Budget 2025

[BoldonLad]

Meanwhile in Cambridge, a recruitment consultant is choking on his cornflakes as he discovers RfA won't make pensioners pay any Income Tax on the State Pension if it exceeds their Personal Allowance and is their only pension. (The full 'new' State Pension will exceed the Personal Allowance from April 2027.)
Another case of not thinking things through and a lack of comprehension on her part.
Some state pensions under the pre-2015 system can be £17k or £18k - will they be exempt?
What about older inherited State Pensions?
When she says 'their only pension', does she really mean that, or does she mean their only income?

1. A common failing of Politicians (and their Advisors?), of all parties.

2. Do you have any figures to support that claim? I retired pre-2015/16 as did many of my acquaintances. There is fairly regular discussion relating to the variability in "state pension", however, it is my understanding that the actual state pension is a fixed rate, the variations are caused by the multiple rubbish variations, ie Graduated Pension, SERPS, contracted in, contracted out.

Whatever the reason, I have yet to hear anyone admit to having a "State Pension" of £17k - £18k pa.

I am willing to be proved wrong, if you can.

3. If by "inherited" you mean the situation where the wife received a state pension based on husband's NHI contributions, it would be interesting to see any figures you have to show that any of these would exceed the tax threshold.

4. I suspect RfA means their only taxable income, although, in the interview I saw, that specific question was not asked, or answered.

 

[BoldonLad]

Well, all of the press seem to think that they have kept their promise not to raise income tax. So it worked.

Since it is the electorate who vote in a GE, not, "the press", I would not be so sure it was worked

 

[Dorset Boy]

1. A common failing of Politicians (and their Advisors?), of all parties.

2. Do you have any figures to support that claim? I retired pre-2015/16 as did many of my acquaintances. There is fairly regular discussion relating to the variability in "state pension", however, it is my understanding that the actual state pension is a fixed rate, the variations are caused by the multiple rubbish variations, ie Graduated Pension, SERPS, contracted in, contracted out.

Whatever the reason, I have yet to hear anyone admit to having a "State Pension" of £17k - £18k pa.

I am willing to be proved wrong, if you can.

3. If by "inherited" you mean the situation where the wife received a state pension based on husband's NHI contributions, it would be interesting to see any figures you have to show that any of these would exceed the tax threshold.

4. I suspect RfA means their only taxable income, although, in the interview I saw, that specific question was not asked, or answered.

Point 2 - the variations for pre-2015 pensions are due to the additional state pension, ie GRP, Serps & S2P. There were sweet spots on the earnings scale where you did well (the lower end), and obviously also impacted by whether you were contracted out or not - most salary related company schemes were contracted out.
I can assure you that there are people out there who have those sized State Pensions - bear in mind the rises they have had over the last decade.
Point 3 - That is the scenario I mean. I don't know what the figures might be.
There is plenty of discussion about RfA's wording on financial adviser sites, and that is where you hear of the higher state Pensions too. I have a client couple who each get around £16,500 pa from their State Pensions

 

[BoldonLad]

I'm not sure that's really true, I don't know many people with enough income left over each month that they can take advantage of these things. I would suggest that's the thing with the "wealthy" as people see them. They have more disposable income to invest in legitimate tax efficient schemes plus a lot of income will come from stocks and shares. The average person earning £40k or so generally isn't able to do any of this as their monthly salary gets them through the month, maybe with a chance to stick a few quid into savings or an ISA if they're lucky.

I would think that may depend on where they live. A household with two £40k pa earners in the South Eat may well be in that situation, here in South Tyneside, not so much so.

 

[icowden]

Since it is the electorate who vote in a GE, not, "the press", I would not be so sure it was worked

It's lucky that the electorate have never once been persuaded by the press in previous elections and referenda then, isn't it?

<checks notes>
Data suggests that Rupert Murdoch is a highly influential figure. Endorsements from his newspapers and channels can significantly impact vote share.

The evidence given during the Leveson Inquiry provided a devastating insight into the influence that Rupert Murdoch has had on successive governments because of the power he wields through his media operation in the UK. The Sun's boast "It's the Sun Wot Won It", following the unexpected Conservative victory in the 1992 election, may or may not have been true, but ever since politicians of all hues have felt the need to pay homage at the court of Rupert Murdoch.

Some suggest that for the past four decades no political party in the UK has won power without the backing of Murdoch’s newspapers. For this reason, UK politicians of every stripe have courted him assiduously.

 

[icowden]

I would think that may depend on where they live. A household with two £40k pa earners in the South Eat may well be in that situation, here in South Tyneside, not so much so.

In the South East, a household might need to be earning as much as £150k before they start putting money into savings.

 

[BoldonLad]

It's lucky that the electorate have never once been persuaded by the press in previous elections and referenda then, isn't it?

<checks notes>
Data suggests that Rupert Murdoch is a highly influential figure. Endorsements from his newspapers and channels can significantly impact vote share.

The evidence given during the Leveson Inquiry provided a devastating insight into the influence that Rupert Murdoch has had on successive governments because of the power he wields through his media operation in the UK. The Sun's boast "It's the Sun Wot Won It", following the unexpected Conservative victory in the 1992 election, may or may not have been true, but ever since politicians of all hues have felt the need to pay homage at the court of Rupert Murdoch.

Some suggest that for the past four decades no political party in the UK has won power without the backing of Murdoch’s newspapers. For this reason, UK politicians of every stripe have courted him assiduously.

I didn't say they didn't "influence", I said they didn't Vote.

Not sure I would use the word "courted", "sucked up to" maybe?

 

[BoldonLad]

In the South East, a household might need to be earning as much as £150k before they start putting money into savings.

Which was rather my point, £150k is greater than £80k, or, it was when I went to school.

I would suspect that even the "South East" has variations in housing cost (the mortgage being the major outgoing, I would guess, for must under 55s).

 

[Pross]

I would think that may depend on where they live. A household with two £40k pa earners in the South Eat may well be in that situation, here in South Tyneside, not so much so.

I'm probably in a similar area, the only people I know who would be likely to get decent amounts into savings are those who've paid off their mortgages and / or retired on good final salary schemes. To max out an ISA you would be saving £20k per year, I doubt I know anyone who is doing that and to then take advantage of all the other tax avoidance schemes that got listed on top of that you'd need to be putting all your income into them and not spending anything.

For context, this was the point I was previously responding to

"Maxing out pensions, drawing PCLs, maxing Isas, using investment bonds either onshore or offshore, using VCTs and EISs are all methods used by ordinary people."

Obviously 'ordinary' people make use of these schemes, what I'm saying is they don't max them out - being wealthy enables people to put the maximum sums into these types of schemes plus various others. Not many billionaires have a billion in cash available at any given times.

 

[BoldonLad]

I'm probably in a similar area, the only people I know who would be likely to get decent amounts into savings are those who've paid off their mortgages and / or retired on good final salary schemes. To max out an ISA you would be saving £20k per year, I doubt I know anyone who is doing that and to then take advantage of all the other tax avoidance schemes that got listed on top of that you'd need to be putting all your income into them and not spending anything.

It is possible to take advantage of, for example, ISAs without "maxing" them out.

I doubt I know anyone who was in a position save £20k plus pa. I think I may know a small number of households however (that is not to say they are doing so).

 

[Pblakeney]

I'm probably in a similar area, the only people I know who would be likely to get decent amounts into savings are those who've paid off their mortgages and / or retired on good final salary schemes. To max out an ISA you would be saving £20k per year, I doubt I know anyone who is doing that and to then take advantage of all the other tax avoidance schemes that got listed on top of that you'd need to be putting all your income into them and not spending anything.

For context, this was the point I was previously responding to

"Maxing out pensions, drawing PCLs, maxing Isas, using investment bonds either onshore or offshore, using VCTs and EISs are all methods used by ordinary people."

Obviously 'ordinary' people make use of these schemes, what I'm saying is they don't max them out - being wealthy enables people to put the maximum sums into these types of schemes plus various others. Not many billionaires have a billion in cash available at any given times.

I think that we are getting close to the rub. None of us on here are truly rich.
The rich don't work 9-5 Monday to Friday (or whatever arrangement you have).

 

[PurplePenguin]

The Tories ruined the whole ISA thing. Originally they were designed to encourage people to save and because you could only put £3k pa in a lot of people did save and were reluctant to use them. The annual limit was then expanded to £20k and interest stopped being taxable for most people, so the whole original purpose of them disappeared except for the very wealthy.

 

[stowie]

That would almost certainly fall foul of the UK and EU anti avoidance measures.
It may be an american thing, but I'm pretty confident it isn't a UK thing.
Which banks would be doing this lending - name some names.

You are largely correct with this. UK/EU rules around Inheritance Tax means such a scheme would be far less beneficial in the first place.

The Atlantic had an excellent article on this scheme but it is behind a paywall - https://www.theatlantic.com/economy/archive/2025/03/tax-loophole-buy-borrow-die/682031/

There are various banks involved with loaning against assets - Musk for instance has had $57bn of loans from banks such as BoA and Morgan Stanley. But a good portion of this would be funding for - say the Twitter takeover - whilst some would be personal spending.

I looked this up, but it relies on having an asset that has appreciated in value. It's not that easy to achieve such gains.

Yes. It is against appreciated assets. On the other hand, if a billionaire hasn't got significant appreciating assets in their portfolio then they are not going to be a billionaire for very long. I am not sure if the bank mandates the appreciated asset part to mitigate risk or if it because the scheme relies on the step-up basis of recalculating asset value for inheritance taxation at time of owner death.

 

[BoldonLad]

The Tories ruined the whole ISA thing. Originally they were designed to encourage people to save and because you could only put £3k pa in a lot of people did save and were reluctant to use them. The annual limit was then expanded to £20k and interest stopped being taxable for most people, so the whole original purpose of them disappeared except for the very wealthy.

ISAs replaced PEPs in 1999

PEPs were introduced by the Conservatives in 1987.

The declared purpose, I believe was to encourage wider share ownership.

This, plus the conversion of mutuals were both earlier versions of RfAs "wider investment in the stock market". In the case of the conversion of mutuals, I suspect that wider share ownership was a by-product, rather than an intended outcome.

PEPs and ISAs, it would appear have not had the desired effect for RfA, it will be interesting to see if she achieves better outcomes in this area.

 

[BoldonLad]

You are largely correct with this. UK/EU rules around Inheritance Tax means such a scheme would be far less beneficial in the first place.

The Atlantic had an excellent article on this scheme but it is behind a paywall - https://www.theatlantic.com/economy/archive/2025/03/tax-loophole-buy-borrow-die/682031/

There are various banks involved with loaning against assets - Musk for instance has had $57bn of loans from banks such as BoA and Morgan Stanley. But a good portion of this would be funding for - say the Twitter takeover - whilst some would be personal spending.



Yes. It is against appreciated assets. On the other hand, if a billionaire hasn't got significant appreciating assets in their portfolio then they are not going to be a billionaire for very long. I am not sure if the bank mandates the appreciated asset part to mitigate risk or if it because the scheme relies on the step-up basis of recalculating asset value for inheritance taxation at time of owner death.

Interesting, in the case of the Barclay brothers, Telegraph, and Lloyds bank.