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Why does the common increased charge tax payer get extra subsidy for his or her pension financial savings every year than anybody on Common Credit score is paid?


I printed this video on TikTok this morning.

As I famous on Twitter:

Why does the common increased charge tax payer get extra subsidy for his or her pension financial savings every year than anybody on Common Credit score is paid and many aged age pensioners get every year? What’s the sense in that? And the place is the equity?

The transcript is as follows:


People who find themselves rich within the UK get advantages of, on common, not less than £8, 000 a yr. Why is that? And why is that truthful?

Now let’s be clear what I am speaking about. The advantages that the wealthiest individuals within the UK get on common, and I stress that ‘on common’ level, relate to the pension contributions that they make to their pension funds yearly.

The entire value of the tax subsidy to those that are rich when it comes to the pension contributions that they make quantities to not less than £38 billion a yr. On the time that I used to be doing the info and within the yr that that data pertains to, there have been round 4. 4 million increased charge taxpayers – there are extra now, however the knowledge on tax reduction prices can have gone up as nicely – that is a median of over £8,000 kilos a yr for each one in all them.

Now, in fact, a few of them do not pay something right into a pension and a few of them pay an incredible deal greater than common right into a pension. However we’re nonetheless within the scenario that they get advantages of greater than £8,000 a yr every on common.

Evaluate that to an individual who’s on the outdated property pension scheme. This yr, they’ll get round £8,800 a yr in pension.

Evaluate that to an individual who’s on the brand new state pension scheme, which applies to youthful state pensioners. They get £11, 500 a yr.

Evaluate it additionally to an individual who’s on Common Credit score. A single one who’s on Common Credit score and is over the age of 25; they get round £4,800 a yr.

So why are we giving such an unlimited quantity of cash to the rich to subsidise their pensions when there are people who find themselves residing in poverty within the UK who’ve such small quantities to reside on?

It makes actually no sense in any respect. So, I’ve made an easy advice within the Taxing Wealth Report, and that’s that the tax reduction on the contributions that the rich make to their pensions needs to be decreased to the essential charge of tax. At current, they get that tax reduction at both the 40 p.c tax charge and even the 45 p.c tax charge if they’re incomes over £125,000 a yr.

If we cut back that to the 20 p.c tax charge, which the 85 plus p.c individuals within the UK pay when it comes to revenue tax, then we’d save £12. 5 billion a yr of the price of subsidising the financial savings of the rich. And that shall be sufficient to present each single outdated age pensioner on this nation an additional £1,000 of revenue a yr.

Now, which is healthier? That we subsidise the rich, or we give those that are in want a much bigger pension? I believe the reply is manifestly apparent. It is even apparent for the economic system as an entire. As a result of these pensioners would spend that cash and provides a large enhance to the economic system, actually raise progress, and ship a greater final result for everyone in society, together with the rich, as a result of we would all be higher off due to their spending.

This present construction of giving subsidies, advantages if you happen to like, to the rich for his or her pensions doesn’t make sense. We have now to create a fairer, higher and extra sincere and accountable system the place individuals know simply how skewed our society’s system of advantages is in direction of these with wealth. It is unfair. It has to finish. And I am suggesting to you that you have to be asking your politicians about how they may ship higher outcomes for us all.


There’s extra on this within the Taxing Wealth Report 2024, right here.


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