George Osborne’s plans could see savers lose a third of their pension in tax changes
Critics say Osborne’s plan could have ‘disastrous effect’ on encouraging people to save for retirement.
Here’s a story that provokes mixed feelings.
On one hand, the Tories are hitting middle-income workers, who will discover how it feels to be persecuted by a government many of them supported into office. How are you enjoying the betrayal, folks?
On the other, this is the end of a tax avoidance scheme and This Blog should support such moves.
However, one must question why George Osborne has decided to attack a scheme involving the pensions of people earning only moderate amounts, when there is at least £30 billion (possibly as much as £120 billion) being avoided every year by his super-rich business cronies.
Is he allowing his personal associations to interfere with his work as a government minister?
Perhaps we should draw our own conclusions about that.
Middle class savers could lose up to a third of their pension pots if proposed changes to tax relief go ahead.
Chancellor George Osborne is trying to save billions by cutting the amount of tax relief the Government offers.
But analysts have warned potential changes would hit middle income workers hardest, and could see them miss out on tens of thousands of pounds.
Critics have labelled the plans a ‘stealth tax’, which could have a ‘disastrous effect’ on whether people can afford retirement.
A 40-year-old earning around £50,000 a year stands to miss out on up to £175,000 by the age of 65 if Mr Osborne scraps the tax relief perk altogether.
Other options being considered would see the same worker losing out on between £44,000 and £110,000 by the time they retire, according to pension provider Fidelity. Currently, workers earning £42,385 or more – higher rate income tax payers – receive a tax-free boost of £2 from the Government for every £3 they save into a pension.
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And George Osborne’s family business avoided tax! We are all in this together are we?
this really is a vile government,i’m 72 and this is the most callous,crafty,underhand,
murdering,scumbag of a government i’d never thought i’d see in a so called modern,
civilised country.
As you say, Mike, a double edged sword here. It’s the beginning of the end of neocon economics, Corbyn’s anti-austerity stance is snowballing. So this would seem an incredibly stupid move by Osborne against the Tory voters, but let’s see how it plays out.
My guess is he will offer another of his false binary choices, such as keep the higher rate tax benefit, OR give transitional protection to the women who have had their pensions stolen. It is a false choice, but the faux choice between the lesser of two evils gets hyped as proof of “listerning”, or worse “Being on the side of the hard working”, but is typical of the sort of thing Gidiot thinks is clever. What ever it inevitably will result in one or another group being massively out of pocket.
As the rise of Labour-led opposition to austerity gains speed and numbers, Osborne knows this is the end of the road for his voodoo economics, and is concerned only with asset stripping the UK to maximise the 1% or 0.1% personal wealth in the Cayman’s or BVI before they are routed.
You can’t expect decency from the Tories. They consider that they have the right to rule and we just blindly allow them.
You avoid tax too.
Duty free? Deferred tax on a pension? Choosing to work less to avoid 40+% going to the govt?
Anyone who doesn’t avoid tax is an idiot. At the very least for believing that the govt knows how to spend their money better than they do.
Duty free? Haven’t been abroad in years.
Deferred tax on a pension? Private pensions are rip-offs in any case.
Choosing to work less? What planet are you living on? How many people do you honestly believe even have that choice?
Still, you may have a point about tax avoidance. But there is a huge difference between HMRC-blessed tax schemes and the kind of wholesale tax avoidance practised by the large companies whose names we have all come to revile over the last few years.
So, really, you still haven’t proved you’ve got a clue.
That you don’t go abroad is not my problem.
Your choice regarding pensions. Defer tax (at a cost) or not.
Clearly, you need to talk some people outside your clique.
No, we “all” don’t revile big companies who avoid tax. Millions of people LOVE Apple. I do too: Headquartered in Nevada to avoid California corp. tax and several $billion offshore to avoid Federal corp. tax.
If they didn’t avoid these rapacious taxes, as a shareholder, I’d sue the directors.
That I don’t avoid tax IS your problem, as you claimed that I do.
Oh, I’m not an idiot either.
As you wish.
I shall continue to buy duty free, stash cash in pensions, and arbitrage goods and currencies.
As JM Keynes said, “Tax avoidance is the only intellectual that carries a direct financial reward.”
You mean: “The avoidance of taxes is the only intellectual pursuit that carries any reward.”
Quoted out of context and therefore meaningless.
Mixed feelings as you say. However as they move in on the middle class and pensioners they will hopefully lose their votes.
Stephen Mellor: you are just the kind of greedy individual that makes for a brutal world where you don’t give a damn about your fellow humans. It’s a pity that such people as you are allowed to have these brutal opinions.
@ChrisKitcher: This is like saying I’m a “greedy individual that makes for a brutal world where you don’t give a damn about your fellow humans” because I refuse to stump up £1B to stop an inevitable landslide, and instead suggest the villages move their houses half a mile to the south.
Gravity is not just a good idea. It’s the LAW.
So is economics.
What are you on about?
In the context of the discussion, you’re making no sense whatsoever.
Go back and think again.
Economic reality is economic reality. Just like the laws of gravity.
The fact that your worldview pretends this reality isn’t so doesn’t make it go away.
Economic reality is indeed economic reality – but it isn’t YOUR economic reality.
Stop bothering us with your fantasies, go and read some proper economists and learn something.
Sad and clear that your god is money. I bet all you do is worry and plot how to get a little more all the time. Personally I would rather spend my time trying to make this country better by helping other people, rather than finding new ways to do someone over.
If you hate Labour views so much, why do you read this blog? Mainly it’s for and about disability. I find it strange people who read Mike’s great stuff just to criticise and try and make themselves feel big by putting others down.
@JamesKemp: My god is not money. I simply understand that things have to paid for, and the supply of good things we could do far outstrips our capacity to do them.
I’m not putting anyone down. I’m just pointing to the fact that you have to pay for things, and taking responsibility for one’s self and one’s family is by far the most effective way to do it.
It also makes for a freer society.
Not true. We can fund anything at all because money is just a tool.
The fact is that certain individuals have been draining money out of the economy, towards themselves, specifically in order to prevent the funding of certain projects which they believe would disadvantage them. They are mistaken but, as our experience with you is proving, it is impossible to teach a blind person to see.
Your comment about taking responsibility is risible. Your own comments about conditions of employment demonstrate amply that you are happy to condone irresponsibility and the acquisition of unfair advantage.
As for your comment about a more free society… perhaps you’d care to explain how we have that, after around four decades of your economics in action.
“Not true. We can fund anything at all because money is just a tool.”
Tell that to my credit cards!
Ah. The ‘David Cameron’ approach – answer with a flippant comment.
I take it you’re admitting defeat, then.
James, I hope that you are replying to Stephen Mellor and not me?
The tories are coming after everyone, even supporters of the tories like yourself Stephen, in their eyes, everyone’s a target, including you!
stephen mellor. Remember the holocaust,???? when will the tories come for you.
you are a prize idiot if you dont believe they will and think you’re immune to long term effects of their policies.
presumably short term thinking is more acceptable but what happens when you realise you have been decieved??????
@Terry Davies: I *am* (mostly) immune to their policies.
You’d have to be an idiot to keep more than living expenses–let alone a pension pot–in the UK.
You might look up Godwin’s Law.
No, YOU should look up Godwin’s Law. It doesn’t apply if the reference is made correctly – and it was.
Anyway, if you’re saying you are avoiding tax by holding your money overseas, perhaps it is time HMRC had a look into your affairs.
Tax avoidance is legal. And a public good.
It is indeed legal, unfortunately.
But it is harmful.
Perhaps you should catch up with The Town That Took On The Taxman (it was on BBC Two last night) and learn something.
Sadly what has been lost here is the concept of morality. We are now in a world where the acquisition of money is the one and only subject some people are concerned about. The fact that they have more than enough money for reasonable needs whilst others are forced into poverty and shortages goes directly against what a civilised society should be. Greed as we are now witnessing is morally wrong and we should be stopping it rather then encouraging it.
Horsepucky. There’s no “morality” involved. Nor is there any “greed.”
We each invest our time and money in a variety of projects, and expect some reward. We can easily give away the proceeds, as have Buffet, Gates and Zuckerberg. That’s our choice. Had they chosen to keep every cent (after rapacious taxes, I might add), that, too is their choice.
That’s none of your business whatsoever.
Well of course being a capitalist like yourself I would have hoped that, with the current callousness and brutality of this rotten Tory government, even the likes of you would have realised how immoral their actions are.
We all live together in a society that is designed, after decades of consideration, to be one that is equitable, just and cares for the weakest in it. Sadly over the recent past greed and a complete lack of moral conscience has allowed for the development of a greed culture, which you evidently espouse, that is of no benefit to anyone.
Oh dear! Back to the “moral” and “greed” nonsense.
It is NOT moral to take the earnings of others to fund your causes, not matter how worthy.
It is, however, greedy to do so.
It is _you_ are who is immoral and greedy.
If it isn’t moral to take the earnings of others to fund your concerns, why do employers do it – by your own admission?
You say they don’t have to pay any more than the absolute lower limit – but they wouldn’t have any money at all without their workforce generating it, therefore by not paying the Living Wage, they are taking the earnings of others and putting the money to their own purposes.
I’m glad you have admitted this is immoral and greedy.
Now apply those judgements where they belong.
Employers don’t take your money. They give it to you in fair exchange for your labour.
If you seriously believe that the worker generates all the cash a business earns, I suggest you set up your own business and divide the proceeds accordingly.
Good luck.
Of course the workforce generates all the cash a business earns.
Tell you what – YOU set up a business, with yourself at the head. As head, of course, you won’t do any of the work. Now here’s the thing – if, as you say, the workforce doesn’t generate all the cash a business earns, allow me to wish YOU good luck in making any money at all.
Your arguments are turning into childish nonsense.
And, by the way, I stand by my words: Employers who do not pay a Living Wage are indeed depriving their workers of money. The wages they provide for the labour they receive do NOT constitute a fair exchange.
It’s that simple.
“Of course the workforce generates all the cash a business earns.”
The workers do indeed contribute. That’s why they get paid.
But so does capital, the original idea(s) and the drive of the CEO.
“Tell you what – YOU set up a business, with yourself at the head. ”
Done that.
“As head, of course, you won’t do any of the work.”
That’s hilarious. 80hr weeks are the norm. 60 if you’re taking time off.
“Employers who do not pay a Living Wage are indeed depriving their workers of money. The wages they provide for the labour they receive do NOT constitute a fair exchange.”
If it’s not a fair exchange, I suggest the worker find other employment.
If you’re doing an 80-hour week, you’re a worker. But I bet you pay yourself a LOT more than you’d pay someone else doing the same work for you – and there lies the rub.
Of course, workers are free to find other employment – if it exists. But now you’re expanding into the wider arena of national politics where, from 1979 onwards, the Conservative Party did everything it could to create a large amount of unemployment, specifically to drive worker wages down. Again, it’s not a fair exchange if there is no other employment to be had, or what little is available pays a comparable – measly – amount on the same “take it or leave it” basis as you’re offering.
Not all businesses are started with capital loans. And you can’t make money with ideas alone.
What you mean by “the drive of the CEO” is anybody’s guess.
“If you’re doing an 80-hour week, you’re a worker. But I bet you pay yourself a LOT more than you’d pay someone else doing the same work for you.”
Actually, I have (on one occasion) paid a worker more than me. It was a deal based on sales that year, and the “extra” money was worth it.
“Of course, workers are free to find other employment – if it exists.”
Of course it exists. At the right price, in the right place.
“Not all businesses are started with capital loans.”
True.
“And you can’t make money with ideas alone.”
False. I did.
“What you mean by “the drive of the CEO” is anybody’s guess.”
What you actually mean is that *you* can’t guess. But let me tell you.
The CEO sets the direction and pushes along that path. The more “drive” s/he has to push along that path, the more successful the business will be.
I suggest you try running a business.
I do run a business.
And no, you can’t make money with ideas alone. You have to work, otherwise they won’t. I have several great ideas every day, but only those I develop into practice ever bring any return – because I WORK on them. Alone, an idea is just an idea. You try to say otherwise, and I know you’re trying to sell me snake oil.
Your talk about a CEO’s drive is not accurate. I’ve known several very energetic CEOs who have driven the companies they represented (owned by other people) into the ground – mostly because they ignored my advice. Incidentally, of course, those CEOs were also employees, although I’m willing to bet they were paid much more than the Living Wage, despite driving their employers’ firms to ruin and proving they were worth far less than the other employees whose efforts were not appreciated with appropriate remuneration.
“And no, you can’t make money with ideas alone. You have to work, otherwise they won’t. I have several great ideas every day, but only those I develop into practice ever bring any return – because I WORK on them. Alone, an idea is just an idea. You try to say otherwise, and I know you’re trying to sell me snake oil.”
Of course you have to put an idea into practice. Facebook was an idea. It was put into practice. And made zillions.
“Your talk about a CEO’s drive is not accurate. I’ve known several very energetic CEOs who have driven the companies they represented (owned by other people) into the ground”
Of course. If their direction is wrong, the more energetic they are the quicker they fail.
“Incidentally, of course, those CEOs were also employees, although I’m willing to bet they were paid much more than the Living Wage,”
So?
“despite driving their employers’ firms to ruin”
That’s up to the shareholders. If they hire an idiot…
“and proving they were worth far less than the other employees whose efforts were not appreciated with appropriate remuneration.”
And just who are you to decide what constitutes “appropriate remuneration”?
So you agree that an idea on its own won’t get anywhere. At last you are starting to learn. Entirely my influence, of course; you mustn’t take any of the credit.
As for who I am to decide what constitutes appropriate remuneration, I’m the employee who walked out when it wasn’t supplied, precipitating the collapse of my former employer’s firm in my wake. I know what I’m saying because I’m describing events I have witnessed. A wise person would learn from that – as you have already accepted my instruction on the necessity of working to bring an idea to fruition.
I hope you’re pleased with yourself, putting all those people out of work.
It was Margaret Thatcher and her Tories who put people out of work. If you think many people in the UK now are in gainful employment, you haven’t been paying attention.
No.
There’s a difference between accepting economic reality and deliberately putting a company out of business.
The reality of Thatcher’s economics is that she deliberately put millions of people on the dole. It’s an established historical fact. If you don’t accept it, you’re just admitting you don’t accept economic reality.
We seem to be going around in circles. Perhaps you should go away and read up on your subject. I have written several good pieces, with links to excellent sources of information. A quick web search should get you the information you need.
Or would you rather continue arguing from ignorance?
“I’m the employee who walked out when it wasn’t supplied, precipitating the collapse of my former employer’s firm in my wake.”
OR
“It was Margaret Thatcher and her Tories who put people out of work.”
Which is it?
Both; they are not mutually exclusive.
“If you want to pay less to someone in India, go and live there.”
No.
“See how ecstatic they’d be. ”
They would be.
“We’d also be happy because we’d be rid of a parasite.”
And an employer. You’d rather be paid nothing.
“And still you come back to the claim that underlying employees isn’t mistreatment.”
It’s probably sexual harassment, though.
“You clearly should never have been allowed to run a going concern; your business plan is poor.”
Allowed? Who do you think you are?
“Underlying” should have been “underpaying”. Spellcheck error.
Regarding my comment on what you’re allowed to do, I’m a taxpaying member of UK society, and I’m not only allowed to have an opinion what else should be allowed here, I can also help decide what should be allowed here.
The last time I checked, the UK was still claiming to be a democracy. If enough of us say we don’t want your immoral employment practices, out they go.
I’m glad you admit you’re a parasite.
As for the loss of an employer: You forget. You’re not special. Lots of people have good business ideas and anyone else could start up in your place, with equitable business practices, and make a go of it.
You have completely lost this thread Stephen Mellor. just accept that your greed is immoral and leave the site, in order to accept your nastiness.
Hardly.
You believe you have a right to my earnings. That’s both immoral and greedy.
That’s pretty nasty in my book.
No, no, no. If Chris was working for you, YOU would believe YOU had a right to HIS earnings.
THAT is what is immoral and greedy.
I’m sorry for you if you can’t see it. You support the accumulation of immoral earnings.
Perhaps I should report you to the police.
No no no.
If Chris were working for me, I’d pay him what we agreed would be a fair amount for his labour. If Chris thought it too little, s/he would seek employment elsewhere. If I thought it too much, I’d hire elsewhere.
At no point do I take *anything* from Chris.
No. You would pay what YOU TOLD HIM was fair. He wouldn’t get any say in the matter, and your terms would be “Take it or leave it.”
Your claims about seeking employment elsewhere are false, as demonstrated by my previous response regarding the support provided by politicians to employers who are happy to assert unfair advantage in pay negotiations.
Squirm all you like, you can’t get out of this corner. And why should you? After all, YOU PAINTED YOURSELF INTO IT.
He *does* have a say in the matter. He can take it or leave it.
Or, as often happens, he can say, “That’s an interesting offer. If you raise it by this much, I’ll take it.”
*Anyone* can find a job, if they’re willing to look. Or they can set up their own business.
What they can’t do is make up a number, say “that’s I need to live on, so you pay me it.”
Abolish tax credits. Abolish the “minimum wage.” Start competing.
Or China and India will eat your lunch. Your choice.
Your attitude stinks. If he can “take it or leave it” but can’t negotiate a more appropriate settlement (for reasons already stated) then he is being exploited by an immoral employer.
The Living Wage is well-established as the authentic indicator of the amount needed to live without relying on benefits in the UK. Your suggestion that all somebody did is “make up a number” is adrift from reality.
Tax credits can go when employers pay a Living Wage.
The minimum wage can go when employers exceed it to the value of a Living Wage – or more.
If employers in the UK want to compete, then this is the only way to succeed, because it has been proven that well-paid employees are well-motivated because they know they are valued, and create a better product.
The wage slaves on starvation pay that you would prefer will certainly make way for China and India to take over. They have no investment in the well-being of an employer who mistreats them.
“If he can “take it or leave it” but can’t negotiate a more appropriate settlement (for reasons already stated) then he is being exploited by an immoral employer.”
Of course he can negotiate. I do. Why can’t he?
And he can always go down the road. Or to Germany. Or to a place where the cost of living is lower.
“The Living Wage is well-established as the authentic indicator of the amount needed to live without relying on benefits in the UK. Your suggestion that all somebody did is “make up a number” is adrift from reality.”
Rubbish.
“Tax credits can go when employers pay a Living Wage.”
Tax credits can go now. The “living wage” is a fiction.
“If employers in the UK want to compete, then this is the only way to succeed, because it has been proven that well-paid employees are well-motivated because they know they are valued, and create a better product.”
I agree that well-paid employees are better motivated. I can pay half as much to someone in India and they’d be ecstatic.
“The wage slaves on starvation pay that you would prefer will certainly make way for China and India to take over. They have no investment in the well-being of an employer who mistreats them.”
No one is being mistreated. They took the job at that rate.
Oh, and BTW, the turnover of this business of yours? How many employees? Enquiring minds etc.
He can’t negotiate. By your own admission, he (or she) is told “Take it or leave it”. It’s wrong to equate your situation with such people; you clearly aren’t in anything like the same position or you wouldn’t protest in the way you do.
“He can always go down the road. Or to Germany.” Big fan of Norman “On your bike” Tebbit, are you? What if they don’t have the cash necessary for such a move? Your thinking is pathetically simplistic.
I see you have no argument whatsoever regarding tax credits @ and the Living Wage. “Rubbish” and “It’s a fiction” aren’t worthy of a response.
If you want to pay less to someone in India, go and live there. See how ecstatic they’d be. We’d also be happy because we’d be rid of a parasite.
And still you come back to the claim that underlying employees isn’t mistreatment. You clearly should never have been allowed to run a going concern; your business plan is poor.
You’re terribly confused about this, obviously.
I don’t know enough about what you do to determine your negotiating position. Would you be going into a job interview as a prospective employee? I doubt it. Your attitude suggests ‘Tory employer’. Therefore, forgive me, I doubt if you would experience anything like the same situation as normal job applicants.
Your comments on the Living Wage and tax credits indicate you have no further argument. Look up http://www.livingwage.org.uk/ to discover why you are wrong about the Living Wage.
I’m glad you agree that well-paid employees are better-motivated. Of course, the reason the UK has lost so much of its economic base is that employers didn’t want to pay for well-motivated and profitable employees and suffered for it. See my own story, as already relayed in a previous comment.
If you want to pay half as much to someone in India, I certainly wouldn’t stop you – as long as you moved to India yourself and made space in the UK for a decent employer.
Your claim that nobody is being mistreated has already been well and truly destroyed. If all you have is repetition of your original, false assertion, then you have nothing more to say.
Oh, and the details of my business are for me to know, not you. I didn’t ask about yours.
“as long as you moved to India yourself and made space in the UK for a decent employer.”
This is a new one. A “Lump of Employers” fallacy.
(I’ll help you out: https://en.wikipedia.org/wiki/Lump_of_labour_fallacy.)
I wasn’t making any reference of the kind you infer.
I was simply saying that, if you want to employ people in a foreign country, you should clear off to the same country to do it.
“I wasn’t making any reference of the kind you infer.”
Oh yes you were. What do you think “and made space in the UK for a decent employer” means?
“I was simply saying that, if you want to employ people in a foreign country, you should clear off to the same country to do it.”
Whatever for? This is a global economy. In the last three months alone, I’ve worked in Spain, Israel, California, Japan, China, Australia, Germany, Switzerland, Singapore, and Italy.
“Residency” is increasingly a fiction for individuals, as well as for corporations.
No I wasn’t. Don’t try to tell me what my intentions are.
As for why you should move – simply to be with people who’ll put up with your exploitation, because pretty soon, nobody here will want anything to do with you.
Oh hey – I’ve just looked up your website and you’re not even a UK citizen! You’re from the States!
No wonder you don’t understand most of the things we’ve been telling you.
Really – stick to what you know.
Wrong again.
I am a UK citizen.
And I have the misfortune to live here.
Oh, I do apologise. Your website doesn’t make that clear.
You have, however, spent a lot of time in the States and it seems to have affected your outlook adversely. You should take the time to rediscover some British values – like decency and fair play.
I don’t have the right to your wages but by living in a civilised society, where provision is made for everyone, we should all recognise that it has to be paid for. Accordingly the most civilised way to do this is through everyone paying according to their means, which in this country means using a persons wealth to determine how much they should contribute towards that society.
Sadly this current government has missed the most crucial point of the whole exercise and that is the determination of a minimum standard of living which every citizen should enjoy. In their blind rush to save money and keep taxes low this government have chosen to reduce living standards for the poor and vulnerable whilst allowing the rich to become even richer.
Well now. This is interesting. An admission of the real goal.
“Accordingly the most civilised way to do this is through everyone paying according to their means, which in this country means using a persons wealth to determine how much they should contribute towards that society.”
And:
“missed the most crucial point of the whole exercise and that is the determination of a minimum standard of living which every citizen should enjoy.”
No. The proper business of government is national defense, protection of human rights (primarily property rights–not the made up ones), just application of the laws, protection of the indigent and enforcement of contracts.
Nothing else.
According to whom? You?
The proper business of government is the protection of its citizens – including protection from exploitation by other citizens. That’s why employment and consumer protection laws have been passed, and why government monitors poverty and its causes.
You have strangely skewed ideas. I’d like to know how you came by them.