There goes a lot of your winter fuel payments

[carmanmemoranda]

If you have anything original to say, that would be good.

Do you think that labour should carry on being as reckless as the Tories with our money.

Or be more responsible and make the tough calls.

 

[motorbiking]

It is relevant because tax is the price we all pay for living in a civilised community.

Some more than others, so it seems.

 

[JohnD]

Yes, it's funny how people with more money are sometimes expected to pay more tax.

Who could have seen that coming?

Not you, it seems.

 

[motorbiking]

While others arrange their affairs to be tax efficient. If only we had a forum troll who would post about people who do that.

Oh wait.. we have one.. apparently with lots of experience.

He likes to tell us we all need to chip in

 

[carmanmemoranda]

Some more than others, so it seems.

Some get paid more than others, so it seems

 

[JohnD]

Some get paid more than others, so it seems

And like to brag about it, while bleating that they are expected to pay tax.

 

[FiremanT]

I know someone at work who is doing the same thing but he is 78. He doesn't want to take it as he'll have a big tax bill but it just grows every year.

A colleague deferred his OAP, so I made a point of looking at the numbers. IMO, you are a fool to defer - unless, maybe, you are a HRT payer who will drop to standard in the next tax year.

 

[FiremanT]

Strange

Strange as a mate of mine never claimed his for 2 and half years thinking it would build up for when he did claim it and when his accountant asked him why he wasnt claiming it .
told him nope you have to inform them you are deferring it and was only allowed to claim around 6 months of it back this was at beginning of this year

Basic State Pension

If you disagree with the decision made on your benefit claim you can ask for a written statement of reasons.

www.turn2us.org.uk

 

[JohnD]

A colleague deferred his OAP, so I made a point of looking at the numbers. IMO, you are a fool to defer - unless, maybe, you are a HRT payer who will drop to standard in the next tax year.

Even then, you could take it, and pay the equivalent amount into a personal pension.

 

[FiremanT]

Even then, you could take it, and pay the equivalent amount into a personal pension.

Yes, but you are not allowed to recycle pension income (not that “they” would know). (I actually do that at the moment, but from a company pension) And you can only pay into a pension when you have earned income. (Unless that has changed, which I doubt).

 

[JohnD]

And you can only pay into a pension when you have earned income

Or £3600 (£2880) if not.

If you are in employment, most people are allowed to contribute up to 100% of their earnings. High earners are capped.

Tax on your private pension contributions

Tax you pay and tax relief you get on contributions to your private pension - annual allowance, lifetime allowance, apply for individual protection

www.gov.uk

 

[motorbiking]

It depends what you mean by high earners.. everyone is capped at £60k.

 

[JohnD]

That is about double the median wage, and in the region of the top 10% of earners.

I'd call the top 10% "high-earners."

Wouldn't you?

And people who have more than £60,000 spare to lob into a private pension, even more so.

 

[motorbiking]

The fact remains, everyone is capped.

 

[Justin Passing]

you can only pay into a pension when you have earned income.

You can pay in 2880 which gets upped to 3600, up to age 75. Last I heard.
If you take it out the next year (which they could object to but probably wouldn't bother), you don't pay tax on the first 25% so make a small profit if there's zero growth.
(3600 x 0.25) + (3600 x 0.75 x 0.80) = 3060.
Less 2880 = £180 which is 6.25% on your money which is slightly better than the building soc.

You can put your money which is in the SIPP straight into a money market fund whcih would have gained at about the same rate as the bldg soc, 5.2% year to date as well, = 11.45% = £324 up.


If you'd been vaguely sensible with the investment in a sipp for the last year you'd have made +30%=4680 (Or a bit more adventurous, x5=18000, say). Call that G for growth so for 30% G = 1.3.
You get 1.25x uplift when you put it in, and pay 20% tax on 75% of it when you take it out.
So if you use the pension, the £M becomes M.G x 1.25 ((0.25) + (0.75 x 0.8)) = M.G. 1.0625
PLus say 5.2% in the money mkt gives M.G. 1.1125

If you'd put it into an ISA, which would be another possible with a small amount of extra cash to invest, you wouldn't get the uplift but you would get the money out tax free.
So at the end of the year you would have M.G x 1.052

The difference is there, and would remain whatever return you got.