March Budget 2016

[muon]

Osborne's budgets have done little to deal with it, and this one is no exception, thanks to the reduced capital gains tax and higher income tax thresholds to name just two policies.

I never got that. With reduced corporation tax and capital gains tax, doesn't that massively benefit people with large amounts of shares? This isn't just a middle class tax cut, it is primarily a tax cut for the very rich who own millions in shares. All that was left was cutting tax on dividends!

The rates aren't necessarily wrong, but it doesn't quite fit with narrative austerity being shared.

 

[danielanthony]

Most people would agree with you. The dangerous trend is not increasing poverty (although that is a concern however you define it) but increasing inequality.

Osborne's budgets have done little to deal with it, and this one is no exception, thanks to the reduced capital gains tax and higher income tax thresholds to name just two policies.

The trouble with increasing inequality is how its measured. I'll agree that the top 1% has a disproportionate level of wealth, but as they get wealthier, the poverty bar also increases. This means that people with normal incomes are almost on par with people on benefits as the government tries to keep families out of 'poverty'. A different measure is needed or the 1% need to get screwed, but either way, people in this country are not poor compared to some of our European neighbours.

 

[The Geezer]

I'm disappointed that the ISA scheme is not open to all regardless of age restriction. On the face of it 25% return per annum on a maximum of 4k per annum sounds great.

The maximum return you get on ISA's today is roughly 1.75%

 

[Rotty]

I'm disappointed that the ISA scheme is not open to all regardless of age restriction. On the face of it 25% return per annum on a maximum of 4k per annum sounds great.

The maximum return you get on ISA's today is roughly 1.75%

it's not on giving taxpayers money away like this

 

[pinkpill]

Does the gov add 25% on deposit, or when you withdraw?

Who is going to pay for that 1000 per year.

 

[Kemik]

Any higher rate taxpayers thinking of getting a Lifetime ISA for anything other than a house should think about putting it in a pension instead. Not sure why people are up in arms either... £1,000 on £4,000 is much less than the gross up an equivalent pension contribution would make.

Let's test the theory:

Lifetime ISA: £4,000 + £1,000 = £5,000
Pension contribution from the net pay of a higher rate taxpayer: £4,000 + £2,667 = £6,667

These are just the first steps to removing the tax advantage you get up front from investing in a pension. The Tories want to tax everything now and give you tax relief in a few decades when people my age (20-35) are still around to take the hit. The baby boomers have had it easy.

 

[Mucky_Pup]

I think the lifetime ISA (probably transformed into 'Pension ISA' in a few years time) is his first step towards his attack on salary sacrifice personally.

 

[muon]

Any higher rate taxpayers thinking of getting a Lifetime ISA for anything other than a house should think about putting it in a pension instead. Not sure why people are up in arms either... £1,000 on £4,000 is much less than the gross up an equivalent pension contribution would make.

Let's test the theory:

Lifetime ISA: £4,000 + £1,000 = £5,000
Pension contribution from the net pay of a higher rate taxpayer: £4,000 + £2,667 = £6,667

You pay tax on the way out on the pension contribution remember.

I think the lifetime ISA (probably transformed into 'Pension ISA' in a few years time) is his first step towards his attack on salary sacrifice personally.

What good is it if you set something up almost just as good though?

 

[Judgeneo]

Who is going to pay for that 1000 per year.

The future tax payers. I expect there will be some clever accountancy so that the money is deducted from the gov's balance sheet until its withdrawn as pension or for a deposit.

 

[muon]

The future tax payers. I expect there will be some clever accountancy so that the money is deducted from the gov's balance sheet until its withdrawn as pension or for a deposit.

If the money is handed over to the bank every year (and reclaimed when the person withdraws early) it will be an expenditure every year. Setting it up as a future liability, off the current books is a recipe for disaster.

If it results in people paying tax now then there won't be much of a difference. If it results in existing taxed income then it will have a cost, but I guess it achieves the goal of getting people to save for their pension.

 

[MooMoo444]

How can they afford to give away £1 for every 4? Are they banking on people not making it to 60 or what? Seems way too easy money if you can afford to save it.

 

[VincentHanna]

The thing is, people are quite ignorant to what is good and what isn't

I keep telling my mrs that fruit juices aren't great as they contain sugar (im of the belief that sugar is sugar) but she is adamant that it's good sugar as it comes from fruit......and fruits healthy right!

When you eat Fruit or drink 100% pure fruit juice it tends to have other benefits - Namely water and vitamins (also antioxidants - but not sure they are really of much benefit)

Something like 'full fat' coke has no nutritional value. Same with a bar of chocolate.

Hence you are better off with the fruit/fruit juice option, even if the sugar content is the same.

 

[Kemik]

You pay tax on the way out on the pension contribution remember.

Yeah, gotta admit I forgot about that bit. You get 25% of it tax free (for now) though.

Lifetime ISA: £4,000 + £1,000 = £5,000. 0% tax = £5,000 net.

Pension contribution from the net pay of a higher rate taxpayer. Assume already used full PA but have some BRB left when draw down: £4,000 + £2,667 = £6,667. 25% tax free, rest at 20% = £5,667.

Might work out better to use the ISA if you have enough of a pension to take you into the higher rate band but then depends on interest rates, if you have used your lifetime allowance, annual allowance, etc. A career in personal financial advice becomes a better idea year on year...

 

[joeyjojo]

The trouble with increasing inequality is how its measured. I'll agree that the top 1% has a disproportionate level of wealth, but as they get wealthier, the poverty bar also increases.

I agree in principle apart from the first statement. Poverty is difficult to measure but inequality is not.

 

[Tuppy_Glossop]

I'm off out to buy some tobacco before 1800.

 

[RavenXXX2]

I never got that. With reduced corporation tax and capital gains tax, doesn't that massively benefit people with large amounts of shares? This isn't just a middle class tax cut, it is primarily a tax cut for the very rich who own millions in shares. All that was left was cutting tax on dividends!

The rates aren't necessarily wrong, but it doesn't quite fit with narrative austerity being shared.

Cutting benefits to disabled raises £1.2bn, which is same as cost of cutting capital gains tax & raising 40% tax threshold

Tory priorities right there.

 

[platypus]

If the money is handed over to the bank every year (and reclaimed when the person withdraws early) it will be an expenditure every year. Setting it up as a future liability, off the current books is a recipe for disaster.

If it results in people paying tax now then there won't be much of a difference. If it results in existing taxed income then it will have a cost, but I guess it achieves the goal of getting people to save for their pension.

About as much of a disaster as the PFI cooking of the books. Which probably means it will happen!

 

[Mr Jack]

Interesting commentary from the BBC:

George Osborne set himself three fiscal rules - to cap welfare spending, to bring down debt as a proportion of national income and to produce a surplus by the end of the Parliament. The welfare cap was breached when the government was forced into a U-turn on cuts to tax credits last year.

Today, the rule on reducing debt has also been broken. With the UK economy slowing, public sector net debt as a proportion of gross domestic product will rise this year, the Office for Budget Responsibility says.

That leaves the chancellor with one rule still extant - a budget surplus by 2020.​

Osborne's record of failing to hit his own rules and targets is beginning to be noticed. Does anyone seriously think that he's going to balance the books by 2020? He's missed every deficit reduction target he set himself. He's even missing a debt reduction target he set less than a year ago.

 

[Kemik]

Interesting commentary from the BBC:

George Osborne set himself three fiscal rules - to cap welfare spending, to bring down debt as a proportion of national income and to produce a surplus by the end of the Parliament. The welfare cap was breached when the government was forced into a U-turn on cuts to tax credits last year.

Today, the rule on reducing debt has also been broken. With the UK economy slowing, public sector net debt as a proportion of gross domestic product will rise this year, the Office for Budget Responsibility says.

That leaves the chancellor with one rule still extant - a budget surplus by 2020.​

Osborne's record of failing to hit his own rules and targets is beginning to be noticed. Does anyone seriously think that he's going to balance the books by 2020? He's missed every deficit reduction target he set himself. He's even missing a debt reduction target he set less than a year ago.

True. A better question however is, what is the alternative and how would that have compared? Of course, that is massive guesswork.

 

[Von Smallhausen]

Jeremy Corbyn's counter strike was as weak as water. You could almost see the targets being painted on his back by swathes who want him gone. It's a shame in a way as the UK desperately needs a credible opposition and a leader and party to take back seats north of the border and highlight Ms Krankie for the one trick pony she is but it isn't happening under Corbyn.

Another five year term for the Tories is just about nailed on.