At the end of October the British Chancellor of the Exchequer reveals tax changes that are planned for next spring. The October 2010 Spending Review statement is likely to be horrendous.
Other countries in Europe bit the bullet last year and brought in major tax rises and spending cuts, Britain did not, partly because there was a general election in the offing.
The Chancellor has already stated that everyone will be hit.
One group who are likely to be hit hard are people who are retiring. Teachers and other public sector employees currently get a large, tax free, lump sum on retirement.
This anomaly has existed for many years. It is anomalous because the retiring teacher’s pension payments have been made before income tax was calculated, so, logically because the pension has been earned from untaxed income it should be taxed when it is taken.
If this tax anomaly is removed next spring, then teachers’ lump sum payments on retirement could be cut from 80,000 to 40,000 pounds, a massive cut.
The Irish government brought in this exact same measure 12 months ago and it caused a mass exodus from the public sector, as anyone who could take their pension did so. The same would happen in Britain. Every teacher, civil servant, train driver, police officer and doctor over the age of 55 would immediately retire.
Why would the Chancellor bring in this draconian measure? Really you have to ask why he would NOT bring it in:
1) It is an anomaly
2) Private sector voters would applaud it
3) It would reduce unemployment at a stroke, as vacancies caused by retirement were filled from the dole queue and new graduates
4) It would cut the state sector wage bill, as new entrants at the bottom of the scale replaced employees at the top of their pay scale
5) Wages would be saved because those who retired would not be replaced for several months
If you are concerned about how you are goingto live on your teacher’s pension from next April, now is the time to take action. I am an ex-teacher, currently making a full-time income from my websites and writing articles. It is time to find out more today.