A lazy generation?

Well, I dare say neither of us can speak for all, or even most doctors . Or young people, for that matter. But I still think that the system should be overhauled to be fairer to everyone. Where pensions are concerned, a lot of young people don't think that there will be a pension when they retire, other than possibly a means-tested one for those with no provision of their own, so they don't see it as a continuation of one generation paying for the next that will benefit them in their turn - they see people who haven't contributed getting free rent and a pension at their expense, and those who have contributed getting a state pension as well as their occupational pensions. My own perspective is that those who have paid into both pension funds should get both pensions - that was the deal - but I am not a young mother on a low income who is paying NI but using a food bank. I can see things from her point of view too, whether I agree with it or not.

Housing costs are so high that many people can't get onto the ladder at all, despite working long hours. They are paying back student loans that previous generations didn't have, and the sale of council houses has allowed landlords to hike rents to the point where they are also difficult to afford. Saving for a deposit on a mortgage whilst also paying rent is very difficult for many who don't have inheritances or parents able to help. Older generations had MIRAS and non-means-tested child benefit, and housing was cheap enough for many, if not most, families to manage on one income. I agree that people made do much more then, but at the same time people married much younger and many paid off their mortgages in middle age - it's just not like that any more. I was 21 when we bought our first house - most young people are still students then, and very few will earn enough to save for a deposit and pay a mortgage at today's prices. It's not fair to say that nothing has changed - it absolutely has.

Anyway, I'm not blaming any group of individuals for any of this - people just live their lives according to what works for them at the time, and it's not fair to penalise them for that. It's the government's fault (all of them) for not managing the economy better. I blame Austerity and the tax credits which have led to benefit dependency for many, as well as a failure to grasp the pensions nettle. Adding 6 years to people's working lives was cruel and unfair - it should have been foreseen decades ago that an ageing population would need more support than before, and contributions should have risen accordingly.

I can't see it happening, but I still think that a universal tax would be much fairer than a tax on work, and that means-testing is inherently a disincentive for people to work more or harder.

Another disincentive for people to work harder, longer or seek promotion at present is the freezing of personal allowances. This is taxing by stealth (known as fiscal drag) because many people on different levels are going to be pulled into paying tax or into a higher tax bracket. Ive been on threads where posters who had much needed skills (eg nurse/midwife etc) had returned to work post 50 and been hammered by the tax man. Therefore it makes good economic sense for people being economically raped on PAYE to drop down to part time hours. Or look for cash in hand jobs.

I assume you mean not paying income tax on cash in hand jobs.

Do you mean people drawing a pension who also earn money for working, biglouis? Why should they work ‘cash in hand’ when others pay tax on earnings? I pay tax and NI on 100% of my earnings because I have an occupational pension, but whilst it’s dispiriting to see my payslip I can’t argue that it’s unfair, or that I’m being ‘economically raped’.

It’s unfair that there are those who opt out of working and pay no tax (other than purchase tax when they buy things with someone else’s money), and I agree that personal allowances should rise with inflation, but defrauding the taxman is not the same as opting to reduce hours.

Cash in hand applies to a lot in the building industry. Here they generally have the biggest and best houses and can afford a lot of holidays and their kids go to expensive private school. Part of me thinks, good for them, better than the toffs inheriting vast amounts from their families.

I have never supported the idea that two wrongs make a right.

Not paying taxes (even if people - wrongly, in my opinion - inherit vast sums) leads to a collapse of the state. Look at what happened to Greece a few years ago for a classic example of a state not collecting taxes.

I can’t speak for the UK, but in Canada and the US, there’s literally a lack of housing. Things ground to a halt in terms of new houses being built years ago, and never caught up again. I read that in the US alone, it’s estimated there’s a shortage of 4 million houses. And corporations are buying houses in both countries to flip as rentals, with an average of 30% rise in rent per year.

Who can afford that? Certainly not the university or college student, just leaving home. It used to be, in my parents generation, that people could go from high school to work and be able to afford an apartment, then a house. Now? It’s completely out of reach.

Wages have been grossly outstripped by inflation. Those who were reasonably comfortable before are struggling. Those who were struggling are drowning. It’s genuinely bleak for a lot of people.

Like I said, I don’t know if it’s the same in the UK, but in Canada, things are definitely problematic

A big problem is the tax credits, IMO. They were meant to help those on low wages, but they just depressed minimum wage and resulted in the taxpayer subsidising employers- often huge corporations- who keep paying as little as possible. As the hourly rate is so low, and there is a means-tested cut off for receipt of the credits, people have to work a lot of extra hours to see the benefits (and as has been said, if they have children they will have to pay childcare costs too).

JaneJudge

Monica, would they have had much student finance debt if they are in their 50s? I went to uni in the 00s and tuition fees were only introduced in 1998 and they were much lower than they are now. My one son's fees are £9,250 a year and his maintenance loan doesn't cover his rent so we have to top him up but the loans and costs are astronomical

The debts were lower but so would the starting salaries have been thirty odd years ago.

Doodledog

Please would you explain this comment:

"A friend of mine manages an admin office and struggles to get people to work overtime as it would have negative impact on their take home pay - it makes no sense."

It could be that if they work a lot of hours in one month their salary will take them into the next tax bracket for PAYE but over a year, that would even out.

I can try to explain, but realistically all I am doing is reporting what my friend said . It is not about tax bands, but about UC top ups. The people she's talking about are on low pay, which is topped up if they work above a certain number of hours and earn under a certain amount (I am not sure of the figures). If they work longer hours, the entitlement stops, so their take-home pay is affected when childcare is taken into account. I think that's right, anyway.

Oh, and I also think that if they work extra one week it can impact on their UC for weeks ahead, as they have to make a fresh claim.

Doodledog

The following is taken from the HMRC website:

"Your Personal Allowance goes down by £1 for every £2 that your adjusted net income is above £100,000. This means your allowance is zero if your income is £125,140 or above."

Adjusted net income means after pension contributions paid by the individual and tax on any benefits that person may receive. So it is wrong to say that people lose their personal allowance when they earn £100,000.

biglouis

Another disincentive for people to work harder, longer or seek promotion at present is the freezing of personal allowances. This is taxing by stealth (known as fiscal drag) because many people on different levels are going to be pulled into paying tax or into a higher tax bracket. Ive been on threads where posters who had much needed skills (eg nurse/midwife etc) had returned to work post 50 and been hammered by the tax man. Therefore it makes good economic sense for people being economically raped on PAYE to drop down to part time hours. Or look for cash in hand jobs.

You could always report anyone working cash in hand to HMRC - they have a special line.

nanna8

Cash in hand applies to a lot in the building industry. Here they generally have the biggest and best houses and can afford a lot of holidays and their kids go to expensive private school. Part of me thinks, good for them, better than the toffs inheriting vast amounts from their families.

Not so much in the UK. Employers are required to deduct BR tax if the worker doesn't have a CIS certificate. It is a bit more complicated than that but it's been the case for a number of years as a result of so many construction workers working on the black.

Doodledog Point taken. Thanks for replying.

Our learning disabled young adult son is attending college learning a practical skill alongside getting a support allowance ( because the learning is at a basic level). The college course includes work experience with a local supportive employer. The idea is to get our son able to join the workforce eventually.
A more able friend ( also in early 20s) of his keeps on at us to push our son out to work for money. The friend doesn't understand that at present our son- like many people with learning disabilities, would not be likely to get paid employment without considerable support! The friend thinks our son is lazy to still be at college. Some working young people struggling to pay their own way, or pay for higher level study, do see non earning adults getting benefits or support as scroungers. Many need societies support.

Dinahmo

Doodledog Point taken. Thanks for replying.

Dinahmo

Doodledog

The following is taken from the HMRC website:

"Your Personal Allowance goes down by £1 for every £2 that your adjusted net income is above £100,000. This means your allowance is zero if your income is £125,140 or above."

Adjusted net income means after pension contributions paid by the individual and tax on any benefits that person may receive. So it is wrong to say that people lose their personal allowance when they earn £100,000.

Ok, I knew I would get the figures wrong, but the principle remains. I appreciate that it is difficult to feel sorry for someone on that salary, but I am not speaking about sympathy, but about why people might cut their hours. Arguably, at that level of income you have more than covered the basics, and would need even more of an incentive to work than those on a lower income.

I do not think that the young generation as a whole are lazy- most work hard as did most people in previous generations. Various aspects of life - earnings, costs, expectations, better access to higher education- many things have changed. There are still some people who exploit the benefits system and some who are trapped by it and a small minority who cheat the system.

Doodledog

I can try to explain, but realistically all I am doing is reporting what my friend said . It is not about tax bands, but about UC top ups. The people she's talking about are on low pay, which is topped up if they work above a certain number of hours and earn under a certain amount (I am not sure of the figures). If they work longer hours, the entitlement stops, so their take-home pay is affected when childcare is taken into account. I think that's right, anyway.

Of course that is correct.

Impacted are many mums who stay home/work low hours.

Doodledog I am not advocating a cut in pensions or benefits. I am saying that the system is to blame, and that a fairer one would tax everyone (with a means by which one earner in a household could pay the tax of another if one wants to stay at home). We all benefit from living in a society that still has healthcare, a police service, free education to 18, defence, roads etc, so we should all contribute to that.

Apart from merely disagreeing one earner households are justified, I'll give my own explanation - to fall on deaf ears.

If people choose the no childminder route, stay home with their children, raise them to adults unaided by childminders and government payments - - perhaps that notion encompasses a higher earner, with very long hours, who is able to provide, pay taxes, pay into pensions.

Maybe people think the high earner is doing their share by providing for an entire family group, paying taxes at 40-45%.

Maybe they do. But other households will have two earners, working hard, perhaps paying 40% tax too, as well as childcare, commuting and other work-related expenses.

I see adults as individuals with individual responsibility. Yes, we form teams in marriage or other circumstances, but that doesn't mean that we can abdicate that responsibility. I think it would be fairer to say that every able adult should pay £X into the collective pot per annum (with exceptions for those genuinely unable to do so). If someone wants to pay for someone else, that could be allowed, but as it is the reverse is true. Two people can get away with paying one lot of tax, plus the lower/non earner can transfer their allowance to the other partner. How is that fair to a two-earner family where both partners contribute?

I have no issue with people making choices, but I do have an issue with people expecting others to fund those choices, and opting out of paying tax is being funded by others - whether it is by not working, working 'cash in hand' or fiddling the books.

We won't agree on this, I know, but that's fine by me - it's just a conversation.

Doodledog

Maybe they do. But other households will have two earners, working hard, perhaps paying 40% tax too, as well as childcare, commuting and other work-related expenses.

I see adults as individuals with individual responsibility. Yes, we form teams in marriage or other circumstances, but that doesn't mean that we can abdicate that responsibility. I think it would be fairer to say that every able adult should pay £X into the collective pot per annum (with exceptions for those genuinely unable to do so). If someone wants to pay for someone else, that could be allowed, but as it is the reverse is true. Two people can get away with paying one lot of tax, plus the lower/non earner can transfer their allowance to the other partner. How is that fair to a two-earner family where both partners contribute?

I have no issue with people making choices, but I do have an issue with people expecting others to fund those choices, and opting out of paying tax is being funded by others - whether it is by not working, working 'cash in hand' or fiddling the books.

We won't agree on this, I know, but that's fine by me - it's just a conversation.

Your logic is good. However, I suspect the non-working outside their home persons feel they are acting quite responsibly.

The high earner is, by earning more - enough for the entire family, paying higher taxes as that person must be earning enough or more than enough to cover the 2 salaries with one.

Nobody, outside that home is being asked to fund sahp choice, imo.

I'd say the SAHperson is contributing, but not the way you prefer. Yes, we'll never agree, it's just an very interesting view on others' thoughts!

Doodledog you keep talking about what people mightdo at higher incomes but produce scant evidence of it happening. As I have already said most doctors work fewer days, but put in a full weeks work.

There was a specific concatination of events around a change in the law and the rules of the hospital doctors pension fund. But in their case they were ending up with a take home pay cut by £thousands, which is a very different situation - and has now been resolved. I have yet to hear of any one with a taxable income of £100,000 choosing to cut their hours for tax reason. They would usually push on to earn even more to get past that problem.

Similarly with houses, we do not have a glut of unsold houses on the market because no one can afford them, so someone is buying them, and it is currently not buy to let landlords because rents are going up because so many buy to let houses are being taken off the market and sold.

Everyone is skint in their 20s as they start in life and get established. House prices may have been lower before the millenium but interest rates were sky high and it is the size of monthly payments, a combination of interest and capital repayment that decide house prices and we were paying the same proportion of our salary out each month in housing costs as today's young people, just that most of it was going towards the interest. When interest rates went down house prices inceased. At one point half of our monthly income was going out in mortgage payments.

I also think you do not understand how the pension system works. To get a full pension you have to have made the full number of contributions. If you did not work the required number of years you do not get a full pension. Nor does it follow that if you do not get a full pension you automatically get pension credit. To get pension credit all sources of income are taken into account, including occupational pensions, savings and investments and if you are married or living with someone, their income as well. So the majority of people with a state pnsion below the PC rate are not entitled to it.

As an example. My state pension is below the Pension credit level because I have not worked enough years, but my occupational pension, to which I made major contributions, brings me well above the PC limit and anyway, my DH also has a substantial pension and if he dies before me I will get a widow's pension that would keep me above the PC level, if I were below it.

Most people getting PC, which I know from experience, are people who were in poorly paid jobs, had no opportunity to join an occupational pension scheme and were too poor to save separately into a personal pension scheme.