Top 5 financial things to do before labour get in?
Discussion
Condi said:
It doesn't confuse me, but it's a very rare situation if that is so, and not representative of 99.99% of the country.
pretty similar to my situation .... have lived in the same house for 20 years. Yes, its gone up a bit, but WAY less than inflation and any 'gain' is small relative to the active savings I've made in my company over the same period. No car increases, no art, wines etc. Have grown value by saving at least half of my earnings (not particularly high earnings either) year on year for 20 years and re-investing the profits in my company. I did this on the basis when I retired I'd either be able to draw tax-free divided income (yes, that was a thing in the past!) or get my money out with low CGT, on the basis it's been taxed all along.
Now, we're marching towards a scenario where this 'gain' as others see it will be taxed at higher income tax rates, ignoring the fact it's already been taxed (and the profits it has generated) annually, and any money that's left over when I pop my clogs will then get whacked again with IHT. In my eyes there is a difference between this type of gain and purely investment / speculative gains made in the other asset classes.
I've just returned from a short trip to Dubai, where I have a small (as yet unprofitable) business venture, and had a sit down with the local accountants. When you try to explain the UK tax system and rates to them, they almost don't believe you and can't understand why anyone would want to run a business in the UK. I'm not meaning to say they have the right approach, or that there aren't a whole heap of other issues with that part of the world, but it does serve as a reminder that we shouldn't blindly accept the notion that more tax is the answer to anything. Have you seen our politicians lately?
bentley01 said:
With regards to taxation the higher earners already pay much more. If you earn 3 times the national average you don’t pay 3 times the tax more like 5 times
Probably more, plus they lose child benefit,The low and average earners are getting off relatively lightly in terms of direct tax take, higher earners are being squeezed.
Puzzles said:
bentley01 said:
With regards to taxation the higher earners already pay much more. If you earn 3 times the national average you don’t pay 3 times the tax more like 5 times
Probably more, plus they lose child benefit,The low and average earners are getting off relatively lightly in terms of direct tax take, higher earners are being squeezed.
Yes, and you could also mention, the top 1% of earners pay 28% of all income tax and the top 5% pay almost 50% of all income tax.
However, those aspects are not even thought about in politics.
Envy is a wonderful sin for political purposes. Claiming to increase tax only for the stinking rich, is a great vote winner.
The problem though, is when wealthy people are taxed too much, as has been seen before, they take action, so the government spending commitments then have to be financed by all tax-payers.
Expect you have all noticed another misleading political trick. The huge extra spending promises, are apparently all going to be paid for by:-
VAT on private schools (until they go bust);
Non-Doms (until they leave) and
Chasing tax-evaders (HMRC cannot cope, but are already chasing).
The subliminal message being, we won't charge everyone else an penny extra, so vote for us.
A recent poll found that 50% of the UK population cannot define 50%, so the explanation above has an enormous receptive audience.
Jon39 said:
Puzzles said:
bentley01 said:
With regards to taxation the higher earners already pay much more. If you earn 3 times the national average you don’t pay 3 times the tax more like 5 times
Probably more, plus they lose child benefit,The low and average earners are getting off relatively lightly in terms of direct tax take, higher earners are being squeezed.
Yes, and you could also mention, the top 1% of earners pay 28% of all income tax and the top 5% pay almost 50% of all income tax.
However, those aspects are not even thought about in politics.
Envy is a wonderful sin for political purposes. Claiming to increase tax only for the stinking rich, is a great vote winner.
The problem though, is when wealthy people are taxed too much, as has been seen before, they take action, so the government spending commitments then have to be financed by all tax-payers.
Expect you have all noticed another misleading political trick. The huge extra spending promises, are apparently all going to be paid for by:-
VAT on private schools (until they go bust);
Non-Doms (until they leave) and
Chasing tax-evaders (HMRC cannot cope, but are already chasing).
The subliminal message being, we won't charge everyone else an penny extra, so vote for us.
A recent poll found that 50% of the UK population cannot define 50%, so the explanation above has an enormous receptive audience.
https://researchbriefings.files.parliament.uk/docu...
Suggests that whilst the top 1% indeed pay 29.1% of all tax…..that same top 1% only pay 12.5% of their income in tax.
Whereas the 50th-90th percentile of taxpayers also contribute 30.2% of all taxes, yet pay 40.8% of their total income in tax.
Even the bottom 50%, whilst only contributing 9.5% of the tax revenues, are still taxed higher than that top 1#, at 25.5%
That perhaps illustrates why maybe that top 1% should *gasp* pay more income tax, no?
I’d say that isn’t about envy, but a little tiny bit more fareness?
If that top 1% paid the same taxes as the bottom 50%, the tax coffers of the country would be massively more loaded.
Well I think my idea is quite good. Everyone would get £20k (maybe more?) of ISA allowance, plus £60k of pension allowance, so that's £80k a year of tax efficient savings. Few people will breech both of those limits in a year, and anything above that should be subject to CGT at a rate equivalent to that of your income tax rate.
CGT on houses would, over time, stabilise and start to bring down house prices somewhat, which has to be good for society as the situation at the moment is unsustainable. It would also encourage businesses and people to locate away from the areas of higher demand, which is again good for the country.
A higher level of IHT, especially on very large estates (say £1m+), would also be beneficial for the country as the money could be used to help more disadvantaged areas.
Whichever way you look at it one of the biggest issues the UK is how unequal it is, whether that be socially, geographically, across age ranges, or whatever. At some point we have to have more progressive tax policies which redistribute some of that wealth, or at least create investment and opportunities away from London/the SE and do more for deprived neighbourhoods. The fairest way to do that is tax unearnt income, which then still preserves the benefit from working.
CGT on houses would, over time, stabilise and start to bring down house prices somewhat, which has to be good for society as the situation at the moment is unsustainable. It would also encourage businesses and people to locate away from the areas of higher demand, which is again good for the country.
A higher level of IHT, especially on very large estates (say £1m+), would also be beneficial for the country as the money could be used to help more disadvantaged areas.
Whichever way you look at it one of the biggest issues the UK is how unequal it is, whether that be socially, geographically, across age ranges, or whatever. At some point we have to have more progressive tax policies which redistribute some of that wealth, or at least create investment and opportunities away from London/the SE and do more for deprived neighbourhoods. The fairest way to do that is tax unearnt income, which then still preserves the benefit from working.
mikeiow said:
Puzzles said:
The top 1% pay 29% of all income tax, it was only 21% in 2000 when we had a labour gov.
Are you finding it hard to read what I wrote?However, your point still stands that the top 1% pay a much smaller percentage of their total income in tax the the lower earners. I would argue that is a more important number than the total amount paid by the top 1% in total.
Jon39 said:
Chasing tax-evaders (HMRC cannot cope, but are already chasing).
The Conservatives have cut HMRC's budget, directly affecting the number of people they have on counter fraud teams. Labour have said they'll give HMRC an extra £800m to recover and prevent fraud, so at least that might change. Each £1 spent on HMRC's anti fraud department brings in £3 in income, so cutting their budget was a really stupid thing for the Conservatives to have done.
Condi said:
CGT on houses would, over time, stabilise and start to bring down house prices somewhat, which has to be good for society as the situation at the moment is unsustainable. It would also encourage businesses and people to locate away from the areas of higher demand, which is again good for the country.
A higher level of IHT, especially on very large estates (say £1m+), would also be beneficial for the country as the money could be used to help more disadvantaged areas.
Whichever way you look at it one of the biggest issues the UK is how unequal it is, whether that be socially, geographically, across age ranges, or whatever. At some point we have to have more progressive tax policies which redistribute some of that wealth, or at least create investment and opportunities away from London/the SE and do more for deprived neighbourhoods. The fairest way to do that is tax unearnt income, which then still preserves the benefit from working.
CGT on primary residences would likely stagnate the market, We keep being told on here that we need the olds to get out of their 4 bed homes into small apartments freeing up the bigger houses for families. So how does taxing them as they downsize help that? They'll stay put. It will drive a boom in home improvements. A higher level of IHT, especially on very large estates (say £1m+), would also be beneficial for the country as the money could be used to help more disadvantaged areas.
Whichever way you look at it one of the biggest issues the UK is how unequal it is, whether that be socially, geographically, across age ranges, or whatever. At some point we have to have more progressive tax policies which redistribute some of that wealth, or at least create investment and opportunities away from London/the SE and do more for deprived neighbourhoods. The fairest way to do that is tax unearnt income, which then still preserves the benefit from working.
Your other suggestions are ultimately taxes on the prudent. People who make savings or investments for their future should be hit?
Before you looking at setting CGT at the same levels as income tax, in the interests of fairness it would be good to at least give indexation back.
Incidentally I have yet to see a policy from the tories or labour that has any sensible change of evening up inequalities. Levying more tax on the prudent is not the answer without a plan to drive growth in the regions. At present any such taxes raised will just disappear into the black of of unaccountable government spending.
GT03ROB said:
CGT on primary residences would likely stagnate the market, We keep being told on here that we need the olds to get out of their 4 bed homes into small apartments freeing up the bigger houses for families. So how does taxing them as they downsize help that? They'll stay put. It will drive a boom in home improvements.
Your other suggestions are ultimately taxes on the prudent. People who make savings or investments for their future should be hit?
Before you looking at setting CGT at the same levels as income tax, in the interests of fairness it would be good to at least give indexation back.
Incidentally I have yet to see a policy from the tories or labour that has any sensible change of evening up inequalities. Levying more tax on the prudent is not the answer without a plan to drive growth in the regions. At present any such taxes raised will just disappear into the black of of unaccountable government spending.
Old people don't downsize, they stay in their home until they die or go into a retirement/care home. Your other suggestions are ultimately taxes on the prudent. People who make savings or investments for their future should be hit?
Before you looking at setting CGT at the same levels as income tax, in the interests of fairness it would be good to at least give indexation back.
Incidentally I have yet to see a policy from the tories or labour that has any sensible change of evening up inequalities. Levying more tax on the prudent is not the answer without a plan to drive growth in the regions. At present any such taxes raised will just disappear into the black of of unaccountable government spending.
The other taxes are not taxes on the prudent, very very few people will use all their £80k tax efficient savings (pension + ISA), so for the vast majority of people it's a non issue. It's only the same as the lifetime pension allowance which is likely to come back in anyway, the government encourages you to save up to the point of having a very good/considerably above average pension pot, and beyond that considers you don't need the help to save more.
Yes, you could index CGT to inflation, that is fair. It is still wrong that sitting on assets is more tax efficient than working though, so CGT does want to be at the rate of income tax. And yes, there does need to be a plan for encouraging investment and business activity. Incidentally out of the approx £10bn Boris made available for levelling up, from memory about £9bn remains unspent and one audit body (NAO maybe?) wrote a pretty blunt report saying they didn't expect the rest of the money to ever be spent.
Condi said:
A higher level of IHT, especially on very large estates (say £1m+), would also be beneficial for the country as the money could be used to help more disadvantaged areas.
I don't consider an estate of £1m+ to be "very large". If the deceased's main residence is excluded I might have some support for your views.R.
Condi said:
GT03ROB said:
CGT on primary residences would likely stagnate the market, We keep being told on here that we need the olds to get out of their 4 bed homes into small apartments freeing up the bigger houses for families. So how does taxing them as they downsize help that? They'll stay put. It will drive a boom in home improvements.
Your other suggestions are ultimately taxes on the prudent. People who make savings or investments for their future should be hit?
Before you looking at setting CGT at the same levels as income tax, in the interests of fairness it would be good to at least give indexation back.
Incidentally I have yet to see a policy from the tories or labour that has any sensible change of evening up inequalities. Levying more tax on the prudent is not the answer without a plan to drive growth in the regions. At present any such taxes raised will just disappear into the black of of unaccountable government spending.
Old people don't downsize, they stay in their home until they die or go into a retirement/care home. Your other suggestions are ultimately taxes on the prudent. People who make savings or investments for their future should be hit?
Before you looking at setting CGT at the same levels as income tax, in the interests of fairness it would be good to at least give indexation back.
Incidentally I have yet to see a policy from the tories or labour that has any sensible change of evening up inequalities. Levying more tax on the prudent is not the answer without a plan to drive growth in the regions. At present any such taxes raised will just disappear into the black of of unaccountable government spending.
The other taxes are not taxes on the prudent, very very few people will use all their £80k tax efficient savings (pension + ISA), so for the vast majority of people it's a non issue. It's only the same as the lifetime pension allowance which is likely to come back in anyway, the government encourages you to save up to the point of having a very good/considerably above average pension pot, and beyond that considers you don't need the help to save more.
Yes, you could index CGT to inflation, that is fair. It is still wrong that sitting on assets is more tax efficient than working though, so CGT does want to be at the rate of income tax. And yes, there does need to be a plan for encouraging investment and business activity. Incidentally out of the approx £10bn Boris made available for levelling up, from memory about £9bn remains unspent and one audit body (NAO maybe?) wrote a pretty blunt report saying they didn't expect the rest of the money to ever be spent.
If your CGT changes will apply to "very very few" then they will raise little & most who it could impact will have their accountants ensure they have no liabilityf, so in no way impacts the desired objectives of levelling up.
Your point about the 9bn unspent just goes to show.... they are all clueless.
Jon39 said:
Perhaps we all need to adopt a completely new mindset, so that we will fit in for the next 5 years.
Bursaries to enable children from low income families to receive a better education are immoral.
Tax the schools by adding VAT to fees and that should clear out the stinking rich privileged skivers.
[Sir Kier Starmer had his private Reigate Grammer school fees paid for by a bursary]
That does not matter, because as soon as he moves in to Downing Street, we will get the unions to replace the toff by Jeremy Corbyn.
Anyone who started a successful business employing thousands of people and has become stinking rich, will be taxed at 98% as we did in the 1970s, to teach them a lesson. We hate the rich and Britain and agree with one of our shadow ministers who eloquently said, "I hate the tory s**m".
What we want is the 1970s again.
Protest marches, streets piled up with rotting garbage, state employees all on strike, inflation at 25% and businesses trying to work 3 days a week, because the state provided electricity was only switched on for 3 days each week.
Perhaps difficult to believe now, unless you were trying to work during the 1970s.
The phrase then was, 'beer and sandwiches at number 10', referring to the union chiefs attending meetings at No.10, telling the Prime Minister what to do.
Eventually the IMF had to bail out failing Great Britain.
The issue is now capital is too powerful and the top few percent avoid most taxes and control government policies etc. Now we’re not rewarding work, just capital. The issue is it is destroying the rewards of working, meaning workers are checking out of the system and not bothering. If we let this continue its result in another collapse.
Most right and left wing people believe their side is correct. In reality it’s about having the tension between each side so we don’t go too far one way or the other. Many of the posters here are clearly a bit older and base their arguments on a world which isn’t the same as the big issues they faced when younger. We’re not facing an issue of a lack of capital, it’s a lack of reward for work. Encouraging growth by relaxing taxes there and moving the taxes to wealth and taxing the rich is the way to do that.
As said earlier the rich pay a lot of the tax, but at a far lower rate than those with less. It’s a perfect example of the issue - we’ve concentrated so much of the money into a small group who pay a lot of the tax despite paying a lower rate - it shows the very unequal distribution of money in the economy.
Isn't Gibraltar option still open to Brits? To save from Both IHT and CGT completely (including a few more I think...). I assumed most used to do this, just making sure that they will never come back, which is I guess fine for now as both NHS and overall infrastructure is just on their knees...
lauda said:
The concept of any sort of purchase tax must really f
k with your head.
Well yes it does. Just tax people once, why all the sneaking around? As Han Solo would say.k with your head. A consumption tax, or a land value tax, or whatever. It would be fairer than tax on something that has already been taxed.
CGT on Primary Residence will mean people don’t move. When markets are illiquid prices become more volatile i.e. they go up and down faster.
Absolutely ludicrous idea.
And of course stamp duty, legal costs, extensions, new kitchens, insulation etc are all allowable as an offset against CGT. Don’t think I’ll be paying CGT on my house I bought a couple of years ago any time soon……
What people need to remember is taxing things like primary residence and reducing people’s ability to save means we’re storing up problems for the future. It will force more people in to the social care system as they age. Let’s hope the cost of that is included in to the calculations.
Absolutely ludicrous idea.
And of course stamp duty, legal costs, extensions, new kitchens, insulation etc are all allowable as an offset against CGT. Don’t think I’ll be paying CGT on my house I bought a couple of years ago any time soon……
What people need to remember is taxing things like primary residence and reducing people’s ability to save means we’re storing up problems for the future. It will force more people in to the social care system as they age. Let’s hope the cost of that is included in to the calculations.
But the increase in house value doesn't come from nowhere, it comes directly from the next generation, or the future house buyers.
And while it's all being laughed at and "poo-pooed" the US has CGT on main houses (with allowances) and their property market and wider economy seems to be working fine!
And while it's all being laughed at and "poo-pooed" the US has CGT on main houses (with allowances) and their property market and wider economy seems to be working fine!
Condi said:
And while it's all being laughed at and "poo-pooed" the US has CGT on main houses (with allowances) and their property market and wider economy seems to be working fine!
Depends on the state, and there is 'threshold' for CGT. Besides, USA housing market is more elastic (unlike UK) which means there is no strict planning restrictions or low supply of residential land over there, in most states. Do not also forget the long term fixed rates of USA mortgages (30 years), so keep people being in the same house for a very long time.If you introduce CGT in U.K., there are many possible outcomes (negative), one of them you would lose loads of investors and higher rate tax-payers that actually buy those houses, and U.K. will end up poorer.
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