Closing tax loopholes used by the 'upper class wealthy'

[Jon39]

We often hear comments about the fabulously wealthy "stinking rich don't pay any tax", and that the "upper class wealthy use tax loopholes".
Of course one person's tax loophole, would be described by another person, as tax law enacted by Parliament.

UK government ministers have told us ad nauseam, that "We have discovered a £22 billion 'black hole' left by the Tory government".
Why they have chosen to lecture everyone about such a small aspect of the government finances, I don't know.
Could it be that £22 billion is a sufficiently large number to frighten people?
Or could it be, that talking about the huge sum of debt owed (£2,690 billion) is not a good idea, becauce there might be a plan to borrow even more?

If the government were surprised to discover £22 billion was missing, then it might be fortunate for the Tories that they have not yet found the national debt total.

...................................................................

Financial year 2023/24
Source: House of Commons

National debt
£2,690 billion
About £38,000 per person in the UK

Annual interest on national debt
£102 billion
8.4% of all government spending

Government Deficit
(Amount of spending, which is more than revenue income)
£49 billion

.......................................................................

The action to close what are regarded as loopholes, would so far be imposing VAT on education (Prime Minister went to a private school) and ending the Right to Buy scheme (Housing minister used that scheme to buy her council house, then sold obtaining a tax free profit).

Making those who have more money pay more (means testing).
Withdrawal of the Winter Fuel Allowance has effectively been achieved by means testing.
Following the imposition of VAT on education, there is another similar way to make the wealthy pay more.
Certain named products and services are either VAT exempt or VAT zero rated.
Food is at present VAT zero-rated, so some would regard that as a wealthy persons loophole

By selling food on a means tested basis, the government could raise £ billions more in VAT revenue.
The socialist Identity Cards could be encoded, to show if a person is entitled to buy VAT free food, otherwise everyone else pays 20% extra. There is an idea to help pay for all the planned extra spending.
Whether all these changes might compound as a disincentive, resulting in a crashed economy, I will leave open for others to opine.

Edited by Jon39 on Sunday 8th September 09:28

[trickywoo]

There is already a thread discussing this but it’s laughable to say Keir Stalin will introduce means based food purchasing.

He’s a crazy lefty for sure but he’s not certifiable.

[Jon39]

trickywoo said:

... it’s laughable to say Keir Stalin will introduce means based food purchasing.

He’s a crazy lefty for sure, but he’s not certifiable.

We hope not, but 'strange' things keep being reported.
Some families in (I think) Buckinghamshire, have concluded that paying steadily increasing 120% school fees, would be beyond them.
When applying for places in local state schools, the Council have asked for evidence that they cannot afford the increased costs.

Councils can use certain criteria for selection purposes, but not income levels. However, that did not stop them attempting that bureaucratic tactic.
If supposedly, the standards at state schools are going to be improved by an influx of independent school pupils, you would think the Council would be keen to have them.

[Mr Whippy]

If Truss/Kwarteng made the wheels fall off a bit with slightly egregious borrowing to fire up the economy, Keir/Helper will make the wheels fall off properly if they go for “fantasy” policy.

[Countdown]

£45bn in unfunded tax cuts was "slightly egregious".........?

She was and is is a certifiable loon

[Jon39]

Mr Whippy said:

If Truss/Kwarteng made the wheels fall off a bit with slightly egregious borrowing to fire up the economy, Keir/Helper will make the wheels fall off properly if they go for “fantasy” policy.

An interesting activity was revealed by that economic jolt, which probably only those involved knew much about.

Regulators had 'encouraged' pension funds to reduce the percentage of equities in their portfolios.
Gilts and bonds were deemed much 'safer'.

The problem was that the funds had future commitments, including defined benefit increasing in retirement payments. Gilts did not produce the same long-term growth, so the pension funds were sold some kind of leverage contract. I don't know how it worked, but the 'miracle guarantee' involved taking on debt. Usually a red flag.
The funds were supposed to be providing a comfortable retirement for their clients, so introducing gambling was probably not the best idea.

The Truss/Kwarteng announcements shook gilts, yields and interest rates, so the pension funds were desperately trying to close positions.

What were those instruments called and was it just good salesmanship which led to their widespread adoption?
A few pension fund managers took a more traditional approach and refused to have anything to to with debt and leverage.

Reminds one of a Warren Buffett quote, something about swimmers and everything being revealed, when the tide goes out. -

[Mr Whippy]

Yes it was LDI wasn’t it?

But it was leverage in LSI exposed by a sudden drop in gilt values because the uk debt was seen as less attractive.

Those servicing leveraged debt were basically asked for more money to service it, which meant selling gilts, which made the gilts worth even less.


The driver here was ultimately gilt values falling because “the market” said the governments plans were craaaxzzzyyyy!

But their plans were, borrow money, stimulate the economy by spending money. That seems prudent to me.



Yet suddenly we have labour planning to tax the population heavily, while giving out pay rises to public sector, and their economic stimulus is mansion house pension reform or something, basically forcing your pension money into UK businesses… apparently to give you higher returns AND grow our economy… why no one was doing this before if it was so risk free


And yet labour appear to be keeping gilt markets happy, despite all this fantasy policy that will basically crush the economy.



Which leads me simply to say that ‘the market’ is fking clueless, or it simply hasn’t woken up yet… which I think it will in quick order.

[Panamax]

Regarding loopholes enjoyed by the wealthy the 100% Inheritance Tax relief for farms could well come under scutiny. It's supposed to let genuine family farmers pass the farm from generation to generation but is widely used by wealthy people as a prestigious lifestyle combined with generous tax relief. You don't even need to do the farming yourself, the farm can be rented to someone else and still qualify for tax relief.

At the moment there's also 100% IHT relief for business assets or controlling interests in companies.

And don't forget she could very easily widen IHT to become a tax on all gifts, not just on death. This is one to watch out for because it could easily be announced "from today" wheras most other tax changes are typically for the next tax year, from 6th April.

[macron]

Yep hence the apparent panic to give things away...

https://www.telegraph.co.uk/money/tax/inheritance/...

[Dingu]

Even by loony NP&E standards this thread is unhinged.

[Mr Whippy]

Countdown said:

£45bn in unfunded tax cuts was "slightly egregious".........?

She was and is is a certifiable loon

So what happens when £45bn goes uncollected?

It gets invested or spent. And/or the money borrowed goes to stimulate and grow the economy.


You’re essentially saying adding to the debt pile slightly faster in order to try get more tax revenue and economic growth is bad.
But keeping the debt pike a bit smaller and only adding to it a bit less, while not addressing economic growth, is completely ok?


It’s shades of grey in practice.

[Jon39]

Mr Whippy said:

Yet suddenly we have labour planning to tax the population heavily, while giving out pay rises to public sector, and their economic stimulus is mansion house pension reform or something, basically forcing your pension money into UK businesses… apparently to give you higher returns AND grow our economy… why no one was doing this before if it was so risk free

And yet labour appear to be keeping gilt markets happy, despite all this fantasy policy that will basically crush the economy.

Which leads me simply to say that ‘the market’ is clueless, or it simply hasn’t woken up yet… which I think it will in quick order.

Each government announcement always seems to be associated with a continual whiff of envy.
Anyone who becomes successful having risked everything by starting a business, has perhaps provided hundreds, sometimes thousands of jobs and paid £millions in tax, must be taxed out of existence because they have done too well.

Pimlico Plumbers is one of todays examples.
What encouragement is all this to future business entrepreneurs.

Then in the next breath, economic growth keeps being promised.

I understand the dream though is a wealth tax.
If that involves tax on assets, but not on income, imagine the widow who happens to live in a £2 million home in North London, her beloved home full of memories for 60 years.
Her retirement income is now only a quarter of a train drivers salary, but by a quirk of the property market, plus 60 years inflation, her home now has a high value which is if no interest to her at all.

HMRC might tell her to sell everything and move to a tiny flat. Her answer to that could be, come here and shoot me.

[bitchstewie]

Dingu said:

Even by loony NP&E standards this thread is unhinged.

Oh I don't know I mean Government Approved Food has often been touted for the poor and vulnerable rather than benefits as cash so I'm sure they could come up with something

[Countdown]

Mr Whippy said:

Countdown said:

£45bn in unfunded tax cuts was "slightly egregious".........?

She was and is is a certifiable loon

So what happens when £45bn goes uncollected?

It gets invested or spent. And/or the money borrowed goes to stimulate and grow the economy.


You’re essentially saying adding to the debt pile slightly faster in order to try get more tax revenue and economic growth is bad.
But keeping the debt pike a bit smaller and only adding to it a bit less, while not addressing economic growth, is completely ok?

It’s shades of grey in practice.

It depends on what and where it gets spent. Spending on Ferraris and foreign holidays doesn't do much good for the UK economy, especially when any "good" that it does is offset by increased debt financing. It would be far better for the country if it was spent on heath, education, infrastructure...stuff that might actually improve the quality of life for most people whilst ALSO stimulating the economy.

[popegregory]

Jon39 said:

but by a quirk of the property market, plus 60 years inflation, her home now has a high value which is if no interest to her at all.

It’s probably of a little interest to her

[cheesejunkie]

bhstewie said:

Dingu said:

Even by loony NP&E standards this thread is unhinged.

Oh I don't know I mean Government Approved Food has often been touted for the poor and vulnerable rather than benefits as cash so I'm sure they could come up with something

I'm not here long enough to know what NP&E would become like under a labour government. It doesn't disappoint .

[crankedup5]

Jon39 said:

Mr Whippy said:

Yet suddenly we have labour planning to tax the population heavily, while giving out pay rises to public sector, and their economic stimulus is mansion house pension reform or something, basically forcing your pension money into UK businesses… apparently to give you higher returns AND grow our economy… why no one was doing this before if it was so risk free

And yet labour appear to be keeping gilt markets happy, despite all this fantasy policy that will basically crush the economy.

Which leads me simply to say that ‘the market’ is clueless, or it simply hasn’t woken up yet… which I think it will in quick order.

Each government announcement always seems to be associated with a continual whiff of envy.
Anyone who becomes successful having risked everything by starting a business, has perhaps provided hundreds, sometimes thousands of jobs and paid £millions in tax, must be taxed out of existence because they have done too well.

Pimlico Plumbers is one of todays examples.
What encouragement is all this to future business entrepreneurs.

Then in the next breath, economic growth keeps being promised.

I understand the dream though is a wealth tax.
If that involves tax on assets, but not on income, imagine the widow who happens to live in a £2 million home in North London, her beloved home full of memories for 60 years.
Her retirement income is now only a quarter of a train drivers salary, but by a quirk of the property market, plus 60 years inflation, her home now has a high value which is if no interest to her at all.

HMRC might tell her to sell everything and move to a tiny flat. Her answer to that could be, come here and shoot me.

Exactly, tragically we n have a bunch of lefty lunatics Governing the Country.

[Randy Winkman]

cheesejunkie said:

bhstewie said:

Dingu said:

Even by loony NP&E standards this thread is unhinged.

Oh I don't know I mean Government Approved Food has often been touted for the poor and vulnerable rather than benefits as cash so I'm sure they could come up with something

I'm not here long enough to know what NP&E would become like under a labour government. It doesn't disappoint .

I was on PH under Blair/Brown but even I've been surprised by how quickly some people can tell it's all suddenly gone to pot and Labour's/Starmer's days are numbered already. And that's during summer recess too.

[Baroque attacks]

Jon39 said:

We hope not, but 'strange' things keep being reported.
Some families in (I think) Buckinghamshire, have concluded that paying steadily increasing 120% school fees, would be beyond them.
When applying for places in local state schools, the Council have asked for evidence that they cannot afford the increased costs.

Not heard anything like that from our group in that area.

Interested to hear where you for this from.

[Mr Whippy]

Randy Winkman said:

cheesejunkie said:

bhstewie said:

Dingu said:

Even by loony NP&E standards this thread is unhinged.

Oh I don't know I mean Government Approved Food has often been touted for the poor and vulnerable rather than benefits as cash so I'm sure they could come up with something

I'm not here long enough to know what NP&E would become like under a labour government. It doesn't disappoint .

I was on PH under Blair/Brown but even I've been surprised by how quickly some people can tell it's all suddenly gone to pot and Labour's/Starmer's days are numbered already. And that's during summer recess too.

Really?

The “black hole” that wasn’t really hidden and was known about sufficiently for their manifesto promises.

Then despite this black hole, once in a lifetime buckle down and take some hard choices, sweets for a load of public sector workers! Yay.


That doesn’t fill anyone with confidence over their fiscal skills set.