Military pension and gratuity to be taxed!
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Military pension and gratuity to be taxed!
Just heard on the grapevine at a secret headquarters in Bucks that the military pension and gratuity is going to be taxed at 40% as of 1 Apr 11.
40% because in the year you receive it, you will have earned enough to be in the higher tax bracket.
You heard it here first!
40% because in the year you receive it, you will have earned enough to be in the higher tax bracket.
You heard it here first!
Which is why you should arrange your exit date so that it falls after whatever pay rises have been agreed but before you've earned enough in the financial year to be in the 40% bracket.....
Tactical PVR'-ing - that's what I did!
Tactical PVR'-ing - that's what I did!
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The Gratuity was always tax free. There was an agreement with IRS that it didn't push the incumbent into the supertax bracket as it was not salary.
The Pension (the monthly bit) has always been taxable (well in my lifetime anyway).
The Pension (the monthly bit) has always been taxable (well in my lifetime anyway).
The Gratuity was always tax free......
..... and I know that it sounds unbelievable in this day and age, but I recall being told way back that the terminal grant was intended to enable one to buy a house on retirement after a lifetime of Service accommodation!
Jack
..... and I know that it sounds unbelievable in this day and age, but I recall being told way back that the terminal grant was intended to enable one to buy a house on retirement after a lifetime of Service accommodation!
Jack
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the military pension and gratuity is going to be taxed at 40% as of 1 Apr 11.
Pay and pensions are increasingly (if not exclusively) used as career decision making tools. I'm probably not alone in having stayed the course in this excuse of an Armed Force based on the benefits I expected to receive at the end of my full career. If they move these particular goalposts now, I predict big trouble ahead.
And yes, I know the country is in financial doo-doo and yes I know my pension benefits are generous compared to other sectors of the population, but I planned my retirement on the figures I was given. Does that count for nothing any more?
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Just to remind people that HMG reserves the right to tax "Government Pensions" in the UK no matter where the recipient resides on this Planet. You can retire to an Island in the sun but your Service Pension will be taxed in UK.
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Just to remind people that HMG reserves the right to tax "Government Pensions" in the UK no matter where the recipient resides on this Planet. You can retire to an Island in the sun but your Service Pension will be taxed in UK.
It depends on the wording of the Double Taxation agreement between the UK and the particular foreign country you move to. It may then be possible to receive the Service Pension without being taxed by the UK. In the country I now live in, I would receive my pension free of UK tax if I (a) have a permanent residence permit, and (b) become a citizen of the foreign country.
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Dum_my said
In the country I now live in, I would receive a Service Pension free of UK tax if I (a) have a permanent residence permit, and (b) become a citizen of the foreign country.
In the country I now live in, I would receive a Service Pension free of UK tax if I (a) have a permanent residence permit, and (b) become a citizen of the foreign country.
40%..................
Same rumour hit the Old Bill recently re our lump sum at 30 years service.
Seems that's all it was, we are likely to be paying higher Pension Contributions by 2014, up to 14 or 15% as opposed to 11% now.
Not such a bad hit to take if you only have a few years to run - not so good if just joined!
TN.
Seems that's all it was, we are likely to be paying higher Pension Contributions by 2014, up to 14 or 15% as opposed to 11% now.
Not such a bad hit to take if you only have a few years to run - not so good if just joined!
TN.
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Quote:
Just to remind people that HMG reserves the right to tax "Government Pensions" in the UK no matter where the recipient resides on this Planet. You can retire to an Island in the sun but your Service Pension will be taxed in UK.
Usually true, but not always.
It depends on the wording of the Double Taxation agreement between the UK and the particular foreign country you move to. It may then be possible to receive the Service Pension without being taxed by the UK. In the country I now live in, I would receive my pension free of UK tax if I (a) have a permanent residence permit, and (b) become a citizen of the foreign country.
Just to remind people that HMG reserves the right to tax "Government Pensions" in the UK no matter where the recipient resides on this Planet. You can retire to an Island in the sun but your Service Pension will be taxed in UK.
Usually true, but not always.
It depends on the wording of the Double Taxation agreement between the UK and the particular foreign country you move to. It may then be possible to receive the Service Pension without being taxed by the UK. In the country I now live in, I would receive my pension free of UK tax if I (a) have a permanent residence permit, and (b) become a citizen of the foreign country.
1. Become a resident. Various countries have special retirement visas.
2. Fight with Inland Revenue.
It CAN be done.
I don't own this space under my name. I should have leased it while I still could
Assume you retired in the first days of April, you would benefit from the in-year payrise and your pay for that year, assuming pension was your only income that year, would be taxed at 20% after tax relief. The following April your pension would be increased by the relevant price index increase from the previous September. If your pension was £20k and the price index was 3% your maximum pension uplift would be £600 giving £20,600 the following year.
OTOH if you retired at the end of September that year your pension would still be paid at the rate of £20k but the following April it would receive only a £300 uplift. Your pension the following year would be £20,300.
Assuming the uplift remained at a constant 3%, after 10 years your April retiree would be on a pension of £27,684 but the person who retired 6 months later would receive only £27,281. For someone retiring at the begining of March the pension would only be £26,945. This disparity is one of the issues that the Forces Pension Society has been tackling.
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and I know that it sounds unbelievable in this day and age, but I recall being told way back that the terminal grant was intended to enable one to buy a house on retirement after a lifetime of Service accommodation!
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Don't take my word for it, but I'm fairly confident that the gratuity at retirement will not be taxed. I understand that it's seen as being a "pension commencement lump sum" under the new rules for pensions that came into force on A-Day (6 Apr 2006). Here's a good website to read the details:
A-Day: Changes in detail, Defined Benefit Schemes - Active Members
The bottom line is that, unless the government changes those rules again - for everyone in the country - I don't see how they can tax pension gratuities. Fingers crossed!
However, what's far more at risk is the Early Departure Payment for those who leave before age 55 on AFPS05. It's not a pension, so I guess it could be taxed quite easily.
A-Day: Changes in detail, Defined Benefit Schemes - Active Members
The bottom line is that, unless the government changes those rules again - for everyone in the country - I don't see how they can tax pension gratuities. Fingers crossed!
However, what's far more at risk is the Early Departure Payment for those who leave before age 55 on AFPS05. It's not a pension, so I guess it could be taxed quite easily.
Last edited by LFFC; 9th Jul 2010 at 20:55.