Budget 2009 proposals

You are missing the point. Tax is applied at many stages in the merry-go-round. After you've paid income tax, you then pay VAT on [some] stuff when you spend yoru net income. And it gets taxed again when the proceeds of that sale are paid to the shop's employee. Etc etc....

Tell us something we don't already know.

So you want some kind of laissez-faire system, where you give tax repayments even when no tax has been paid?

Correct. So why do you want [some] people to be able to reclaim a tax-credit, when it's only notional? As I said before, tax hasn't been paid.

Yes they do - look it up.

I know that. But your 25% figure is merely the result of accounting for tax at 32.5% on the gross div, and adjusting for the tax credit.

Whose suggestion?

So now you're agreeing it's 32.5%. Such inconsistency throughout your post makes it difficult to respond.

What you're saying now is that instead of CT at 28% on all PCTCT, plus tax on receipt of div (total tax 46% of PCTCT) you want to reduce that to 40%. Which invites the question.... how does HMG make up the shortfall?

Now you're fence-sitting

Eh? So what?

So now you're proposing delaying the finalisation of shareholders' tax position for, potentially, a couple of years - until final CT bill has been assessed and paid? That's unworkable.

It was Thatcher who succeeded in getting lots of employees to leave their FSPS (and forfeit employers' contributions).

The bigger reason the pension schemes are under-funded is not investment returns, it's the growth in liabilities as folk live even longer.

In message , Martin writes

Too true, taxpayers' money used to bribe 'em out of company schemes, £2000 each, wasn't it? Cheap at the price. Let's not forgetting SERPS, which she allowed to wither, and reduced the widows' share of SERPS from 2000 onwards. My SERPS contributions enhance my state pension by around 65%.

Gordon Brown didn't do them any favours, with the removal of dividend rebates , but to give an example of your assertion: My dad died at age 60 in service, after 30 years of pension contributions. I retired at 58, after 21 years' contributions, and have drawn a FS pension for over 17 years. My retirement was at the company's request, with the inducement of a 40% enhancement, ie 21 * 140% = 29.4 years contributions. Those employees over 55 years old were lucky, it was a one-off.

Yes. And? Why add in another stage?

It happens with personal pension tax relief now. You can get tax repayments without paying tax, or get more tax repayments than the tax you pay. I take it you object to that too?

So why do some people get to offset the tax credit against their liabilities, effectively a refund, but others, because they either don't pay enough tax, or use a pension, can't reclaim the tax credit?

Since you object to notional tax being attributed to dividends, they don't. They pay as below...

It's 32.5% of the gross amount including the tax credit, it's 25% of the net amount. This is obviously too hard for you...

What about where CT isn't paid, eh? Since you seem to think that's highly significant and should prevent reclaims. Then more tax will be paid this way -

Their levels are set to reflect they are additive and always have been. CT/income tax on dividends were generally alternative taxes, not additive. Making them additive was another of Brown's sneaky stealth taxes.

WTF are you on about? This is for tax reclaims within the pension scheme so won't affect the individual's tax position at all.

Bullshit, it was their aim to tempt people out of SERPS, not out of company pensions.

It was dodgy financial advisors who persuaded people to leave company schemes. Victims of this mis-selling (which it was under the rules from 1988 IIRC, before the time of the bonuses to leave SERPS) should now have been compensated.

How much has life expectancy increased since 1997? Companies generally started closing down final salary schemes to new employees at about the turn of the century, when investment returns were good, particularly in relation to 1997.

This is utter bullshit. It was intended to bribe people out of SERPS, not company pensions which were generally contracted out anyway. See my other post.

SERPS was cut, but not "allowed to wither" then, that is happening now. The SERPS percentage was reduced from 25% to 20% phased in for younger people from about 1988 onwards. Labour were happy with this as they didn't restore it to

SERPS, now called S2P, is *now* being allowed to wither, as this year an "upper accural point" has been set in stone, which will not increase in line with inflation, so the band of income which counts for S2P will reduce in real terms year on year. It will eventually be flat rate.

None of this is really party political, despite the posturing by various politicians. Labour didn't change the Tory plans and the Tories are unlikely to change Labour's plan wrt state pensions.

You mean 10 years after she left power? Yeah right, cos nobody could have possibly changed those rules before 2000 could they?

Ask whoever's advocating that.

You seem to be out of your depth. A tax credit is not the same as reclaiming tax deducted at source.

When did I say that? You clearly don't understand the system and its rules, nor the purpose and effect of the tax credit, so I suggest you look at the HMRC site for guidance.

LOL - I had to correct you (see above)

You mean where there are no distributable profits? I await your example.

Ha ha. You're really in a muddle now.

Eh? Pray explain what levels wouldn't reflect they are "additive".

Pension funds hold shares too - didn't you realise that?

Have you any idea how long it can be between a div being paid and the CT being paid?

Resort to vulgar langauge if you must, but I was there and saw what was happening. Do you not remember employers being banned from promoting company pension schemes?

For men, over one third longer from age 65. That takes a lot of funding.

It's not being "advocated", Brown did it as a stealth tax.

Consider it a "token" that can be used to pay a tax bill. It's really not that hard.

I understand it very well. Non taxpayers, and pension funds, can't reclaim the "tax credit", but basic rate taxpayers can use it to settle the tax bill in full, and higher rate taxpayers can use it to partially settle the tax bill. This means that effectively non taxpayers are forced to pay tax (through not being able to use the "tax credit" in the same way as basic/higher rate payers).

No, you have clearly misunderstood. Try referring to the HMRC site...

It was you who claimed that pension funds were getting a tax "refund" where no CT had been paid...

It's quite simple. If no CT has been paid then a HRT payer will pay 25% of the net dividend.

Who cares? They've always been like that.

Whether a pension fund can reclaim tax credits or not doesn't affect the individual's tax position, or didn't you realise that?

Who cares? Pensions are long term investments.

Guess you don't get out much?

Absolute bullshit. My company made us go to meetings in the 80's where they explained why the company pension scheme was much better than a personal pension.

I'll repaste one of you many selective snips which you're obviously incapable of responding to:

It was dodgy financial advisors who persuaded people to leave company schemes. Victims of this mis-selling (which it was under the rules from 1988 IIRC, before the time of the bonuses to leave SERPS) should now have been compensated.

And how much from 60 (which was the normal pension age for most schemes)? And how much when you include women? And how much when you look at the life expectancy from the date the pension starts being paid?

So why don't you ask Brown?

And BTW, a stealth tax is simply a tax which the great unwashed fail to understand. Which is presumably why you seem to think all taxes are stealth taxes.

Unlike you, I don't need childish analogies.

Why are you telling me this?

That's a ludicrous argument. You might as well say I pay tax by virtue of not receiving CTC or WTC.

So you're so impressd with my suggestions, you are now trying to emulate them.

Indeed, but it's nothing like the 13% reduction in tax which your proposal would yield. I ask again - how would you make up the shortfall?

You wrote it - and now don't care? So weird.

Why do you keep misquoting or mis-attributing stuff? It was you, not me, that mentioned individuals.

Evidently not you.

Certainly not to mix with the kind of people who substitute vulgarity for coherent arguments.

Why, if you think I'm "obviously incapable of responding to"...?

I won't waste time highlighting all my points which you've failed to answer.

Look it up. And while you're at it, note the proportion of women due to receive a company pension.

Which bit of "For men, over one third longer from age 65" don't you understand?

In message , Andy Pandy writes

Her government made the changes, they were phased in.

Reduce VAT to zero.

Use Income Tax to equalise the imbalance between tax imposed, tax collected and the ability to pay. Set a realistic rate, and tell people straight that those who are paid the most (whether they say they earn it or not) are liable to pay the most. Collect the tax from their pay month by month and week by week.

That's the fairest, and the most efficient tax policy. It will give the poorest the incentive to work, by minimising their tax. Minimising the tax on the richest simply encourages them in their incompetent greed like Fred the Shred, and takes incentive away from the poorest who need to be encouraged to work rather than to rely on benefits.

I make it 46%. From each £1, 28% corporation tax leaves you with 72p. 25% effective rate of income tax takes another 18p. 28p + 18p is 46p.

But as they didn't take effect till 2000 they could have been changed well after she left power. But they weren't.

Typical of Labour - they complained about everything the Tories did but didn't change things when they got in.

He has been asked.

The "great unwashed" certainly didn't understand ACT.

Do I? What evidence do you have of that? Or is this just an amateur attempt at trolling?

You clearly do. You seem incapable of understanding the simple concept of a tax credit being worth something unless you physically receive the refund in cash. If you receive it as a token you can use to offset against tax, then to someone who can use it it is as good as a cash refund. To someone who can't (eg non-taxpayers, pension funds) it's worth nothing.

Because you were clearly having difficulty understanding.

In fact, though you're probably too stupid to realise it, that's a good point. WTC and CTC are paid credits, which people can get whether or not they've paid tax. They aren't a "token" you can use to offset against income tax, like dividend tax credits, which can only be used by people who pay tax.

It's called "taking the piss" ;-)

I'd tax idiots at 98%. So watch out!

Hang on, there's a bit missing here - more selective snipping - I was looking forwards to your answer to this bit:

It's quite simple. If no CT has been paid then a HRT payer will pay 25% of the net dividend. "

Why was I "in a muddle"? Please explain.

Why would I care? They are designed to additive, so who gives a toss what levels wouldn't reflect that?

I've not snipped anything. It was obvious you were referring to individuals. If a pension fund gets a tax credit 2 years down the line, for a big corporate fund who cares?

What like "bullshit"?? Diddums. I've heard it on daytime TV. It's commonly used even by mild mannered grannies.

Just thought you might rise to the challenge. But no, I see you've snipped it again.

Cos there aren't any. I've not snipped your posts, I've taken the piss out of all your "arguments".

That's convincing.

CBA. It's pretty irrelevant anyway - that's not the reason for closing down final salary schemes, they could have just increased the NPD of the schemes to reflect increased life expectancy. But they didn't, in general they closed them to new employees and sometimes even toexisting employees.

Which bit of "the date the pension starts being paid" don't you understand?

The majority of corporate pension recipients, and future recipients, did not or will not retire at 65. most retire earlier, sometimes as young as 50. The proportion of extra years such people will be getting paid their pension is nowhere near a third.

In message , Andy Pandy writes

No, typical of Blair, who was an admirer of Thatcher. A real Labour government would of course have reversed the decision, and raised taxes on the wealthier in order to pay for it, and then been defeated at the next election.

But they didn't, fortunately. ;-)

We can't just reduce VAT to zero, unfortunately, because that's the tax which hits the poor disproportionately. But that's a pity..

How about a singe Income Tax rate, with Personal Allowances which leave anyone below the 'poverty line' paying no tax, and remove all the numerous tax avoidance schemes and tax havens for the rich?

OK, typical of NuLab I should have said.

Not sure they would, remember this is SERPS we're talking about - based on the principle that the more you contribute the more you get out. That's hardly typical old Labour, in fact what's happening to SERPS *now* (ie the flat-rating of it) is more typical of old Labour. How much you put in is becoming less relevant to what you get out - in fact in some circumstances the more you put in the *less* you get out!

This is rubbish - VAT doesn't hit the poor disproportionately as they will spend a greater percentage of their income on VAT free stuff like rent, most food etc than richer people.

Excise duties like cigarette tax, alcohol tax, petrol tax hit the poor disproportionately.

Or a citizen's income, and abolish all personal allowances and means tested benefits, with a single flat rate of tax.

In message , Andy Pandy writes

I haven't really studied how it works now, as I retired in 1991. We were advised by the Union Rep to vote for "opted in" about 1978, and they changed their minds around 1985 I think, perhaps because of the change of government.

I'm just grateful for the supplement to my State pension. I checked again and this year it adds 73%.

It is very complicated, but it's likely that if you were at state pension age you should get 25% of average earnings between the LEL and UEL from 1978-1991 uprated by earnings inflation, minus any contracted out deductions.

It certainly was very generous for people retiring at state pension age before about 1999.

You're right - but I guess you didn't see that 46% was indeed the figure I quoted in my 11:24 hrs post the previous day.

BUT... 46% is the effective tax rate on the PCTCT. The CT, as you know, is paid by the company. The 32.5% is the rate paid on the post-CT dividend by the HR recipient, as you've correctly quoted me as saying, above.

Of course, if one wants to derive an accurate "all inclusive" tax rate, then it's arguable that pre-tax profits per the accounts, not PCTCT, should be the starting point....!