NI on Military Pension or EDP

[Captain Kirk]

The way I understand it, but I’m more than likely wrong…
Your pension or EDP is not going to face NI, but if you have a second income then that will be hit.

AFPS, is that how you read it?

 

[busby1971]

Unearned income doesnt attract NI, however if a brand new tax is created it could potentially be applied to anything.

The problem with applying NI to Pensions is the Employer element, you don’t have an employer if you are receiving a pension.

 

[Captain Kirk]

Thanks Busby.
leaving the rich to claim circa £16000 against tax for pension inputs will quite likely be a battleground in the next few weeks.

 

[Downsizer]

Also with this new tax - if you work past SP age you will pay NI. Previously you didn't.

 

[busby1971]

It would have been better if this had been called a COVID-19 tax, which is what it is.

Political double speak isn’t helping, and dred to think what will happen at the next election

 

[Vauxhall]

The way I understand it, but I’m more than likely wrong…
Your pension or EDP is not going to face NI, but if you have a second income then that will be hit.

AFPS, is that how you read it?

That is not the way I read it ... but I will take another look.

What I hear was that, for the first time, people over state pension age who are still working, will have a small NI type levy on those earnings.

 

[Captain Kirk]

I’m a fair bit off state pension age, but if I’ve got this right… if I was 67 and working for Blingpalace today, my Blingpalace pay statement would have income tax taken off me, but not NI? Add to that income from my taxed pension which is not subject to NI deductions.
After the new NI rules come in…now I pay NI on the Blingpalace earnings, but again not on my pension?
At the end of the day, theres nothing we can do until the next election, bar a couple of works pension bits and pieces, to take part of the sting out (Telegraph money article yesterday).

 

[Vauxhall]

Under the new rules you would pay a 1.25% NI levy.

 

[Captain Kirk]

But is that levy going to include pensions, or just salaried income?

 

[Oldstacker]

I’m a fair bit off state pension age, but if I’ve got this right… if I was 67 and working for Blingpalace today, my Blingpalace pay statement would have income tax taken off me, but not NI? Add to that income from my taxed pension which is not subject to NI deductions.
After the new NI rules come in…now I pay NI on the Blingpalace earnings, but again not on my pension?
At the end of the day, theres nothing we can do until the next election, bar a couple of works pension bits and pieces, to take part of the sting out (Telegraph money article yesterday).

That is my understanding of the situation (other opinions may vary....).

This may have an impact on the jobs market; I know of people who have worked past SPA but have reduced their hours because they didn't need to work so many to achieve the same (or similar) take home pay and have deferred their state pension. If that take home pay is now going to be reduced again by the 'new' NI levy then they may decide to throw in the towel & retire altogether (thereby saving commuting costs and the other 'trivial' daily expenditures that go along with working) rather than increase their hours again. It will, I suspect, be a matter of personal situation & judgements for the over SPA workforce as to whether this stops them working altogether (creating a job vacancy but also an increased state pension burden) or makes them ramp up their hours again (reducing job availability for others but potentially deferring pension liabilities)

 

[Downsizer]

Under the new rules you would pay a 1.25% NI levy.

Only on earned income past SP. Not pensions income?

 

[Vauxhall]

The Health and Social Care Levy - Forces Pension Society

Employers, employees and the self employed will be affected.

forcespensionsociety.org

Class 1 and Class 4 NI payers, and people over state pension age who are still working.

 

[Downsizer]

So no levy no pension income.

 

[Vauxhall]

You don't pay NI on your pension, so no.

 

[Captain Kirk]

Contract change. Anyone here got experience of contractor salary sacrifice? On paper it looks exploitable.

 

[Vauxhall]

You can only do salary sacrifice on certain things (HMRC website should tell you what) and the benefit of salary sacrifice is that it comes from your pay before tax, so lowers your tax bill.

 

[Captain Kirk]

You can only do salary sacrifice on certain things (HMRC website should tell you what) and the benefit of salary sacrifice is that it comes from your pay before tax, so lowers your tax bill.

I’m only just getting to grips with it, but I’ll be paying both employer and employee NI as well as income tax.
It’s one way to significantly reduce my income for a payback in the near future. Any advice on what to compare to find the sweet spot where sacrificing is at its optimum?

 

[Vauxhall]

As I said, take a look on the HMRC website. Initially, salary sacrifice was for things like a bicycle, a computer and child care but I suspect this might have changed.