‘More people in their seventies earn enough to pay higher-rate income tax than those in their thirties, according to new figures. A surge in pensioner wealth now means a higher proportion of septuagenarians have incomes above the £42,385 higher-rate tax threshold than their younger counterparts. The survey, by Nationwide Savings, also found that the average yearly income for someone in their seventies was £21,617 – only slightly less than the average 30-year-old who has £24,763.
Source: The Daily Telegraph’
It is sometimes suggested that it would make more sense for “peak income” to occur when expenditure is at its greatest, typically for people with young children trying to get a foot on the housing ladder while paying off student loans, and for it to tail off later in life when, care fees apart, the need for income may diminish.
It is certainly the case that the current generation of pensioners, most of whom receive a range of benefits starting at age 60 for which future generations will have to wait a lot longer. Of course, in the absence of proper planning, the Government will claw back some of the money from inheritance tax receipts. The IHT nil rate band (above which tax is payable on capital at 40%) is frozen at £325,000 until 5 April 2021 after which it will rise only in line with the CPI. To (loosely) honour their 2007 pledge to make the IHT nil rate band £1m the Conservatives are introducing extra “residence” nil rate band starting at £100,000 on 6 April 2017.
Anyone who reads the umpteen pages of legislation could be forgiven for losing the will to live. Bizarrely foster children will be able to benefit from the new measure but not nephews and nieces or siblings. So “never had it so good”; quite possibly.