Isn't it time we raised the cut-off age for paying NI

Wyllow3

And yes, I think people who are well and above pensionable age who work should still pay NI, up to a higher cut off point. It goes against the grain in one way, but money has to be raised. At any age, health is utterly variable and the fortunate are still paying into a pot they will benefit from.

That seems fair to me.

That's accountancy growstuff

This was the Treasury forecast for tax revenue in 2021-22:

27% of the total comes from Income Tax
20% of the total is from NICs

So if a person doesn't pay NICs for whatever reason, "income tax" is effectively almost halved. I don't think that's fair.

It also shows that over half of the Treasury's income is not from income tax nor NICs. It's almost impossible to escape tax of some sort, which is why it's nonsense when people talk about "taxpayers" as a distinct group when we're all taxpayers.

Casdon

The issue I have with this is that it changes the goalposts when older people have already made, and are living within their income. Most people live on their nest egg, and don’t continue to invest money once they have retired, being property rich does not mean that most can afford to live extravagant lifestyles or to pay an additional tax which they had not budgeted for.

I suppose it could be called the sour grapes tax, how dare some people be fortunate enough to have saved enough to live comfortable retirements, let’s make them pay for it - levelling down.

Yes, correct Casdon.
How very dare they?

People already have to work till 68 and pay NI now till they’re 68. I think they’ve paid enough during their lifetime.

maddyone totally agree with you...am unable to retire now at 66..and paid over the NI contributing years..but now have to pay tax albeit reduced work hours due to SP now payable so feel am taxed again...

maddyone

People already have to work till 68 and pay NI now till they’re 68. I think they’ve paid enough during their lifetime.

No, they don't. The current age for receiving SP is 66 and will increase to 67 for those born in 1961.

Sorry, but on average they haven't paid enough. The current generation of workers is subsidising them.

Bea65

maddyone totally agree with you...am unable to retire now at 66..and paid over the NI contributing years..but now have to pay tax albeit reduced work hours due to SP now payable so feel am taxed again...

But you're not paying NI, which means your income tax/NI liability is just under a half of working people.

Casdon It's not about levelling down, but why should people who don't do paid work, but have income from other sources, only pay (nearly) half the percent that working people do?

I’d like to see non-dom status abolished first. It’s an anachronism, dating back (I believe) to when rich people owned sugar plantations in the Caribbean. And I dare say there are many who still exploit it.

Either you’re normally resident or you’re not, and if you are, you pay U.K. taxes.

Well said - and make the privilege king with all his properties and inherited wealth pay tax too.

growstuff

Casdon It's not about levelling down, but why should people who don't do paid work, but have income from other sources, only pay (nearly) half the percent that working people do?

Because they’ve paid in all their lives and now it’s time to take their pension out of the system. Those who have made the sacrifice of paying in extra for a professional or private pension already pay tax on that. I don’t see any reason to tax them further. It would simply be a tax grab and we are already a highly taxed population.

growstuff

Casdon It's not about levelling down, but why should people who don't do paid work, but have income from other sources, only pay (nearly) half the percent that working people do?

I think it depends what you mean by ‘income from other sources’ growstuff. If you receive a pension from a former employer you have already paid tax when you were working, on the basis that you received that pension, and have planned you retirement so you can draw it down. If you have been self employed and contributed to a private pension scheme the same principle applies. If you have additional income which means you are still accruing funds after retirement I think you should pay tax on the element.

People who continue to work past state retirement age on a self employed basis pay an NI contribution.

Casdon

The issue I have with this is that it changes the goalposts when older people have already made, and are living within their income. Most people live on their nest egg, and don’t continue to invest money once they have retired, being property rich does not mean that most can afford to live extravagant lifestyles or to pay an additional tax which they had not budgeted for.

I suppose it could be called the sour grapes tax, how dare some people be fortunate enough to have saved enough to live comfortable retirements, let’s make them pay for it - levelling down.

That's how I see it, Casdon. There is so much resentment about pensioners, and whilst of course there are some who have expensive houses and large incomes, most don't. I'd like to see regionally adjusted median averages, instead of mean averages which take into account London house prices and the sort of pensions that most of us can only dream of. I am sure that they would tell a different story for many areas of the country.

I assume that the pension rate was set to take account of the fact that pensioners would not be paying NI, so adding it now would be iniquitous. People make financial decisions based on what they are led to believe will happen, and whilst life can change for anyone, older people are far less able to plug gaps when they leave work. Many of us have already lost 6 or 7 years of pension - to then take a chunk of money that people weren't expecting to pay would be very unfair.

I think that everyone should pay tax, including SAHPs (unless they have responsibilities for a disabled child), and I agree that NI should be part of that - ie a combined tax. I am not in favour of taking NI from the State Pension or of taxing away any extra that people get from occupational pensions that they have already paid for. Workers already subsidise those who choose to stay at home - why should that continue beyond pension age?

I'm another who has never inherited a penny. My house is paid for, but I haven't made a huge profit on it, and I didn't benefit from high interest rates (when they were at 15/16% I was paying a mortgage). I resent the 'boomers' generalisations too, and the fact that some people of our age (mainly older than me) got things that younger people don't is (a) not applicable to all, and (b) not the fault of those who did benefit. Similarly, the fact that the state pension is a ponzi scheme is not the fault of pensioners either. We paid in what was expected of us (or many of us did) and if that has been spent on other people then governments should have acted on that. It is unreasonable to ask us to plug those gaps now, particularly when there are still people getting free NI contributions for staying at home.

maddyone

growstuff

Casdon It's not about levelling down, but why should people who don't do paid work, but have income from other sources, only pay (nearly) half the percent that working people do?

Because they’ve paid in all their lives and now it’s time to take their pension out of the system. Those who have made the sacrifice of paying in extra for a professional or private pension already pay tax on that. I don’t see any reason to tax them further. It would simply be a tax grab and we are already a highly taxed population.

I agree maddyone

But this isn't to do with private pensions or how much people have paid into state pensions.

Doodledog It is a fact that over the last 20 or so years there has been a redistribution of wealth from people who work for an income to asset holders. Younger people are paying more and will receive less. Try looking beyond your own circumstances at the wider picture. It's not healthy for the economy.

Casdon

growstuff

Casdon It's not about levelling down, but why should people who don't do paid work, but have income from other sources, only pay (nearly) half the percent that working people do?

I think it depends what you mean by ‘income from other sources’ growstuff. If you receive a pension from a former employer you have already paid tax when you were working, on the basis that you received that pension, and have planned you retirement so you can draw it down. If you have been self employed and contributed to a private pension scheme the same principle applies. If you have additional income which means you are still accruing funds after retirement I think you should pay tax on the element.

No, I didn't pay any tax on pension contributions to an occupational pension. Nobody does.

If you have additional income which means you are still accruing funds after retirement I think you should pay tax on the element.

So do I ... and National Insurance.

growstuff

*If you have additional income which means you are still accruing funds after retirement I think you should pay tax on the element.*

So do I ... and National Insurance.

Pensioners do pay tax on all income over the personal allowance.

growstuff

Doodledog It is a fact that over the last 20 or so years there has been a redistribution of wealth from people who work for an income to asset holders. Younger people are paying more and will receive less. Try looking beyond your own circumstances at the wider picture. It's not healthy for the economy.

Many young people have inherited substantial sums from parents who made money on houses. Many haven't of course, but taxing pensioners on very average incomes is only going to increase that divide, which is, on the whole, geographical rather than generational.

growstuff

Casdon

growstuff

Casdon It's not about levelling down, but why should people who don't do paid work, but have income from other sources, only pay (nearly) half the percent that working people do?

I think it depends what you mean by ‘income from other sources’ growstuff. If you receive a pension from a former employer you have already paid tax when you were working, on the basis that you received that pension, and have planned you retirement so you can draw it down. If you have been self employed and contributed to a private pension scheme the same principle applies. If you have additional income which means you are still accruing funds after retirement I think you should pay tax on the element.

No, I didn't pay any tax on pension contributions to an occupational pension. Nobody does.

I know, but as a taxpayer you are contributing when you are working. Your pension contribution is deducted from your salary as well, based on the level of your salary in most organisations so you aren’t getting something for nothing. To my mind national insurance is just another tax.

Casdon It's not about levelling down, but why should people who don't do paid work, but have income from other sources, only pay (nearly) half the percent that working people do?
Because they have done paid work all their lives, and paid tax/NI?

Should there never be a time when people can retire and enjoy the fruits of their labours?

There have been some very thought-provoking posts for which I thank you all. It has made me reconsider. I now think we should not muddle up the funding of the NHS with NI. NI was and is a National Working Age Insurance that should end at State Pension Age.

I believe (until someone persuades me differently) that we need a separate National Health Service Insurance (NHSI).

The working-age paying NI - workers and employers - are already paying, from their NI, an amount covering 20% of the NHS costs. For those of working age paying NI, it should go down by the amount relevant to the NHS. They would then pay that amount into an NHSI "fund". So, they are paying the same amount as before. Doing this would separate the NHS from the NI account.

Those on sufficient income, past SPA (State Pension Age), would pay an equal amount into the NHSI fund as someone of working age. I would guess that, at this point, it could be about 20% of the NI amount. However, I would also imagine that it is not that easy, but it's as good a number as any to test this. However, these are very, very rough figures.

Someone on £30,000 a year salary would pay £2,666 in NI. We can say (for argument's sake) that 20% of this would now be paid to the NHSI fund. The SPA person, also earning £30,000 income, would contribute the same to NHSI - about £533 per annum.

Remember that this is just the start. The next thing would be to move the money for the NHS that comes from taxes and goes into the NI fund, into the NHSI fund. Doing this will not affect any taxpayer. It would be an on-paper government move. Taxpayers will pay the same it will just be allocated differently.

At this point, the working-age person will be paying a lower NI and a new NHSI insurance. The total of these would equal what the old NI would have been. They will be paying the same tax and insurance as before.

The SPA person would also be paying the same tax (if any) as before. As with the work-age person, some will be differently allocated and go to the NHSI. The SPA person will be paying the newly created NHSI insurance. This could be, using our test figures, about £533 pa on an income of £30,000.

At this point, we could see what is available for the NHS and where it comes from. It will be slightly more (the SPA people's contributions) than it was previously.

Governments will have to convince us should they want to increase this and why. Any increase would come from both working-age and SPA citizens through NHSI insurance.

GrannyGravy13

growstuff

If you have additional income which means you are still accruing funds after retirement I think you should pay tax on the element.

So do I ... and National Insurance.

Pensioners do pay tax on all income over the personal allowance.

I've never claimed they don't, but they don't pay NICs, which for working age people in paid employment can be half the amount they pay in tax - for some it's more.

My ex DH, who hasn't reached SPA yet, hasn't paid NICs for 20 years. I suspect he's managed to squirm his way out of paying that much tax too. He certainly squirmed out of paying me maintenance. He currently has a property portfolio which is (I guess) worth about £4 million and he doesn't have any mortgages.