Impact of permanent USC on pensions

G

goosebump

Registered User
Messages
159
It seems that several parties in the general election campaign and looking to make the USC a permanent feature of the tax system, and even those that aren't acknowledge it will be around for a while.

USC is chargeable on all income, before pension deductions.

As far as I know, it is also chargeable on proceeds from occupational pensions (ie private pensions).

I can understand the rationale of the USC being charged on all income, because the USC was envisaged as an emergency tax. ie the intention was that it would be gone by the time you got your pension, so you had to pay it now, unlike PAYE, which you can reasonably defer until later.

But if we're going to keep USC, surely it should be changed so that its only payable on income after deductions?

If I pay it on my pension contribution now, and when I draw down my pension, am I not paying it twice? Maybe I'm missing something here, but if not, the parties proposing to keep the USC should be challenged on this.
 
Interesting point ... i suppose it depends on the size of your pension fund on retirement , if you only have a small pension you may will fall under the USC threshold. Although penions are an excellent tax deferral tool i have always wondered about there future ...a future government might well move the goalpost in terms of taxing your penion. My advise be careful how well you provide for your future.
Why did Robinhood steel from the rich ..." because the poor have feck all "
 
Yet again Posters highlight the harm done by Raiding pension funds.
Pension savings were understood as deferred income, that only on drawdown would be taxed as (normal) income.

Of all the short-sighted stupid hits, the hits on private pensions even trumps the water fiasco.
 
I suppose you could make the argument that the tax-free lump sum is a benefit. Never really understood the rationale behind the tax-free lump sum myself. If any part of the pension regime was open to being hit, that is probably it. I think the UK are abolishing it.
 
You must log in or register to reply here.
Back
Top