Tax credit and pensions


C

Chris

Hi,

Need some advice and help.
Currently in a dispute with someone over tax and pensions.
We have had tax credits abolished for dividend payments, I think this is
20%.
Would that mean for a pension fund to make up the shortfall it would require
a
20% growth year on year to replace what brown is currently confiscating out
of each and every individual pension pot being contributed today
 
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J

Jonathan Bryce

Chris said:
Need some advice and help.
Currently in a dispute with someone over tax and pensions.
We have had tax credits abolished for dividend payments, I think this is
20%.
Would that mean for a pension fund to make up the shortfall it would
require a
20% growth year on year to replace what brown is currently confiscating
out of each and every individual pension pot being contributed today
No. Dividend income has fallen by 20%. The original sum invested and the
capital growth are not affected by this.

If the dividend yield was previously 4%, you would need an extra 1% growth
year on year to replace what Gordon has taken from you.
 
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T

Terry Harper

Currently in a dispute with someone over tax and pensions.
We have had tax credits abolished for dividend payments, I think this is
20%.
Would that mean for a pension fund to make up the shortfall it would require
a
20% growth year on year to replace what brown is currently confiscating out
of each and every individual pension pot being contributed today
It was 20%, reduced to 10% by Gordon Brown in April 1999, and then the
ability to reclaim tax credit on dividends was abolished this April.

It means that the pension fund needs 25% more than it would have got from
the original net income to restore the tax reclaim income lost. 100 is 125%
of 80.

Note that the tax deducted from interest is still 20% and can be reclaimed.
As the Government needs to issue considerable billions each year in
gilt-edged stock, you could call this cynical. I couldn't possibly comment.
 

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