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How you could be affected

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How you could be affected
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There is growing speculation that the way pensions are taxed could be changed in the Budget.

Chancellor Rachel Reeves says she needs to find £22bn and some experts say she could change the system on workplace or private pensions to find some of this money. This is separate from another debate about the state pension.

There are a number of options which could affect workers getting their first job, those already working, all the way up to those in retirement. This is what could happen and why you should care even if you’re only in your 20s.

Make employers pay more national insurance

When you get paid, national insurance (NI) is deducted and the government spends it on things like benefits and public services. Your employer has to pay a NI contribution too.

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However, money that goes into a pension is free from income tax and NI.

One option for the chancellor is to make employers pay at least some NI on the money they put into workers’ pensions.

Doing so could immediately raise billions of pounds for the government.

However, this extra cost to business owners could leave them with less money to spend on hiring and investing. It could therefore become harder to get a job.

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Businesses could also limit pay rises, hitting all their workers, or reduce the pension contributions they make for new staff.

Alternatively, employers who currently make the most of the NI break by encouraging workers to take less in pay and more in pension – known as salary sacrifice – could be stopped from doing so.

The attraction of this option for Ms Reeves is that she can raise money without a visible difference to people’s take-home pay.

The downside is it creates less of an incentive for employers to put money into their staff’s pensions. That would mean when current workers retire they wouldn’t have as much income.

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Change the rules on inheriting pension savings

Various rules exist when inheriting money from partners or parents when they die.

Inheritance tax is paid if an estate is valued at more than £325,000 but any money saved in a pension does not count towards this.

Separately, anyone who dies before the age of 75 can usually pass on what is left of their pension savings tax-free as a lump sum, or an income.

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If they are 75 or older when they die, their pension money can still be passed on, but it is treated as income and the person they leave it to may have to pay income tax. There is more on these rules here.

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Removing these tax breaks would give the government more money, but exactly how much is unclear. The vast majority of people don’t pay inheritance tax anyway because they are not left estates worth more than £325,000.

There could also be anger from people who have organised their finances under the current rules, only to find their loved ones would get a lot less if those rules changed. That anger would be even greater among those who have already retired, as they have less time to do much about it.

Tax-free lump sum could be capped

From the age of 55 (or 57 from 2028), anyone with pension savings can take a quarter of their money as a tax-free lump sum up to a maximum of £268,275.

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Some use that money to pay off their own mortgage, if they have one. Others use it to help children and grandchildren buy a first home.

The chancellor is said to be considering lowering the cap.

By limiting the tax-free limit, people will eventually pay more in income tax when they take their pension. However, there are questions over how much extra money that would raise for the government and when.

Making arrangements for those who have already exceeded the limit, or were planning to, could also be complex, and reduce how much extra tax the Treasury gets.

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Introducing a single rate of pension tax relief

The build-up to every Budget usually sees speculation about changing pension tax relief.

When you pay into a pension, some of the money that would have gone to the government in tax goes into your retirement savings instead, known as pension tax relief.

You don’t pay tax when putting money into a pension but you do when you come to take that money as income.

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Under the current system, you receive pension tax relief at the same rate as your income tax bracket – meaning basic rate taxpayers receive relief at 20%.

That means for higher rate taxpayers, the relief is more generous, at 40% or 45% in line with your income tax rate. You can read more about how this is done here.

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Some economists say it would be fairer to give the same level of relief for everyone.

Setting a flat-rate of relief at, say 25%, could benefit lower-earning employees who currently get 20% relief, by further reducing their tax bill.

However, higher rate taxpayers with an annual income of about £50,000 or more would lose out, because tax relief would be lower than now.

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An added, but important, complication is that a huge group of public sector workers, and some in the private sector too, have so-called defined benefit (DB) pensions.

Ensuring the correct level of tax relief is applied to higher-rate taxpayers with these pensions would be highly complex.

It may mean they are automatically given 40% or 45% tax relief, then later handed a tax bill – possibly for thousands of pounds – to pay some of that back.

Tom Selby, from investment platform AJ Bell, says this would likely provoke “a blistering row” with NHS staff, teachers and civil servants who could fall into this bracket.

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Given that ministers have said they will not raise taxes for working people, that would become a tricky policy to sell – and reports suggest changes have now been ruled out by the Treasury.

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Barack Obama says Black men’s support for Trump is ‘not acceptable’

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Barack Obama has said Black men’s support for Donald Trump is “not acceptable”, suggesting they were uncomfortable with a female candidate as the former Democratic president hit the campaign trail for Kamala Harris.

Obama said in an unannounced stop at a Harris campaign office in the swing state Pennsylvania that he had not detected the “same kinds of energy and turnout in all quarters of our neighbourhoods and communities as we saw when I was running”.

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The problem seemed to be “more pronounced with the brothers”, Obama said. Support for Trump, whom he said had denigrated women, was “not acceptable”.

“You’re coming up with all kinds of reasons and excuses. I’ve got a problem with that,” Obama, the first African-American US president, said hours before he was due to hold a rally for Harris, the vice-president, in Pittsburgh.

The comments come as Harris and Trump vie for undecided voters that could determine one of the tightest White House races in decades. Trump has made inroads with some Black male voters in battlegrounds such as Georgia, in contrast to Harris’s success in energising women voters.

Obama’s intervention comes less than a month before the election and marks a new effort to boost Harris, who was an early supporter of his bid for the White House in 2008. The former president remains among the most popular Democratic politicians and is one of its best communicators.

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Obama said on Thursday that he was “speaking to men directly” when he said: “It makes me think that, well, you just aren’t feeling the idea of having a woman as president, and you’re coming up with other alternatives and other reasons for that.

“Women in our lives have been getting our backs this entire time . . . when we get in trouble and the system isn’t working for us, they’re the ones out there marching and protesting. And now, you’re thinking about sitting out or supporting somebody who has a history of denigrating you, because you think that’s a sign of strength, because that’s what being a man is? Putting women down? That’s not acceptable.”

Harris, the daughter of a Black father and an Indian-American mother, would be the first female US president. Polls put her in a dead heat with Trump in the seven swing states that will determine who wins the White House in November.

Several recent polls have shown that Harris’s levels of support are lower among Black voters, and Black men in particular, than Joe Biden had in 2020.

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The 8 most magical Christmas light shows across England in 2024

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Kew Gardens becomes an ethereal fairytale land at Christmas time

CHRISTMAS is a magical time of year and one of the best ways to get into the festive spirit is to see a light show. 

There are many stunning light shows across England from Kew Gardens in London to Blenheim Palace in Oxfordshire.

Kew Gardens becomes an ethereal fairytale land at Christmas time

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Kew Gardens becomes an ethereal fairytale land at Christmas timeCredit: Times Newspapers Ltd
Regent Street has some of the most beautiful Christmas lights in the country

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Regent Street has some of the most beautiful Christmas lights in the country

Some even serve festive treats including mulled wine and gingerbread men to help you get into the fun of the season. 

Here are the eight best Christmas light shows in England.

Kew Gardens, London

Christmas at Kew features impressive light displays

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Christmas at Kew features impressive light displaysCredit: The Times

When Christmas arrives, Kew Gardens is lit up with more than a million bulbs.

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It’s an entirely new way to see the 320 acre attraction which is home to over 16,000 species of plants. 

The gardens are bathed in warm, colourful light and the trail is lined with thousands of candles, holographic laser beams and canopies of fairy lights. 

Visiting Christmas at Kew doesn’t have to break the bank either, as ticket prices range from £21.50 for members at off-peak times to £26 at peak times. 

For non-members, it is a little bit more expensive with off-peak tickets costing £25.50 and peak tickets costing £32. 

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Blenheim Palace, Oxfordshire

Blenheim Palace is used as a set in big Hollywood productions

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Blenheim Palace is used as a set in big Hollywood productions

The grounds at Blenheim Palace are already so beautiful that they have been used in Harry Potter, James Bond and Indiana Jones — but Christmas there is really something special.

There are thousands of illuminated lights transforming the historic building and grounds into a winter wonderland.

Kids will love the Neverland in the palace experience, which gives them the opportunity to explore the sparkling state rooms, complete with a model London skyline

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Also, £1 will be added at basket stage for each Neverland in the Palace ticket to Great Ormond Street Hospital Children’s Charity. 

Longleat, Wiltshire

Bristol is home to the beautiful Longleat House which opens its gates for visitors to welcome them to its annual Festival of Light. 

The grounds, which are home to one of the UK’s most exciting safari parks, will turn back the clock and take visitors on a journey from the dawn of man to the present day. 

But that’s not all because this light show has a Santa train to meet Father Christmas and his elves.

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The Festival of Light runs from November 9, 2024 to January 5, 2025.

Oxford Street and Regent Street

Oxford Street is one of the busiest streets in Europe

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Oxford Street is one of the busiest streets in Europe

Oxford Street and Regent Street are among the busiest streets in Europe and they are both home to some of England’s best light displays every Christmas.

Both streets have over 300,000 LED lights which provide great photo opportunities while you do some Christmas shopping. 

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Regent Street has huge angels of light spanning across the entire street and Oxford Street is draped in over 5,000 white stars. 

Oxford Street will be lighting up from November 5, 2024, and Regent Street will follow suit just two days later. 

Killerton, Exeter

Christmas at Killerton will feature a traditional Christmas experience that includes an enchanted decorated house, which has green garlands, warming fireplaces and lush trees to make you feel cosy.

There is more fun to be had in the garden, which has an outdoor trail for the kids to enjoy.

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The gardens and chapel grounds will be covered in Christmas lights, making it the best location for a Christmas family photo so dress to impress.

Christmas at Killerton will run from November 26, 2024 to January 2, 2025.

Bedgebury, Kent

Bedgebury is home to a one-mile magical winter trail which has fields of light and giant luminous seed pods.

Then, you’ll walk through sparkling tunnels of light and the forest is drenched in all of the colours of the rainbow.

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It’s perfect for a little Christmas warmth on a cold December day.

Christmas at Bedgebury runs from November 14 to December 31, 2024.

The Twilight Trail turns Mayfield Park into a winter wonderland

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The Twilight Trail turns Mayfield Park into a winter wonderland

Mayfield Park, Manchester

The Twilight Trail transforms Mayfield Park into a 6.5 acre Christmas extravaganza with 50,000 lights.

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From hot chocolate to toasted marshmallows, there is plenty to eat and drink as visitors wander through the winter wonderland.

Tickets are now on sale. Adult tickets priced at £14 and child tickets are £9, with under two-year-olds gaining free entry.

The Twilight Trail runs from November 14 to December 31, 2024.

Liverpool Cathedral

Liverpool Cathedral is the largest cathedral in Britain

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Liverpool Cathedral is the largest cathedral in Britain

The Light Before Christmas 2024: Starlight is an immersive sound and light installation by the acclaimed artistic collective Luxmuralis, in one of the most historic cities in England.

The cathedral will be become a stunning display of sound, light and storytelling — but it only runs for one day so you’ll need to hurry to get tickets.

Head on to Liverpool to catch The Light Before Christmas when takes place on November 30, 2024.

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California legislators not equipped to rework AI law

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Banker all-nighters create productivity paradox

Your editorial on Governor Gavin Newsom’s veto of California’s artificial intelligence safety bill (SB 1047) hits the nail on the head (“California’s AI bill was well-meaning but flawed”, FT View, October 3). The bill was flawed for several reasons. It risked stifling innovation, applied stringent standards too broadly, and couldn’t account for unforeseen misuses of AI. The FT board is correct that getting AI regulation right is worth the effort.

However, your suggestion that lawmakers should simply “rework and clarify vague rules” does not address a fundamental issue. Legislators currently lack the necessary information about how harms from these systems materialise and evolve in the real world to be able to design truly effective regulations. No amount of rule tweaking — whether adjusting metrics, adding safeguards or redefining terms — will resolve this problem.

Thankfully, California can be the birthplace of a better approach. The upcoming meeting of the International Network of AI Safety Institutes in San Francisco provides an ideal platform to shift the focus. Countries on this global stage should collaborate on tracking AI incidents and developing methods to assess the broader societal impacts of these models, such as effects on the environment.

By championing a smarter, evidence-based approach to AI safety, policymakers can better balance fostering innovation with establishing the necessary guardrails to protect society.

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Hodan Omaar
Senior Policy Manager, Center for Data Innovation, Washington, DC, US

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Bit of blue sky thinking on Nato’s common defence

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Banker all-nighters create productivity paradox

Making Europe safe for democracy will take much more than just maintaining Nato country defence budgets at 2 per cent of GDP, according to the organisation’s outgoing secretary-general Jens Stoltenberg (“So far, we have called Putin’s bluff”, Lunch with FT, Life & Arts, October 5).

Probably. But wouldn’t it be possible to improve the organisation’s weapons, capabilities and troops if the national defence forces of each country were put under one command?

Maybe we could start with the Nordic countries. Why do they each have their national defence forces and not one common defence force? Are they afraid of a future conflict and possible war with each other?

Jan Erik Grindheim
Professor, University of South-Eastern Norway; and Afflliate, Civita Think Tank (Oslo), Notodden, Norway

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Ministers have to mitigate effects of renters’ rights bill

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Banker all-nighters create productivity paradox

The renters’ rights bill, which passed its second reading in the House of Commons this week, is set to be the biggest change to the private rented sector in England for over 30 years with proposed changes to ban Section 21 evictions, the introduction of open-ended tenancies and new requirements for property standards and rent increases (Report, September 12).

Propertymark is the UK’s leading membership body for property agents. While we want to see improved standards, the government must fully understand the impact these changes will have, with agents left wondering how this legislation will help meet the much-needed demand for homes for people to rent.

Our monthly Housing Insight Report shows on average eight registrations for each available property with fewer new properties coming on to the market. The bill in its current form is highly likely to exacerbate this situation with more landlords withdrawing homes from the private rented sector, frequently moving them to short-term lets.

Tax is reducing the investment appetite of new and existing landlords with higher rates of stamp duty on buy-to-let properties and the withdrawal of tax relief on mortgage interest costs. Ministers must recognise the financial implications of this bill and the impact it has on the supply of homes to rent.

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Through the renters’ rights bill, the UK government must commit to reviewing all costs and taxes impacting on private landlords to ensure landlords continue in the market and more landlords can meet the demand for homes to rent.

Additionally, with no security of a rental term for a landlord beyond the proposed two months’ notice period and no long-term guarantee of rent, we would expect to see a significant number of landlords attracted to higher rents in the short-term letting market, which also offers them the advantage of being unregulated.

With landlords exiting the private rented sector, the result would be a reduction in the rental stock available for long-term tenants and increased rents. To help mitigate this, the government must also enact the registration of short-term rental property requirements, as passed in the Levelling-up and Regeneration Act 2023, alongside these reforms to level the playing field for landlords and the long-term rental market.

Timothy Douglas
Head of Policy and Campaigns, Propertymark, Warwick, UK

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Business travel expected to surpass pre-pandemic levels this year

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Business travel expected to surpass pre-pandemic levels this year

A new report by the World Travel & Tourism Council forecasts that global business travel will reach a record US$1.5 trillion in 2024

Continue reading Business travel expected to surpass pre-pandemic levels this year at Business Traveller.

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