TAX: Pension Warning: How Sunak Could Target Pensions To Pay Covid | Personal finance | Finances



The pandemic has sparked a world of uncertainty, but one thing seems certain is that taxes will have to be increased to cover the costs incurred from borrowing Covid over the past 18 months.

Looking at the autumn budget in November and considering a budget deficit of more than 300 billion took a look at the tax hikes rumored by Chancellor Rishi Sunak. should be considered

Rishi Sunak previously indicated a suspension of the triple ban, saying it was a question of “fairness”.

Artificial wage growth this year, after vacation reduced many wages to 80 percent of normal levels during the pandemic and workers broke away from that support, wages have returned to normal levels, but this shows up as wage growth after the triple -Lock formula.

The triple lock suspension would be lucrative as it could result in savings of £ 8 billion.

Private pension:

Not only for later financial security, but also for the advantageous tax advantages, savings are often made in retirement.

The cost of tax relief on pension contributions is estimated at £ 38 billion, according to the National Audit Office.

Reducing the tax break on pension contributions by capping the tax break to 20 percent can be a palatable option and could raise as much as £ 10 billion.

The tax relief for pension contributions currently works in such a way that those who pay the base rate of 20 percent income tax receive a tax reduction of 20 percent on the pension contributions, those who pay the higher rate of 40 percent on income can receive 40 percent of the pension tax reduction Taxpayers with an additional tax rate who pay 45 percent income tax can claim a 45 percent tax reduction.

Basically, the more you earn, the better the tax relief.

State insurance:

It is speculated that since National Insurance (NI) is a generally preferred tax, an increase would be more acceptable than other tax increases, such as an increase in income tax.

Currently, NI pays 12 percent on income between £ 9,501 and £ 50,000 and a 2 percent rate above £ 50,000.

The 12 percent rate could be extended to revenues above £ 50,000, making it a flat rate.

In addition, the UK’s five million self-employed people with incomes above £ 9,501 pay only 9 percent to NI, a cheaper percentage compared to other workers.

This is “much more difficult to justify”, according to Rishi Sunak, after the government introduced the Self Employed Income Support System (SEISS), which can be seen in exchange for higher NI contributions.



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