uk personel allowance to be abolished

[salavan]

hi has anyone got any information on the uk's 2014 budget about non resident prsonel allowance being abolished

[fletchsmile]

As far as I understood, the Govt just announced that they consult on whether to restrict the personal allowance so nothing fixed yet just consultation. Also the allowance would be for UK residents and non-UK residents with strong economic connections to the UK, whatever they decide that to mean.

More surprising was the possibility of amending defined contribution pension schemes. Treating people like adults, and saying you can actually take all your own money when you retire, instead of being ripped off by the insurance industry buying an annuity or painfully slow income drawdown.

If they do finally amend the pensions they might become almost as attractive as Thailand's RMFs. Hopefully one day they will get round to it. Now there's a thought the UK pension rules being brought up to Thailand's standards and level of freedom

Cheers

Fletch

[VBF]

It's just a proposal so far - full details on the BBC website

[AyG]

The proposed withdrawal of the UK income tax allowance for non-residents is potentially very serious for people who're funding their life overseas from property rental income. I suspect this will be deeply unpopular and probably won't get enacted.

[PattayaPhom]

As far as I understood, the Govt just announced that they consult on whether to restrict the personal allowance so nothing fixed yet just consultation. Also the allowance would be for UK residents and non-UK residents with strong economic connections to the UK, whatever they decide that to mean.

More surprising was the possibility of amending defined contribution pension schemes. Treating people like adults, and saying you can actually take all your own money when you retire, instead of being ripped off by the insurance industry buying an annuity or painfully slow income drawdown.

If they do finally amend the pensions they might become almost as attractive as Thailand's RMFs. Hopefully one day they will get round to it. Now there's a thought the UK pension rules being brought up to Thailand's standards and level of freedom

Cheers

Fletch

Its only the past few years that annuities have been so low. Previously a single life level with 10 year gaurantee offered exceptional value for a 65+ year old. Lets not forget the tax relief on contributins, every 100 meant 128 was paid in and even better for higher rate taxpayers. Then the 25% TFC. Its good they will let people choose but you must admit that many will blow the money and then expext to be cared for by the government. Maybe a higher TFC allowance would have been more appropriate

[AyG]

More surprising was the possibility of amending defined contribution pension schemes. Treating people like adults, and saying you can actually take all your own money when you retire, instead of being ripped off by the insurance industry buying an annuity or painfully slow income drawdown.

The proposals aren't quite the simple. You can only take all the cash (i) if the total pension fund is less than GBP 30,000 or (ii) you have a secured income of at least GBP 12,000 from other sources.

Another good step (addressing the "painfully slow income drawdown" issue) is that income will be allowed at 150% of GAD rates. Currently it's 120%, and going back a few months it was only 100%.

[fletchsmile]

As far as I understood, the Govt just announced that they consult on whether to restrict the personal allowance so nothing fixed yet just consultation. Also the allowance would be for UK residents and non-UK residents with strong economic connections to the UK, whatever they decide that to mean.

More surprising was the possibility of amending defined contribution pension schemes. Treating people like adults, and saying you can actually take all your own money when you retire, instead of being ripped off by the insurance industry buying an annuity or painfully slow income drawdown.

If they do finally amend the pensions they might become almost as attractive as Thailand's RMFs. Hopefully one day they will get round to it. Now there's a thought the UK pension rules being brought up to Thailand's standards and level of freedom

Cheers

Fletch

Its only the past few years that annuities have been so low. Previously a single life level with 10 year gaurantee offered exceptional value for a 65+ year old. Lets not forget the tax relief on contributins, every 100 meant 128 was paid in and even better for higher rate taxpayers. Then the 25% TFC. Its good they will let people choose but you must admit that many will blow the money and then expext to be cared for by the government. Maybe a higher TFC allowance would have been more appropriate

The low rates are just the tip of the iceberg seen in recent years.

Good value depends on how long you live not just the rate. My father died 4 years after buying his annuity. Even with a guarantee and % for spouse I d say it was very poor value for money. Much better if you could take your own cash invest it and leave to your dependents or heaven forbid spend it before you die

The basic issue I have tho is lack of freedeom of choice with my own money.

Now compare to a Thai RMF:

Like a UK pension you get tax relief at your marginal rate.

You can take 100% tax free cash when you retire. Not just 25%.

The uk govt gives you take relief buy then makes 75% taxable on the other end. Thai has tax relief but no taxable catch on the other end as long as you dont take before retirement.

Thai will also let you take your money before retirement if you pay tax penalty (giving back the tax benefit). Uk you cant touch it whatsoever.

Yes I d like the choice. Yes I m an adult. Like you say tho the UK govt is factoring in the hangers on and wasters so the rest of us are deprived of choice.

The budget was a welcome step in tge right direction tho

Cheers

Fletch

Sent from my GT-I9152 using Thaivisa Connect Thailand mobile app

[fletchsmile]

More surprising was the possibility of amending defined contribution pension schemes. Treating people like adults, and saying you can actually take all your own money when you retire, instead of being ripped off by the insurance industry buying an annuity or painfully slow income drawdown.

The proposals aren't quite the simple. You can only take all the cash (i) if the total pension fund is less than GBP 30,000 or (ii) you have a secured income of at least GBP 12,000 from other sources.

Another good step (addressing the "painfully slow income drawdown" issue) is that income will be allowed at 150% of GAD rates. Currently it's 120%, and going back a few months it was only 100%.

Yes as you say there are caveats etc. These will exclude a large no. Of people

Hence the choice of words like: "possibility, if, hopefully...":)

To be fair. Good steps in the right direction. More to be done tho as you say.

Cheers

Fletch

Sent from my GT-I9152 using Thaivisa Connect Thailand mobile app

[wordchild]

More surprising was the possibility of amending defined contribution pension schemes. Treating people like adults, and saying you can actually take all your own money when you retire, instead of being ripped off by the insurance industry buying an annuity or painfully slow income drawdown.

The proposals aren't quite the simple. You can only take all the cash (i) if the total pension fund is less than GBP 30,000 or (ii) you have a secured income of at least GBP 12,000 from other sources.

Another good step (addressing the "painfully slow income drawdown" issue) is that income will be allowed at 150% of GAD rates. Currently it's 120%, and going back a few months it was only 100%.

the proposals ,for those with DC schemes are pretty straightforward ie from april 2015 you can take the lot as a lump sum, if you so wish (subject to tax at your marginal rate) ,or you can purchase an annuity (which almost no one will) or you can leave it in there and drawdown without restriction. Prior to that date HM treasury will undertake a "technical consultation" including looking at the situation for those in DB (defined benefit) schemes. But the implication is that the proposed changes for DC schemes are unlikely to be altered much and i would assume legislation on this will be enacted as part of the current finance bill.

The increase in the drawdown limit to 150% and the other changes seem to be transitional arrangements which start with effect from 27th march 2014 prior to the other (more radical) changes coming into force next year, after that they will pretty much be irrelevant for those with DC schemes https://www.gov.uk/government/news/budget-2014-support-for-savers-announced

This also, potentially, has significant implications for those expats with QROPs but I have not seen any comment on this yet

[AyG]

This also, potentially, has significant implications for those expats with QROPs but I have not seen any comment on this yet

Previously the government has taken steps to ensure that expats with QROPS don't run out of money and return to the UK to live on the state, viz. GBP 20,000 minimum secured pension requirement and the very conservative drawdown rates. Either there will be a reversal of policy, or the QROPS rules won't change to match the UK rules.

Of course, the Tory government doesn't care if its own citizens living in the UK are impoverished or destitute. (After all, it will have taken a nice slice of income tax in the process.) And undoubtedly quite a few people will take their pension pot and spend it recklessly. It's not going to cost the government any more. However, if expats run out of money and return home, that's quite a different matter.

[mmh8]

not sure it matters if its tories or labour. what are these new proposals on tax owed over 1500 quid. the tax office are in competition with the us irs ? lets see who can have greater power over the slaves?

[wordchild]

This also, potentially, has significant implications for those expats with QROPs but I have not seen any comment on this yet

Previously the government has taken steps to ensure that expats with QROPS don't run out of money and return to the UK to live on the state, viz. GBP 20,000 minimum secured pension requirement and the very conservative drawdown rates. Either there will be a reversal of policy, or the QROPS rules won't change to match the UK rules.

Of course, the Tory government doesn't care if its own citizens living in the UK are impoverished or destitute. (After all, it will have taken a nice slice of income tax in the process.) And undoubtedly quite a few people will take their pension pot and spend it recklessly. It's not going to cost the government any more. However, if expats run out of money and return home, that's quite a different matter.

these rules are not/were not specific to QROPs but apply to all those with UK personal pension plans. By extension any payment from a QROP that is not within these rules is likely to be regarded as an unauthorised payment and therefore likely to be subject to penalty. After April 2015 these rules will be no more, at least for onshore plans.

If they follow through on the logic/principle of the proposed changes then these rules should no longer be relevant for QROPs either. On the other hand the government wont benefit from increased tax revenue (unlike with the onshore changes ) so its not such a win win for them. On balance though, i think the govt is going to find it hard to argue that QROP holders should not enjoy the same freedom to do as they wish with their pension savings.

[AyG]

these rules are not/were not specific to QROPs but apply to all those with UK personal pension plans. By extension any payments from a QROP that were not within these rules were deemed likely to be regarded as unauthorised payments and therefore likely to be subject to penalty. After April 2015 these rules will be no more, at least for onshore plans.

If they follow through on the logic/principle of the proposed changes then these rules should no longer be relevant for QROPs either. On the other hand the government wont benefit from increased tax revenue (unlike with the onshore changes ) so its not such a win win for them. On balance though, i think the govt is going to find it hard to argue that QROP holders should not enjoy the same freedom to do as they wish with their pension savings.

To quote from the HMRC website:

Qualifying recognised overseas pension scheme (QROPS) status does not confer an overseas pension scheme with the same combination of UK tax exemptions that a registered pension scheme (RPS) enjoys.

I suspect (but would be happy to be proven wrong), that the divergence between RPSs and QROPS is about to get a bit larger.

The UK government has never liked QROPS - they were basically forced into allowing them by the European Union. Any chance the government get to screw the QROPS providers and pensioners, they'll go for. (Cf. the decrecognition of Guernsey for QROPS, Guernsey having been what was perhaps the safest, best regulated and most convenient of providers.)

[davejones23]

They need to be careful with this, as they could drive quite a few expats back to the UK. As they are probably mostly elderly they'll be a big drain on the NHS. All that to get another £2K or so off most people. I don't think they've thought this through. Wouldn't be surprised if it comes into force though, as they're grabbing money from wherever they can at the moment.

And while I agree with the annuity changes, I suspect it'd been done to have a flood of money in many people's pockets next April. There'll be a feelgood factor and lots more spending, just time time for the election.