tiintax

I’m a pensioner now, you know.  (OK I took early retirement and I’m also a student, but still, I’m probably a member of the Geezer Class rather than the Bright Young Things).  So I really feel as if I ought to care about the consultation that closes today, into Pensions Tax Relief: Individual Protection from the Lifetime Allowance Charge

(Incidentally, would someone in either HMRC or the Treasury please take an executive decision on Random Capitalisation In Consultation Titles?  Sometimes they’re lower case after the first word, and sometimes (as here) they aren’t and instead have Initial Caps.  Update your style guide and do a copy edit, please!)

Yes, all right, I admit it, I found the document to be literally unreadable.  I read the beginning and the end and skipped through some of the impenetrable stuff in the middle.  Because, you know,

Individual Protection 2014 (‘IP14’) is intended to allow individuals to protect from the lifetime allowance charge (‘LTA charge’) any pension savings they have on 5 April 2014, which has been accumulated with UK tax relief with a value of between £1.25 million (the standard LTA from 6 April 2014) and £1.5 million (the current LTA since 6 April 2012)

Oh come on, you glazed over too, admit it!

All right then.  What we seem to be looking at here is a kind of grandfathering provision – the government has decided to bugger about with the amount of money you’re allowed to save for your retirement, and there are a few people who’ve saved a bit more than we’re now going to allow (but a bit less than we used to allow) who would be seriously pissed off if they were shafted by the changes.

I pause to change into my shiny ’80s Ben Elton suit and say “bit of politics” because buggering about with people’s pensions expectations didn’t seem to bother the government when they changed MY pension from being updated by RPI to being updated by CPI each year.  Nor does it seem to have bothered them that they’ve changed my former colleagues’ pensions by introducing what amounts to a Civil Service Tax so that they are now taking home LESS than they were when I left, because of the “contribution” they’re making to the pensions.  You know, the “gold plated pensions” we keep hearing about, that were supposed to make up for the below market rate salaries we got from (to my certain knowledge) the mid eighties when I joined up, till I left.  As I say, bit of politics.  Now back to your regularly scheduled consultation response.

So in general I’m not in favour of buggering about with people’s pension expectations, so protecting the people who get the fuzzy end of the lollipop on this occasion is probably a good thing, no?

Well, except, how many of these people ARE there exactly?  I mean, we’re talking about protecting people who would otherwise lose out when the upper limit is lowered from £1.5m to £1.25m, right?

Let’s turn to the impact assessment.  It’s an odd kind of consultation, because it conflates stages 2 and 3 of the consultation process – we’re being consulted about

Setting out objectives and identifying options. Determining the best option and developing a framework for implementation including detailed policy design.

Drafting legislation to effect the proposed change.

So we’re being asked about how to solve the problem at the same time as we’re being asked to look at the detailed legislation to implement the proposed solution.

The impact assessment is detailed enough that it’s been signed off by Sajiid Javid MP, Economic Secretary to the Treasury, as a “reasonable view of the likely costs, benefits and impacts of the measure” and who are we to disagree?

And what does it say?  Look at the Exchequer Impact:  It asserts that there will be an extra £100m in the tax take in 2014/15, £80m in 2015/16 and £50m in 2016/17.  Say what?  We’re going to get in a total of £230m over three years from the difference between £1.5 and £1.25 million?  How much tax relief does someone get at 40% on a quarter of a million?  40% x £250,000 = £100,000, right?  But £230 million divided by £100,000 is 2300, isn’t it, unless I’ve got my decimal point in completely the wrong place?

The TIIN says (in the “impact on individuals and households”) that

It is estimated that about 120,000 individuals will have pension savings above £1.25 million in April 2014. Of these, those who don’t have enhanced or primary protection will be eligible to apply for IP14.

I’m weirded out about why it isn’t going to save us fifty times the amount shown in the TIIN if there’s the possibility of affecting fifty times more people .  But I’m more weirded out by the assertion it’s going to cost HMRC £1m to administer – what, for this one change, affecting two to three thousand people?  What are they going to do, write to them individually, in iambic pentameter, on vellum, with a goose quill pen dipped in gold ink?

So no, I’m not going to respond to this particular consultation either.  Except to say, pick a limit and stick to it.  If the government hadn’t put the limit up and then brought it down again they wouldn’t be having to think of grandfathering provisions.

And I have a Modest Proposal on the “simplicity and fairness” front – wouldn’t it be a lot simpler to set a date after which pension tax relief is only given at basic rate in the first place? *ducks and runs for cover*