thebarns wrote:A wealth tax on pensions ?
I don’t see that happening - particularly as many will point out the true value of index linked final/career salaried defined benefit pensions schemes - very few of these exist in the private sector these days and most are in the public sector, Including all those in the civil service who are closely involved in the rules surrounding the valuation and taxation of these - these have been significantly in their favour for years.
Once they - due to the outcry - had to start calculating the proper value of these pensions, ie what would they cost you to buy on the open market were you to choose this option with a private pension pot, then many mid level defined benefit salaries would be valued at £500k - £1M
That also overlooks that DB pensions are taxed as income, and with civil service DB pensions you still have to pay UK tax on them even if you move overseas, plus they effectively vanish on the death of the pensioner or their spouse.
On what the Labour Party might do in relation to personal taxation, then the main impact is likely around Starmer’s statement at their most recent conference -
“
We are looking at how we tax fairly. On wealth, I am looking at whether and how we tax all different forms of income. Some people obviously earn their income through a wage, other people earn it through stocks and shares and dividends and we are looking at what is a fair way to tax all income wherever it comes from.”
Told that it sounded like a ‘wealth tax’, he said: “
No, it is not really a wealth tax. It is looking at different forms of income, it is stocks and shares and dividends.”
So it is obvious they are intending to do something, but what.
Whatever it is there will be a strong resistance from HMRC to significantly increase the number of people doing SA, particularly for relatively trivial amounts and all the hassle that brings. Also I can’t see Labour wanting to impact their voters who may hold small amounts of shares from employee share schemes.
ISAs - the simplest way for Labour to initially deal with those is to lower the £20k annual subscription limit. Sure it doesn’t deal with money in them but they get to tax what can’t be put in there.
Or alternatively they could simply abolish ISAs from a set date with any growth, dividends or interest after that date being taxable. There would be complaints but the rebuttal would be that people had benefited from the tax free status up to then so they haven’t actually lost anything.
Other changes that wouldn’t impact their ‘blue collar’ voters too much but would bring in more tax would be to restrict the tax relief on pensions to the basic rate, and one that would probably bring in a good chunk of tax and saved child benefit - remove the salary sacrifice mechanism for pensions (and employee cars).