Private schools, times a changing?
Discussion
brickwall said:
The question is whether they do a simple rebanding, or (more likely) some kind of proportional payment structure of anything >£1m.
The simple method would be existing council tax (proceeds going to council) then a ‘super tax” of say 1-2% of value above £1m with the proceeds going straight to HMT. So if you live in a £5M house in Westminster, you’re about to get a big bill.
I suspect that, as with the window tax, people would take steps to devalue their homes to avoid the tax. The simple method would be existing council tax (proceeds going to council) then a ‘super tax” of say 1-2% of value above £1m with the proceeds going straight to HMT. So if you live in a £5M house in Westminster, you’re about to get a big bill.
Put your £2m freehold house onto a 5 year leasehold, thereby devaluing it. Split a house into two or three 'separate' flats. Separate the house and garden into two different titles. I'm not a tax accountant (clearly!) but I'm 100% sure ways would be found to get around such a punitive tax.
Sway said:
Currently, there's a staggering glass ceiling between earning from your labour, and earning from your assets.
You generate those assets by taking risk, and using your labour. If assets generate profit, that's risk trade off, as it can also wipe out the entire investment.When you only rely on "labour", you exclude yourself from taking that risk and also the potential reward disappears.
If you create an environment where that potential of wealth generation by investments, disappear with heavy tax, than people won't have any incentive to take risk and there won't be any job to employ "labours"
Not a rocket science really.
ooid said:
Sway said:
Currently, there's a staggering glass ceiling between earning from your labour, and earning from your assets.
You generate those assets by taking risk, and using your labour. If assets generate profit, that's risk trade off, as it can also wipe out the entire investment.When you only rely on "labour", you exclude yourself from taking that risk and also the potential reward disappears.
If you create an environment where that potential of wealth generation by investments, disappear with heavy tax, than people won't have any incentive to take risk and there won't be any job to employ "labours"
Not a rocket science really.
ooid said:
You generate those assets by taking risk, and using your labour. If assets generate profit, that's risk trade off, as it can also wipe out the entire investment.
When you only rely on "labour", you exclude yourself from taking that risk and also the potential reward disappears.
If you create an environment where that potential of wealth generation by investments, disappear with heavy tax, than people won't have any incentive to take risk and there won't be any job to employ "labours"
Not a rocket science really.
these taxes are not about raising revenue, like taxing schoolchildren or the 45% tax rate, they are about making the less well off feel that those wealthier than them are being levelled down and the perception that 'massive profits' are being punished. Those same people will be blind to the fact it will in the long run make everyone poorer.When you only rely on "labour", you exclude yourself from taking that risk and also the potential reward disappears.
If you create an environment where that potential of wealth generation by investments, disappear with heavy tax, than people won't have any incentive to take risk and there won't be any job to employ "labours"
Not a rocket science really.
Zolvaro said:
Gearing just moves the wealth it doesn't make it disappear. Wealth taxes are on global assets so unless you are actively evading tax it will still be considered. Whether wealth taxes are reasonable is a whole other discussion!
That's not how implementations work. The taxes tend to be asset and geolocation specific so you just change how the asset is held and move the wealth. It's why so many wealthy overseas owners of London property are renting at home but owning in the U.K. etc. For example, you have a U.K. property where the net value is to be annually taxed. The solution is to therefore remove that net value by increasing the debt on the asset. You can go one step further and sell up to an SPV and rent it back which can work even better as it is also a vehicle for moving net income out of the U.K. when things like pension caps are in place.
As with all such taxation it doesn't target the people the proponents are priapismic over the thought of it targeting but is just a bill carried by the perfectly normal workers who are trapped at the level where options are few.
A good example being those who just bought normal houses, in normal streets using normal incomes and spent 30 years doing normal jobs to pay off that normal mortgage. The deliberate property asset inflation from 1997 to create a faux wealth euphoria and rampant consumer spending increase from borrowing against that faux wealth means that those completely normal people who didn't partake in the great 21st century shopathon and chattel consumption race but left that faux equity where it was would now be paying a huge annual tax uplift that isn't commensurate with their lifetime income, pension etc. Meanwhile, those who asset stripped themselves living someone else's lifestyle and are essentially renting the property they live in because they've extended the loan and duration so many times they'll never own it would be sitting pretty.
This is the equality of IHt as a wealth tax over living wealth taxes.
The spiking of council tax to bury an annual property wealth tax in it is quite interesting as it will force many pensioners to move but also push many emigrants to the SE to return to the cheaper regions as it would fundamentally be a tax on the SE. It would arguably create quite a potential change in the London centric nature of the service economy biased U.K. There are fair arguments on either side with regards to that. Afterall, the housing problem in the U.K. isn't really one of affordability but a combination of a failure of local authorities to enforce the construction of social/affordable housing and instead favouring the money being spent building a new club house or other municipal facility but primarily an employment issue where the majority of jobs are in the SE etc.
Zolvaro said:
ooid said:
Sway said:
Currently, there's a staggering glass ceiling between earning from your labour, and earning from your assets.
You generate those assets by taking risk, and using your labour. If assets generate profit, that's risk trade off, as it can also wipe out the entire investment.When you only rely on "labour", you exclude yourself from taking that risk and also the potential reward disappears.
If you create an environment where that potential of wealth generation by investments, disappear with heavy tax, than people won't have any incentive to take risk and there won't be any job to employ "labours"
Not a rocket science really.
For much of the asset owning class, the 'risk' was non existent. Financial regulation, asset prices, other historic factors mean people who happened to be born in a specific couple of decades and had an income when the conditions were right were able to print money.
All that's changed. I missed out by about 3 years. Stupidly, initially focussed on getting my own home - not an income earning asset. Then the world changed, and I'd missed out, along with every generation after me.
That's not healthy for society - and as said usually on here I'm considered somewhere further right than Thatcher economically.
Zolvaro said:
That's true if you exclude house prices, lots of people have generated a lot of wealth just by being born at the right time and riding the huge increases.
Again? Yawn really...those who was born before (us), did not have internet, easy jet and today's much more diverse job market. People who invests or buy assets (that they actually inhabit) might generate wealth. Sorry but people still arguing this is bad for society similar to 5 year old kid who does not want to accept "gravity" exists..
DonkeyApple said:
That's not how implementations work. The taxes tend to be asset and geolocation specific so you just change how the asset is held and move the wealth. It's why so many wealthy overseas owners of London property are renting at home but owning in the U.K. etc.
For example, you have a U.K. property where the net value is to be annually taxed. The solution is to therefore remove that net value by increasing the debt on the asset. You can go one step further and sell up to an SPV and rent it back which can work even better as it is also a vehicle for moving net income out of the U.K. when things like pension caps are in place.
As with all such taxation it doesn't target the people the proponents are priapismic over the thought of it targeting but is just a bill carried by the perfectly normal workers who are trapped at the level where options are few.
A good example being those who just bought normal houses, in normal streets using normal incomes and spent 30 years doing normal jobs to pay off that normal mortgage. The deliberate property asset inflation from 1997 to create a faux wealth euphoria and rampant consumer spending increase from borrowing against that faux wealth means that those completely normal people who didn't partake in the great 21st century shopathon and chattel consumption race but left that faux equity where it was would now be paying a huge annual tax uplift that isn't commensurate with their lifetime income, pension etc. Meanwhile, those who asset stripped themselves living someone else's lifestyle and are essentially renting the property they live in because they've extended the loan and duration so many times they'll never own it would be sitting pretty.
This is the equality of IHt as a wealth tax over living wealth taxes.
The spiking of council tax to bury an annual property wealth tax in it is quite interesting as it will force many pensioners to move but also push many emigrants to the SE to return to the cheaper regions as it would fundamentally be a tax on the SE. It would arguably create quite a potential change in the London centric nature of the service economy biased U.K. There are fair arguments on either side with regards to that. Afterall, the housing problem in the U.K. isn't really one of affordability but a combination of a failure of local authorities to enforce the construction of social/affordable housing and instead favouring the money being spent building a new club house or other municipal facility but primarily an employment issue where the majority of jobs are in the SE etc.
Those kind of people probably aren't resident for tax in the UK anyway and they are of course never caught by these things due to their mobility. The other 99.9% of normal people affected by this will not be able to gear their way out it.For example, you have a U.K. property where the net value is to be annually taxed. The solution is to therefore remove that net value by increasing the debt on the asset. You can go one step further and sell up to an SPV and rent it back which can work even better as it is also a vehicle for moving net income out of the U.K. when things like pension caps are in place.
As with all such taxation it doesn't target the people the proponents are priapismic over the thought of it targeting but is just a bill carried by the perfectly normal workers who are trapped at the level where options are few.
A good example being those who just bought normal houses, in normal streets using normal incomes and spent 30 years doing normal jobs to pay off that normal mortgage. The deliberate property asset inflation from 1997 to create a faux wealth euphoria and rampant consumer spending increase from borrowing against that faux wealth means that those completely normal people who didn't partake in the great 21st century shopathon and chattel consumption race but left that faux equity where it was would now be paying a huge annual tax uplift that isn't commensurate with their lifetime income, pension etc. Meanwhile, those who asset stripped themselves living someone else's lifestyle and are essentially renting the property they live in because they've extended the loan and duration so many times they'll never own it would be sitting pretty.
This is the equality of IHt as a wealth tax over living wealth taxes.
The spiking of council tax to bury an annual property wealth tax in it is quite interesting as it will force many pensioners to move but also push many emigrants to the SE to return to the cheaper regions as it would fundamentally be a tax on the SE. It would arguably create quite a potential change in the London centric nature of the service economy biased U.K. There are fair arguments on either side with regards to that. Afterall, the housing problem in the U.K. isn't really one of affordability but a combination of a failure of local authorities to enforce the construction of social/affordable housing and instead favouring the money being spent building a new club house or other municipal facility but primarily an employment issue where the majority of jobs are in the SE etc.
ooid said:
Zolvaro said:
That's true if you exclude house prices, lots of people have generated a lot of wealth just by being born at the right time and riding the huge increases.
Again? Yawn really...those who was born before (us), did not have internet, easy jet and today's much more diverse job market. People who invests or buy assets (that they actually inhabit) might generate wealth. Sorry but people still arguing this is bad for society similar to 5 year old kid who does not want to accept "gravity" exists..
ooid said:
Zolvaro said:
That's true if you exclude house prices, lots of people have generated a lot of wealth just by being born at the right time and riding the huge increases.
Again? Yawn really...those who was born before (us), did not have internet, easy jet and today's much more diverse job market. People who invests or buy assets (that they actually inhabit) might generate wealth. Sorry but people still arguing this is bad for society similar to 5 year old kid who does not want to accept "gravity" exists..
I'm saying the disconnect in how labour and wealth are taxed is bad for society. The chasm is so great on the middle classes.
Compare two people, one earning £80k in a job doing 40+ hours a week and one earning £80k from a BTL portfolio that self funded off riding a wave of perfect conditions (and very little 'investment' or risk) purely as a consequence of being the right age at the right time - the net income for them is wildly divergent. Is that right, or fair?
Sway said:
Zolvaro said:
ooid said:
Sway said:
Currently, there's a staggering glass ceiling between earning from your labour, and earning from your assets.
You generate those assets by taking risk, and using your labour. If assets generate profit, that's risk trade off, as it can also wipe out the entire investment.When you only rely on "labour", you exclude yourself from taking that risk and also the potential reward disappears.
If you create an environment where that potential of wealth generation by investments, disappear with heavy tax, than people won't have any incentive to take risk and there won't be any job to employ "labours"
Not a rocket science really.
For much of the asset owning class, the 'risk' was non existent. Financial regulation, asset prices, other historic factors mean people who happened to be born in a specific couple of decades and had an income when the conditions were right were able to print money.
All that's changed. I missed out by about 3 years. Stupidly, initially focussed on getting my own home - not an income earning asset. Then the world changed, and I'd missed out, along with every generation after me.
That's not healthy for society - and as said usually on here I'm considered somewhere further right than Thatcher economically.
We aren't going to get a sudden upward shift in growth. The Boomer working demographic has pretty much retired and the following generations are too small. These generations don't work the number of hours that the Boomer generation did. The working day is shorter as is the working week. We are an ex growth economy, whether that is a positive or a negative is for debate but there is no magical growth increase to cover off the liabilities so it comes down to levying taxes on assets potentially.
Sway said:
Compare two people, one earning £80k in a job doing 40+ hours a week and one earning £80k from a BTL portfolio that self funded off riding a wave of perfect conditions (and very little 'investment' or risk) purely as a consequence of being the right age at the right time - the net income for them is wildly divergent. Is that right, or fair?
Your understanding is fundamentally wrong. You would be surprised how many those investors actually employ people that earn more than 80k to manage their assets.
This riding perfect waves of BTL nonsense is just a 5 year old dream, and quite worrying TBH...
ooid said:
Your understanding is fundamentally wrong.
You would be surprised how many those investors actually employ people that earn more than 80k to manage their assets.
This riding perfect waves of BTL nonsense is just a 5 year old dream, and quite worrying TBH...
Yup. The BTL 'live for free' was mainly an investment scam that lazy suckers fell for and got rinsed. But for those who did create a successful business doing so via property opens the door to the 'property is theft' 'unearned income is evil' extremist mantra that is easy to sell into a core section of society. You would be surprised how many those investors actually employ people that earn more than 80k to manage their assets.
This riding perfect waves of BTL nonsense is just a 5 year old dream, and quite worrying TBH...
As an aside, the one intelligent thing the Conservatives did was to end the utter lunacy of the speculative BTL boom by forcing out the most leveraged monkeys. Just imagine the state of the housing and rental market today if they hadn't made those tax changes in 2011 and all those leveraged gamblers had hit 6% debt funding at the same time and the rampant capitulation that would have been contagious.
ooid said:
Your understanding is fundamentally wrong.
You would be surprised how many those investors actually employ people that earn more than 80k to manage their assets.
This riding perfect waves of BTL nonsense is just a 5 year old dream, and quite worrying TBH...
It's not quite nonsense.it happened. I know of one person who ended up with a nice buy to let portfolio with very little initial investment. He no longer works as the tax changes to rental income stopped it being worthwhile. He had a couple of worrying moments around 2008/9 when his mortgages came.up for renewal though.You would be surprised how many those investors actually employ people that earn more than 80k to manage their assets.
This riding perfect waves of BTL nonsense is just a 5 year old dream, and quite worrying TBH...
Notreallymeeither said:
GT03ROB said:
There will be working people in £1m houses, earning less than 100k & where are they going to find £20k from to pay that?
And working people in £1m houses with very considerable mortgages and little equity. DonkeyApple said:
The spiking of council tax to bury an annual property wealth tax in it is quite interesting as it will force many pensioners to move...
More selling...So you'd have lots of properties coming onto the market from forced sellers because they can no longer afford to keep their homes. The ability of buyers to afford those same properties will be similarly impacted.
House price crash, anyone?
Sway said:
. I missed out by about 3 years. Stupidly, initially focussed on getting my own home - not an income earning asset. Then the world changed, and I'd missed out, along with every generation after me.
Many of us missed the waves like NVIDIA, Tesla, Netflix... Should we go after everyone who invested in them? They did their research, they probably also lost many investments along the way, some probably were just pure lucky.A flat blanket Tax who made massive profits, because they took risk?
MadCaptainJack said:
More selling...
So you'd have lots of properties coming onto the market from forced sellers because they can no longer afford to keep their homes. The ability of buyers to afford those same properties will be similarly impacted.
House price crash, anyone?
I suspect the housing market has already split in two and the split will start showing as the Boomers start dying off and the supply of larger family homes increases while the ability to purchase them at today's levels has diminished substantially. The higher end of the market is only being held up by GenX property equity that is sufficient to offer a large enough deposit and the current very low rate of supply. So you'd have lots of properties coming onto the market from forced sellers because they can no longer afford to keep their homes. The ability of buyers to afford those same properties will be similarly impacted.
House price crash, anyone?
Valuing per sq foot is a recent trend and it doesn't look remotely possible to maintain a market where large properties and small properties are valued on the same Sq footage values and the market will revert to a much lower Sq footage cost for larger properties. The buying power at the lower ends of the market is fine but you can see quite clearly that at the upper end it is scheduled to fall off a cliff as the Millenial generation won't have the big equity pools for deposits and the rate at which the larger properties come to market is a guaranteed increase in the 2030s.
Property crash? Who knows but a market split to reflect the manifestly different economics seems a certainty to me.
For example, the number of £1m homes outside of the SE is greater than the number of £300k/annum income households so straightaway you can see those values have no choice but to rebase to fit incomes as the era of them being held up by enormous deposits from smaller property inflation will end with GenX.
Is that a good or bad thing? That's all openly debatable.
ooid said:
Sway said:
. I missed out by about 3 years. Stupidly, initially focussed on getting my own home - not an income earning asset. Then the world changed, and I'd missed out, along with every generation after me.
Many of us missed the waves like NVIDIA, Tesla, Netflix... Should we go after everyone who invested in them? They did their research, they probably also lost many investments along the way, some probably were just pure lucky.A flat blanket Tax who made massive profits, because they took risk?
All I'm saying is not all asset driven wealth was created via economically of societally useful 'investment' carrying risk and adding true value.
Some, a decent amount, was created through little more than the luck of being in the right place at the right time. Where was the risk in a self declared 100% BTL mortgage at the turn of the century? Oh no, it might get repossessed and my credit score go down.
There's risk in employment too - however the differing tax rates against the two modes of generating income are staggeringly different. It doesn't seem unreasonably to me to slow down or even reverse some of the squeezing of middle income PAYE earners, whilst their neighbour has nigh on double the net income on the same gross...
DonkeyApple said:
FishAndChips said:
At least they have now pledged to use the money raised from charging VAT on private schools to pay for these 6.5k extra teachers. Can't argue with that.
That was their time ledge from the outset. To raise £2bn and to generously use £200m to hire 1 new member of staff for every 1,000 pupils, which is already trying to be done anyway so technically SFA of the money raised is going back into educating the UK's kids. It'll get binned on slacker parents, the actual root cause of the problem facing the nation's children. Anyone who thinks otherwise is extremely naive.
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