Hunt has just announced that SP will rise by 8.5% in April. I wonder how many of us will pay more tax as a result? Why is the ‘living wage’ twice the level of our pension?
Siope
Thank you. I always value your take on political issues.
Aaww! Thank you Siope. I try to be reasonably objective, despite having my own values and opinions.
In that case, you wouldn't have to pay NICs anyway.
Actually I was expecting to as I'm self-employed, I'd read last year that I would have to pay them for another year.
I think this was actually a change, as it said "new for 2022-23."
Sorry, you're right V3ra. My birthday is just before the end of the tax year. Yours is a new tax year. I would have liked to have paid for the last year, but I wasn't allowed to.
No politician wants to own it but higher taxation is essential for better public services as are high levels of legal immigration to fill essential NHS and care jobs until a government manages to train more indigenous workers. Don't hold your breath on that though as our birth rate is inadequate.
Siope
I’ve waited for the detail to become clearer, as was suggested earlier.
Overall, it’s a spiteful, scorched earth budget, which will penalise the poorest and most vulnerable; hollow out public services; and which is designed as a political trap for a future Labour government.
It does nothing to help with the key issues of the cost of living and climate crises, or improving education, healthcare and housing.
I agree 100% Siope.
Personally I would like to see tax thresholds increased - no-one earning minimum wage should have to pay income tax, which would give a threshold of £22,000 a year. This could be paid for by abolishing the upper limit for paying NI contributions - which would be an additional progressive tax on the highest earners - plus I would have wealthier pensioners (I am one, with a decent occupational pension as well as state pension) continue to pay NI after retirement, as long as this was ring-fenced to pay towards the NHS. Those of us who can afford it should be paying more, to ease the burden on the lower paid. I hope the next Labour government will do something to redress the balance, but am not holding my breath.
I've heard working people on the radio say that the net result was virtually nothing, ie NI saving vs tax increase due to not changing the tax bands cancel each other out. However no benefit to most pensioners in most cases from NI changes.
I imagine that most pensioners have been "economically active"in the past and have paid their taxes and NI contributions. A fair rate of pension is not too much to ask to keep them out of poverty. Some did not have the opportunity of paying into a private pension.
19.1 %this year and 8.5% next year ….snd if you do pay tax it’s only at 20% ….whats not to like about this ruse ?! Some people never happy …..and before you start at me ….my state pension is ALL i have!
10.1% this year ….slippy finger!!
What is 10.1% this year, Saggi?.
Can you clarify this?
Tax on your pension isn’t set at 20% for everybody, it’s at that rate if your total income including your pension is below £37,700. The gripe for pensioners is that the state pension is not generous, it ranks 16th in Europe, and equates to less than 30% of the average salary of working age people.
Casdon
Tax on your pension isn’t set at 20% for everybody, it’s at that rate if your total income including your pension is below £37,700. The gripe for pensioners is that the state pension is not generous, it ranks 16th in Europe, and equates to less than 30% of the average salary of working age people.
What portion of salary were state pensions meant to replace?
What portion of salary should UK state pensions replace?
Should people save or purchase other pension funds?
Saggi
19.1 %this year and 8.5% next year ….snd if you do pay tax it’s only at 20% ….whats not to like about this ruse ?! Some people never happy …..and before you start at me ….my state pension is ALL i have!
Of course, the 10 and 8 per cent uplifts weren’t and aren’t actual increases - they simply replace the loss of real income due to inflation.
And fiscal drag from the unchanged thresholds will mean more pensioners paying income tax or paying more tax.
And of course national Budgets/Statements are about a great deal more than state pensions.
Many working age people have higher outgoings than retirees - mortgages, commuting costs, children for instance. I don’t believe that the SP should be compared with the average wage of working people, which will be calculated by reference to those on minimum wage at one end of the scale and those paying higher and additional rate tax at the other. In some countries the SP is higher because higher taxes have been paid during one’s working life.
Norah
Casdon
Tax on your pension isn’t set at 20% for everybody, it’s at that rate if your total income including your pension is below £37,700. The gripe for pensioners is that the state pension is not generous, it ranks 16th in Europe, and equates to less than 30% of the average salary of working age people.
What portion of salary were state pensions meant to replace?
What portion of salary should UK state pensions replace?
Should people save or purchase other pension funds?
A pension set at minimum of 35% of average annual salary is what most advanced economies aim for as I understand it.
The UK devotes a smaller percentage of its GDP to state pensions and pensioner benefits than most other advanced economies, according to research published by the House of Commons Library. The system also ranks among the lowest for the “pension replacement rate of average salary” metric calculated by the Organisation for Economic Co-operation & Development. This is despite the “triple lock” promise. Is that okay?
It’s wrong to assume that everybody can or should contribute to private pension schemes - how would family carers, the disabled etc. have the resources to do that?
I’m not speaking for myself, I’m fortunate and have a good private pension, but it is a huge struggle for people to live on the state pension alone, even with the lauded additional amounts that they receive if they pass the means testing criteria - a humiliating process too. It really irks me when people say how generous any government is when it gives pensioners a rise in line with inflation. Big Deal.
Germanshepherdsmum
Many working age people have higher outgoings than retirees - mortgages, commuting costs, children for instance. I don’t believe that the SP should be compared with the average wage of working people, which will be calculated by reference to those on minimum wage at one end of the scale and those paying higher and additional rate tax at the other. In some countries the SP is higher because higher taxes have been paid during one’s working life.
In some countries the SP is higher because higher taxes have been paid during one’s working life.
This is what some forget when making comparisons.
I get a state pension from Norway for working 12 years - it's almost as much as the SP here for working 30 years - but guess how much I had to pay in contributions!! And tax!
Scandinavias is an outlier though Dickens, and it’s not a simple equation related to employee tax contributions, of course. For example, in Norway no family pays more than 6 percent of their total income to childcare. Additionally, low-income families are eligible to receive 20 hours per week of free childcare. We should look to their system and learn some lessons, rather than subjecting any UK pensioners to live in penury.
Casdon
Norah
Casdon
Tax on your pension isn’t set at 20% for everybody, it’s at that rate if your total income including your pension is below £37,700. The gripe for pensioners is that the state pension is not generous, it ranks 16th in Europe, and equates to less than 30% of the average salary of working age people.
What portion of salary were state pensions meant to replace?
What portion of salary should UK state pensions replace?
Should people save or purchase other pension funds?A pension set at minimum of 35% of average annual salary is what most advanced economies aim for as I understand it.
The UK devotes a smaller percentage of its GDP to state pensions and pensioner benefits than most other advanced economies, according to research published by the House of Commons Library. The system also ranks among the lowest for the “pension replacement rate of average salary” metric calculated by the Organisation for Economic Co-operation & Development. This is despite the “triple lock” promise. Is that okay?
It’s wrong to assume that everybody can or should contribute to private pension schemes - how would family carers, the disabled etc. have the resources to do that?
I’m not speaking for myself, I’m fortunate and have a good private pension, but it is a huge struggle for people to live on the state pension alone, even with the lauded additional amounts that they receive if they pass the means testing criteria - a humiliating process too. It really irks me when people say how generous any government is when it gives pensioners a rise in line with inflation. Big Deal.
Thank you for explaining the 35%.
I always wonder, during posts as this, what a target number is.
No, it is not okay to be "amongst the lowest" for the “pension replacement rate of average salary” -- precisely why I asked.
Casdon
Tax on your pension isn’t set at 20% for everybody, it’s at that rate if your total income including your pension is below £37,700. The gripe for pensioners is that the state pension is not generous, it ranks 16th in Europe, and equates to less than 30% of the average salary of working age people.
The 20% band is up to £50270. After deducting the personal allowance of £12570, the income taxable at 20% is £37700.
It is wrong to say that "it’s at that rate if your total income including your pension is below £37,700." You could cause confusion. You should say that your income, up to £50270 is taxable at 20%, after taking into account the PA.
Dinahmo
Casdon
Tax on your pension isn’t set at 20% for everybody, it’s at that rate if your total income including your pension is below £37,700. The gripe for pensioners is that the state pension is not generous, it ranks 16th in Europe, and equates to less than 30% of the average salary of working age people.
The 20% band is up to £50270. After deducting the personal allowance of £12570, the income taxable at 20% is £37700.
It is wrong to say that "it’s at that rate if your total income including your pension is below £37,700." You could cause confusion. You should say that your income, up to £50270 is taxable at 20%, after taking into account the PA.
Sorry, you’re right, it is a bit confusing the way I said it.
Casdon
Scandinavias is an outlier though Dickens, and it’s not a simple equation related to employee tax contributions, of course. For example, in Norway no family pays more than 6 percent of their total income to childcare. Additionally, low-income families are eligible to receive 20 hours per week of free childcare. We should look to their system and learn some lessons, rather than subjecting any UK pensioners to live in penury.
I didn't explore the income / tax ratios re childcare as it didn't affect me!
Though I do believe that for some low-income families, back in the 90s - childcare was completely free, IIRC. I think also that there are extra benefits to parents if their child up to the age of 2 is not in kindergarten.
The information is sent to me every year along with all the relevant stuff but I don't usually read it.
People think that Norway has a very high tax system, but according to the OECD, the tax rates are fairly reasonable (they are looking at average personal tax) and, in fact, lower than some other European countries. But those countries may also have better tax benefits for families, so it's all a bit swings and roundabouts.
Dickens
Casdon
Scandinavias is an outlier though Dickens, and it’s not a simple equation related to employee tax contributions, of course. For example, in Norway no family pays more than 6 percent of their total income to childcare. Additionally, low-income families are eligible to receive 20 hours per week of free childcare. We should look to their system and learn some lessons, rather than subjecting any UK pensioners to live in penury.
I didn't explore the income / tax ratios re childcare as it didn't affect me!
Though I do believe that for some low-income families, back in the 90s - childcare was completely free, IIRC. I think also that there are extra benefits to parents if their child up to the age of 2 is not in kindergarten.
The information is sent to me every year along with all the relevant stuff but I don't usually read it.
People think that Norway has a very high tax system, but according to the OECD, the tax rates are fairly reasonable (they are looking at average personal tax) and, in fact, lower than some other European countries. But those countries may also have better tax benefits for families, so it's all a bit swings and roundabouts.
Tax is organised completely differently in Norway. My partner pays Norwegian income tax on part of his earnings. I can't remember the exact figure off the top of my head, but it's about 11%. The reason it's so low is that he doesn't live in Norway. If he lived there, he would pay various property and wealth taxes. He would also have to pay for health insurance, but his employer foots the bill for that when he works in Norway a couple of days a month.
growstuff
This is interesting.
The government made it clear in the Hurdal Platform that local communities and society as a whole should receive a fair share of the value created from the utilisation of society’s natural resources. The principle that society as a whole should receive a share of the profits generated from the utilisation of society’s natural resources has served Norway well. Without this, we would not now have the Government Pension Fund. Like the petroleum and hydropower resources, aquaculture and wind power resources are tax objects that cannot be relocated, and which should be taken advantage of at a time when many tax bases are becoming more mobile. The government is now proposing the introduction of a resource rent tax on aquaculture and onshore wind power, which will enter into force from the 2023 income year.
Taken from "People's Policy Project" an American institution (I was looking at how the US viewed Scandinavian countries' economies / taxation, and it came up on the search)
The Hurdal Platform - Hurdal - a city about 40 odd miles north of Oslo where an agreement was reached between the Labour and Centre parties.
Not everyone will agree, but that first sentence struck a chord.
Your partner has an unusual working pattern!
But it doesn't take long to hop over to Norway - or, at least, it didn't at one time.
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