The Lib Dems again show how incompetent they are by bleating about higher rate tax relief on pension contributions which they try to frame as a loophole.
Well excuse me,but income tax is a tax on income as and when it is actually received, not a tax on the accumulation of rights to income (should you actually live long enough to recieve it).
By way of example, take the case of a businessman who pays £1.5m into a pension fund and dies the day after retiring. The £1.5m is partially taxed as income, but it is never received
Next example, assume the businessman lives for another 20 years, and with accumulated earnings the fund pays out £3m. The £1.5m is taxed (partially) on its way into the fund, and again on its way out. If the £1.5 million had been paid into a bank account there would have been no tax on the withdrawl of capital.
So all this does is encourage higher rate earners not to use pension funds as currently structured. And oif course let us not forget that Mr Cable and Mr Clegg will not be taxed on the state contributions to their pension pot because it doesn't exist and their pensions will be paid out of future taxes.
2 comments:
I see your point. This bit in the Lib Dem's proposals may relate to the others about closing loop holes etc. in order to catch out the avoiders/evaders. In your example, alas, the businessment is very like these days to have off-shored both the investments and the relevant income. Which means that the UK taxman sees little return.
Good point, I turn 30 next year and am going to start a pension in April. Was talking to a retirement age woman in the office about it.
She keeps telling me that the local government scheme is 'no risk' and today I retaliated that she was merely transfering the risk to other people. She responded that she didn't care (irritaingly she is someone that regularly criticises banks for doing exactly the same thing).
Looks like my generation are in hock for the dodgy loans, the likes of Mr Cable's pension pot and hers.
I really wish I could just take a reasonable employers contribution and put it all in a SIPP where I at least have some control, but can't be done.
I have either sacrafice the employers contribution or pay in like a charlie and take the risk that whatever goes in doesn't get nicked one day by politicans, banks or insurance companies.
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