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How many more will retire or give up

Given the 1.25% hike in NI, how many more business people will retire.

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Together with MTD this hike of 1.25% Ni acroos the board including dividend tax could force many more business people to retire.

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By ireallyshouldknowthisbut
07th Sep 2021 13:53

I would suggest this small amount of tax is unlikely to make or break a retirement decision.

What is maddening is the fact its not 1.25% on NI, but what appears to be a whole new tax very similar to NI, but not NI which will need splitting on payroll from April 2023.

That's another step in the opposite direction from amalgamating all taxes on income into a single tax.

I find it laughable that this money will be "ringfenced". What utter balls.

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Replying to ireallyshouldknowthisbut:
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By SXGuy
07th Sep 2021 14:15

Ring fenced, oh like pensions? (insert laugh emoji)

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Replying to ireallyshouldknowthisbut:
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By DKB-Sheffield
07th Sep 2021 14:23

Agreed. We expected tax rises. The 1.25% increase (2.5% for director-only employment income) is relatively small.

It's probably more likely that MTD (or 6% CT for director-only limiteds) will force someone's retirement acceleration more.

Good point regarding the new "levy". Clearly meant to lull is into thinking the money is transferred straight from our bank account to the care home/ NHS! I'm assuming however, we'll still make one payment for tax NI and levy to Shipley/ Cumbernauld rather than going back to sending 2 (now 3) cheques!!!

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By bettybobbymeggie
07th Sep 2021 21:49

Forgive the daft question, but where did you arrive at 2.5%?

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By creamdelacream
07th Sep 2021 22:09

Think it's the 1.25 on employee's NI and 1.25 on employer's. I suppose it would only be applicable if the director(s) went up to the personal allowance.

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Replying to creamdelacream:
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By DKB-Sheffield
07th Sep 2021 22:52

Yep, that's what I was getting at. Director only, above both NIC thresholds, no EA entitlement.

Usually not an issue if dividend distributions are available. However, with losses b/fwd or loss-making years with few reserves (i.e. post-pandemic) sometimes the only option!

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By bettybobbymeggie
08th Sep 2021 09:13

Oh right, thanks for the clarity. I was worried I'd misread something.

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Replying to DKB-Sheffield:
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By legerman
13th Sep 2021 10:06

DKB-Sheffield wrote:

Yep, that's what I was getting at. Director only, above both NIC thresholds, no EA entitlement.

Usually not an issue if dividend distributions are available. However, with losses b/fwd or loss-making years with few reserves (i.e. post-pandemic) sometimes the only option!

Dividend tax is also going up though, so it will be 2.5% for omb's who extract profits.

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By Mr_awol
07th Sep 2021 16:43

The whole new category of NI was necessary to enable it to be charged to those over retirement age, as opposed to 'regular' NI which is still payable. TBH they should abolish the upper age exemption for NIC but after the full those ridiculous WASPI women kicked up that might have been a bit of a vote-killer.

On the plus side, i do believe that this money will indeed all be ringfenced. On the other hand, of course, that doesnt stop them from cutting some of the other funding to those areas, and only leaving the 'ringfenced' bits in.

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By Tornado
07th Sep 2021 16:51

'On the plus side, i do believe that this money will indeed all be ringfenced. On the other hand, of course, that doesnt stop them from cutting some of the other funding to those areas, and only leaving the 'ringfenced' bits in.'

I doubt if it will be ringfenced for long. History shows that Hypothecated funds usually get absorbed into general taxation, National Insurance Contributions being a classic example.

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Replying to Mr_awol:
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By spilly
07th Sep 2021 18:07

Waspi women are not ridiculous, they just object to not being fully informed of changes properly so they could organise their pension provision in a timely and proper manner.
You may also like to ponder that it is usually women who shoulder the bulk of caring for their elderly relatives. Now they have to work until 67, fewer are able to do this, leading to an increase in costs of care provision for councils.

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By Mr_awol
07th Sep 2021 18:54

Oh do me a favour. They had a minimum of 15 years to start planning for it and even if they couldn’t/didn’t, this nonsense about a ‘gap’ until their state pension kicks in doesn’t wash.

I won’t get state pension until 67,68, possibly 150 by the way things are going. If I get two years away, had planned to retire ‘early’ but can’t because I won’t get state pension yet then guess what - I’ll just have to suck it up and not retire for a couple of years. Or I could always pretend I didn’t realise and sue the government.

This isn’t about being unfairly treated. It’s about not liking the new rules when the time comes it affects them and letting hoping somebody else will pick up the tab.

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Replying to Mr_awol:
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By lionofludesch
08th Sep 2021 08:08

Mr_awol wrote:

Oh do me a favour. They had a minimum of 15 years to start planning for it........

No, they didn't.

It was just under 10 years.

And the raising of the age to 66 was announced at a lot less notice than that.

To be honest, I was flabbergasted when that was brought in so quickly. It should've been tagged onto the end of the existing arrangement for raising the pension age for women from 60 to 65.

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Replying to lionofludesch:
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By Mr_awol
08th Sep 2021 15:41

lionofludesch wrote:

Mr_awol wrote:

Oh do me a favour. They had a minimum of 15 years to start planning for it........

No, they didn't.

It was just under 10 years.

And the raising of the age to 66 was announced at a lot less notice than that.

To be honest, I was flabbergasted when that was brought in so quickly. It should've been tagged onto the end of the existing arrangement for raising the pension age for women from 60 to 65.

Absolute Rubbish. Ken Clarke announced in his budget on 30 November 1993 that the State Pension Age for women would be increased to 65 - phased in over ten years starting 2010. The Pensions Act received Royal Assent on 19 July 1995 and the first people affected are those due to retire in June/July 2010.

I will let you recalculate how many years there were between the announcement and the first persons affected but i think you will find that it is not only more than ten, but (as i said) more than fifteen too. Even longer for those due to retire later and therefore those more affected.

To be honest, even if they had received the notice youd thought they had, they STILL had penty of time to realise that they wouldnt be retiring when they thought they would. I find it hard to believe that this was a shock to anybody.

The WASPI idiots' main gripe appears to be that the didn't get a (handwritten, personally delivered) letter back then - only receiving postal notification a year or so before.

The whole campaign stinks of "i don't like this so here's a load of reasons I've thought of as to why it is unfair" rather than genuine injustice. And let's not forget they don't actually HAVE to retire if they are facing a funding gap.

One final point - in 2006/07 a survey found that 'less educated' women were more likely to be affected - at that time 92% of women with 'high levels of education' knew about it vs 80% of women with 'low levels of education'. If it was such a closely guarded secret then how comes over 80% (and possibly as high as 90% - i don't have the overall figures) of women knew about it?

The raising of the age to 66 was a much less radical change and didn't need anything like the same level of notice. I know my (current) state pension age prediction but how many times over the last ten years have people referred to 'if it stays at that age' or even 'if there is still a state pension by then'?

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By spilly
08th Sep 2021 16:12

Gosh, you still don’t get it do you? Any non-state pensions for women were geared to retirement at 60, meaning they pay out considerably less than if they had been set up for age 65.
And most women still do not have private pensions so the state pension is the only one they will ever get. This is largely due to them working in low-paid jobs or working part-time to accommodate caring for children.
I don’t know where you dug your survey figures up from, but in my experience it is the majority of women who were unaware of pension changes, a minority who knew anything at all about it, and a tiny number that realised the ramifications.
HMRC themselves admit that they did not even send notifications out to a large proportion of women, which for such a major change for so many, was clearly negligent.

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By Mr_awol
09th Sep 2021 01:29

Gosh. You really don’t have a clue, or care about facts do you?

1) if their ‘other’ pension provision isn’t enough to allow them to retire at 60 because their official retirement age has gone up:
1a) don’t retire early
1b) or use the seventeen years notice period to adjust plans/increase provision.
2) you can’t say it’s my misunderstanding because their other pensions won’t plug the gap - then say most of them don’t have other pensions. It’s ludicrous.
3) if they were unemployed or in low paid jobs and seventeen years notice wasn’t enough, then 20 or even 25 years wouldn’t have been enough either.
4) the survey is available online. You could find it, or you could find your own survey. Instead you make up stats claiming a majority blissfully unaware, tiny minority aware etc - based on what? You making stuff up to support your case by the looks of it.
5) I don’t believe HMRC admit anything of the sort. If they did, show me a link. Not an opposition MP grandstanding. Not a campaign group, not even a different government department. I’d like to see HMRC admitting that
5a) even if they did (which I doubt) that doesn’t negate points 1-4, or the fact that most women knew about this.
5b) there was actually a suggestion that the formal communication by direct/individual letter was a bit late - but since most of them already knew that’s not particularly relevant in terms of their claims

As previously stated, the whole WASPI argument is reverse engineered from ‘I don’t like this’ to ‘how can I justify this as unfair’.

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By spilly
09th Sep 2021 06:46

I probably know more about how this issue affects women as I am a member of a Waspi group. I also employ staff who are in this category.
You seem determined not to understand how much a women's earnings and employment status have been, and still can be, affected by having children and/or other caring responsibilities. And yes, I know that more men are starting to do this too, but they are still very much the exception. Therefore I am disengaging with you on this matter.

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By Mr_awol
14th Sep 2021 15:37

spilly wrote:

I probably know more about how this issue affects women as I am a member of a Waspi group. I also employ staff who are in this category.
You seem determined not to understand how much a women's earnings and employment status have been, and still can be, affected by having children and/or other caring responsibilities. And yes, I know that more men are starting to do this too, but they are still very much the exception. Therefore I am disengaging with you on this matter.

Interesting that, again, i point out the gaping holes in your position, and again you accuse me of 'refusing to understand' (actually that might be an upgrade - you may have suggested i was incapable of understanding before) the situation. I understand it perfectly well thanks although I do appreciate that it is easier to witter about me not accepting/understanding than it is to come up with any actual counter-argument. Unfortunately for your cause, however, the simple fact of the matter is that they had ages to plan for this and didn't 'have to' retire anyway.

So fundamentally that want to overturn a longstanding policy because it doesn't suit them and they want someone else (me, and other taxpayers) to fund their early retirement/preserve the advantage they have by virtue of their gender. And they have the gall to claim it's in the name of 'equality'!

The comment about caring responsibilities is completely irrelevant to the point at hand. WASPI's spurious claim is about State Pension entitlement and not only will they have got an NI credit for the year they were caring for children, if they have had an extended period out of work then the extra years' employment will give them the opportunity to top up their qualifying years. But no they'd rather pack it in now and let us pay those years for them.

I'm glad your giving me the last word - better that than get another "but, but but it's not fair because it's just not and if you dont agree then you dont understand" reply, which youve done to death already.

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By armstrongbell
07th Sep 2021 20:36

My parents worked into their 70s because they couldn't afford to retire earlier. It would seem unfair for people that need to keep working to have to pay more NI when those that can afford to retire avoid it.

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By Mr_awol
07th Sep 2021 22:19

I agree - and to an extent, applying the new social care levy (or some other form of NI) to pension income would appear sensible.

It is an outdated concept that people should stop paying NI when they get to pension age though. If they’re still working then they should be taxed just like any other worker. In fact given all the claims of ‘age discrimination’ for much less valid reasons im surprised nobody has complained

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By DJKL
08th Sep 2021 10:15

Why should NI just be applied to earnings?

Pensions, rents received, should these be subject to NI? When there is really little link between the "tax" and what it buys the rationale for it only applying to certain source incomes becomes much weaker.

Next thing you know NI on capital gains, what is so special about gains that they are exempt NI?

If one forgets how things work now, takes a step back and looks at what is taxed, how it is taxed and why then one really appreciate there is no watchmaker at work here and the tax system is a great example of entropy.

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By johnjenkins
08th Sep 2021 10:25

That argument gives rise to the need for one tax across the board with no NI. The political problem with that is that you could then judge each Government on its merits by way of increasing or lowering tax (things like covid excepted).

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By DJKL
08th Sep 2021 15:24

Why the politicians do not make things transparent, it is divide and rule, take a little from one group, a bit from another.

Human nature has us not really caring if someone else pays the bill , as long as it is not impacting us we let them do it.

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By johnjenkins
10th Sep 2021 12:33

I don't think it's a question of not caring, it's more a question of can't doing anything about it so we have to put up with it. Until a Government has a change of modus operandi we will always be in the same boat and keep getting pushed back.

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By lionofludesch
08th Sep 2021 07:41

Mr_awol wrote:

The whole new category of NI was necessary to enable it to be charged to those over retirement age, as opposed to 'regular' NI which is still payable.

Why's that? Why not just charge 1.25% to the employee on Table C?

Which is, apparently, what is going to happen in 2022/23.

No, this is just window dressing. Sure it'll be ring-fenced, there'll just be less funds for care coming from the general taxation piggy bank.

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By David Ex
07th Sep 2021 14:16

johnjenkins wrote:

Together with MTD this hike of 1.25% Ni acroos the board including dividend tax could force many more business people to retire.

MTD maybe, small tax increase, no.

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By johnjenkins
07th Sep 2021 14:45

Could be the straw that broke the camel's back.

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By David Ex
07th Sep 2021 14:51

johnjenkins wrote:

Could be the straw that broke the camel's back.

Yes, it could be, but it won’t.

Why would it?

Are you expecting lots of employees to throw in the towel when their NICs increase?

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By johnjenkins
07th Sep 2021 15:23

I'm expecting loads of problems with the smaller business and yes I do think those that are very near retirement age and have their own pension will think hard about whether to carry on or not. I see the black economy rising. If I actually felt the increase in NI would go where it should then I might think a bit different. I also expect Boris to stand down in about a year and Rishi to take over.

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By SXGuy
07th Sep 2021 16:24

This was bound to happen tho. Typical problem, reaction, solution. For the last 2 years people have been banging on about being happy to pay a little more to fund the NHS. And look where we are.

They will think it's justified and ignore what we all know. That it will just get swolled up somewhere else

Let's face it, most ppl would rather have care in their own home or assisted living, what they don't want, is to be sent off to the NHS old people's home where they can slowly die in peace.

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By Mr_awol
07th Sep 2021 17:51

The concept that a 1.25% NI increase will encourage mass retirement is the second most melodramatic thing i have read on here today.

Businesses wont like it - especially the S/E and Partnership employers who will get his with the 1.25%* on E'ers and also an increase on their Class 4 liabilities

*1.25% less tax and NIC relief so could be anywhere from .725% and .8875, assuming full use of PA and C4 threshold

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By johnjenkins
08th Sep 2021 09:21

I did say the increase in NI together with MTD might sway those that are thinking of retiring. Nothing melodramatic there. I think there are many disgruntled small business owners and not just in Accountancy. Covid and lockdown has knocked quite a few business for 6. It really wouldn't take too much to persuade those near retiring age to call it a day. Then that might be a good thing, allowing the youngsters to come through.

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By lionofludesch
08th Sep 2021 09:33

johnjenkins wrote:
It really wouldn't take too much to persuade those near retiring age to call it a day. Then that might be a good thing, allowing the youngsters to come through.

How does raising the pension age square with this free up jobs for young folk concept?

I've often wondered.....

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By johnjenkins
08th Sep 2021 10:21

I see your point but don't forget not too many years ago youngsters could leave school at 15 or 16, some at 14. Then we had the school leaving age raised to 18. So when you equate longer schooling to raising of the pension age there's not too much difference.

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By lionofludesch
08th Sep 2021 10:45

johnjenkins wrote:

I see your point but don't forget not too many years ago youngsters could leave school at 15 or 16, some at 14. Then we had the school leaving age raised to 18. So when you equate longer schooling to raising of the pension age there's not too much difference.

The school leaving age became 16 in 1968. It's a matter of opinion whether that falls into the category of "not too many years ago".

It's still 16, albeit that you're supposed to have an apprenticeship or similar on the job training for a further two years. Poorly enforced, if at all. Similar to under 16s, judging from the number of kids I see wandering round during school hours.

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By johnjenkins
08th Sep 2021 11:49

The school leaving age was raised to 18 in 2007.

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By lionofludesch
08th Sep 2021 12:45

johnjenkins wrote:

The school leaving age was raised to 18 in 2007.

Shocking that this is so out of date.

https://www.gov.uk/know-when-you-can-leave-school

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Replying to lionofludesch:
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By johnjenkins
08th Sep 2021 14:44

You missed the point. The concept is children staying on at school until they are 18 unless they have an apprenticeship etc. So the school leaving age is 18 but with provisos if you want to leave early. I presume the Government thinking was that if children are staying in school longer then the state pension age can go up.

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By lionofludesch
08th Sep 2021 15:02

johnjenkins wrote:

You missed the point.

Still not got it.

If they're apprentices, they're in the job market.

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By bettybobbymeggie
08th Sep 2021 12:51

Not in the Wales it wasn't!

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By DKB-Sheffield
08th Sep 2021 13:03

Not in England either.

ESA (2008) - tabled 2007, enacted 2008, law 2013 (17 yr olds), law 2015 (18 yr olds).

Children can leave school at 16 but must continue ongoing education (inc. vocational training) until 18.

As lionofludesch states, this is not, in my experience, heavily enforced. I am aware of a number of 16-18 yr olds who have slipped through the cracks!

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By johnjenkins
08th Sep 2021 14:51

So you can leave school at 16 and go on the dole? No of course you can't but you can at 18. I totally agree that it's not enforced. So the point I was making was that if the school leaving age has increased by 2 years then the retirement age can increase by 2 years. I know it's more but I presume that is the thinking to try and justify it.

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By lionofludesch
08th Sep 2021 15:05

johnjenkins wrote:
I know it's more but I presume that is the thinking to try and justify it.

The justification is paying less money out in pensions. Nothing to do with school leaving age.

The UK is hardly the most generous when it comes to pensions. Given that we're one of the G7 nations, we should be doing much better.

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By johnjenkins
08th Sep 2021 15:40

OK let's up the NI another 1.25% to pay for extra pension.

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By lionofludesch
10th Sep 2021 13:34

It's a mistake to think that Governments run their finances like you run your household budget.

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By johnjenkins
10th Sep 2021 13:47

Maggie didn't do too bad a job until she got shafted.

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By lionofludesch
10th Sep 2021 13:52

johnjenkins wrote:

Maggie didn't do too bad a job until she got shafted.

She did a great job - provided you were one of her mates.

Worst Prime Minister we ever had.

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By johnjenkins
10th Sep 2021 14:49

Totally disagree. She made the eighties "feel good factor" which has never returned. What did Gordon Brown say "we will never return to boom and bust". the rest is history. The poll tax was a good thing. It would have stopped a lot of Brits getting tagged with "lager louts".

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By lionofludesch
10th Sep 2021 14:55

Her policy was "sell the family silver and distribute the proceeds to all my mates".

What was selling council houses at a 75% discount all about ? Councils still haven't recovered from the depleted housing stock.

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By johnjenkins
13th Sep 2021 09:09

Er, I think you'll find that it was Gordon Brown who sold the family silver to pay for his ineptness.
Selling council houses allowed people to take more control of their own lives, give them more responsibility and the result was an economic boom until the stupidity of Major and co allowed a property crash with a resulting recession, when lots of people lost their business and houses. Things have not been the same since. It was because of this I voted for Tony Blair.

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