a few hundred quid in real terms - the 6 April increase had it matched inflation would have been c. £1100, but will be zero.

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Thu 16 Mar 23 10:08

Budget - sooty123

Not mentioned when the changes to free childcare are discussed but for the vast majority you can only take the 30 free hours during school term time.

Stretched hours i think it's called. Works out to 22 hours if you add in holidays.

Last edited by: sooty123 on Thu 16 Mar 23 at 10:09

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Thu 16 Mar 23 11:53

Budget - Rudedog

So not 30 hours per week of free nursery fees which is the headline figures in the news...

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Thu 16 Mar 23 12:31

Budget - sooty123

I think it's done on the basis that if you had school age children you would have to look after them in the holidays.

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Thu 16 Mar 23 14:31

Budget - smokie

There was also something about providing pre- and post-school facilities for all children - 08:00 - 18:00 IIRC

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Thu 16 Mar 23 16:26

Budget - sooty123

I think that's starting in 2026.

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Thu 16 Mar 23 14:33

Budget - smokie

"So not 30 hours per week of free nursery fees which is the headline figures in the news..."

Yes 30 hours for some, in certain conditions.

Surely you are used to headlines often not reflecting the detail by now?

Last edited by: smokie on Thu 16 Mar 23 at 14:34

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Thu 16 Mar 23 16:39

Budget - Bromptonaut

>> The new system will rely on that for personal independence payments to determine benefit eligibility.
>> I am not clear if this is more demanding than the current work assessment.

They're different but work in a similar way in so far as both award points for things you cannot do.

For PIP those relate to Daily Living or Mobility and include things like cooking, eating, dressing etc and ability to plan/undertake journeys and how well you can walk.

The current Work Capability Assessment looks more at work and work related things like fetching/carrying, sitting/standing etc.

The risk with any change like this is creating high profile 'victims'. To avoid that the criteria for PIP will need to change or some people - for example those receiving Chemotherapy for Cancer - will need to be 'treated as though eligible for PIP'

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