Rishi Sunak's capital gains tax review may usher in higher taxes on wealthy
You have to applaud him for looking at this rather than the usual suspects.
Well, austerity isn't going to pay the CV19 bill.
He's looking suspiciously unlike the rest of the cabinet.
I don't give him long.
Well, austerity isn’t going to pay the CV19 bill.
Yep, austerity + increases to income tax, capital gains etc,.
He's only BoJo's yes man so maybe you should be asking a different question.
He is already becoming a danger to Joris, but the people who Sunak is 'targetting' with higher CGT will be very easy to mobilise against him. For obvious reasons.
Tax rises are inevitable given the current situation so this is hardly a surprise. Didn't CGT rate used to be pegged to your marginal income tax rate not too long ago so this is hardly a new phenomena? Frankly I'd have expected the Government to ditch it's "no tax rises" promise and use the pandemic as the reasoning. I'd also expect a reduction in all sorts of other reliefs too (Pension tax relief being one) although that one would likely hit the public sector a lot harder if the value of the employers contribution is subject to similar limits on relief.
Higher taxes is exactly what the backers of Johnson & Brexit did NOT donnate all that cash for.
They already wussed out on inheritance tax, after a similar 'review', I can see this going nowhere too.
For the more politically engaged amongst you - I just assumed that Rishi is a frontman for Boris - Am I really to believe that Rishi is doing most of this off his own back!?
While I disagree with CGT on inheritance, a bigger priority is tax avoidance and legal tax loopholes.
While I disagree with CGT on inheritance
This will probably open a bigger debate, but I see Inheritance Tax as the 'perfect' tax; you're dead, you don't need the money. You had it while you were alive and didn't need it (otherwise you'd have spent it), now you're dead so you definitely don't need it, so taxing it affects no-one.
And I know people will say that it affects the people who stood to inherit it, but tough, they did nothing to earn it. And if you really want them to have it, stop holding on to it, give it to them now rather than making them wait until you're dead.
Plus the relief is £325k (indeed £650k for a married couple), so anyone whinging that they can 'only' inherit anywhere up to £650k tax free can get in the sea.
– Am I really to believe that Rishi is doing most of this off his own back!?
I'd think he finds himself with a hell of a lot more freedom than the rest of the cabinet combined.
Sajed Javed was basically forced to resign by Cummings in mid-February because he wouldn't do what he was told by an unelected advisor. They can't sack another chancellor within a couple of months for the same thing.
At the point Rishi was made chancellor he was a total unknown who nobody had heard of. He was appointed for the same single reason every other cabinet member has been appointed.. they're commitment to Brexit. Thats all that matters in this field. Everything else is secondary
But once appointed it does seem that he has ideas that wildly differ from traditional Tory doctrine.
His stock is very high as his policies have been generally well-received, he appears to actually know what he's doing, he seems ridiculously normal and likable for an MP, and he is surrounded by a sea of incompetents, which includes the PM, so within reason, he's got a lot of leeway.
Lets be honest, ts not hard to look like the only responsible, competent grown-up in the room when you're stood next to Boris Johnson, Gavin Williamson, Priti Patel and Liz Truss.
At the moment he's unsackable. Whether that continues remains to be seen, seeing as he's eclipsing the buffoon who is nominally his boss, who is a very vain, egotistical and thin-skinned man
I can assure you absolutely he is. He's took money I should have got and given it directly to home buyers through the stamp duty cut.
Smells like a Tory to me.
He’s attempting to (in my opinion) discourage people from holding back their economic activity ‘till after the 2020/21 horror show that is unfolding. If people fear future tax increases on property sales etc, they should, in theory, act sooner rather than later. You don’t even have to bring the tax changes in… just brief that you are likely to.
He's the teenager in the room full of babies and toddlers.
Totally with IHN on inheritence tax. There also shoild be a ceiling at which point it gets taxed at 100%.
Nobody needs to inherit 50bn, like Jeff Besos' kids will. They should have to work and be productive too.
As for CGT - it'll hit couples who've moved in together and rented the other house out. It won't hit the rich - who retained their mortgage tax breaks if they had *more* than 16 houses.
Yep. If you have over 16 houses you don't pay mortgage interest. But if you have less, you do.
Tories are there for the rich. Labour are notionally there for everyone but never get their teeth into the rich, just the middle classes, so they're a waste of space too.
I see this as an easy way to appear to be taxing the rich, and thereby appeal to the formerly red wall new blue voters.
Those with great wealth will simply find more ingenious ways to avoid paying these higher taxes.
We don't need higher taxes, we just need to close the loopholes that allow people to make money in the UK and keep it in foreign places that hide the money away from HMRC, albiet in legitimate ways.
And if you really want them to have it, stop holding on to it, give it to them now rather than making them wait until you’re dead.
Keep trying to tell my parents this..... i'll even do them a good deal on the rent 😉
Totally with IHN on inheritence tax. There also shoild be a ceiling at which point it gets taxed at 100%.
+1, you didn't earn it, its not your money.
Bizarre tax, affects so few people yet seems to be a red rag to the masses.
While I disagree with CGT on inheritance
Why, (apart from the obvious problem of conflating two different taxes) What's possibly wrong with inheritance tax?
Plus the relief is £325k (indeed £650k for a married couple), so anyone whinging that they can ‘only’ inherit anywhere up to £650k tax free can get in the sea.
Get with the times grandad. Assuming they have a house, which is a pretty safe assumption if they are that loaded then it is effectively £1m tax free.
Also fully agree on inheritance, absolutely tax the windfall, after paying for social care. Not sure removing pension tax relief makes any sense. It's not really tax relief, it comes out of your pay before tax, you still pay tax on it later when you draw the pension. Anything that reduces peoples private pensions pots is nuts and storing up even bigger issues later.
As for Rishi, most of what he's done has been pretty popular with many, and there is anything Boris likes more than Brexit its being popular. The hang over from this is only just starting.
Yeah, I forgot the 'passing on a home' thing.
It’s not really tax relief, it comes out of your pay before tax, you still pay tax on it later when you draw the pension
Thing is, for a lot of people you 'save' the tax on pay at 40% (because it tends to be the well paid who can afford to save into a pension), then pay it on your pension at 20% (because not many people have pensions >50k pa)
I think capping the pension tax relief at the basic rate is reasonable, and I speak as someone who's done well out of the current system.
I think capping the pension tax relief at the basic rate is reasonable, and I speak as someone who’s done well out of the current system.
Yes agreed. I hope they don't do it, but objectively speaking I agree that they should.
Thing is, for a lot of people you ‘save’ the tax on pay at 40% (because it tends to be the well paid who can afford to save into a pension), then pay it on your pension at 20% (because not many people have pensions >50k pa)
Yep, saved the max into my pension every year for the last 10 years, saving 40% tax on the the lot. A very generous scheme. Given the lifetime limit of just over £1m, you'd struggle to achieve the 40% tax bracket unless you used a very aggressive draw down which wouldn't last more than 20 years. NB You can currently still take 25% tax free, although not sure how long that will last...
Thing is, for a lot of people you ‘save’ the tax on pay at 40% (because it tends to be the well paid who can afford to save into a pension), then pay it on your pension at 20% (because not many people have pensions >50k pa)
*waves* although I did end up being caught in the taper which was a tax return nightmare. The trouble with limiting to the basic rate is that it won't save that much money. The total relief cost is £40bn to HMRC however I'd expect the bulk of that to be "given" to the those who are taxed at the basic rate. In addition you would have to properly account for the employers contributions to defined benefit schemes which if added to earnings, which you would have to do if you limit the relief, could end up giving relatively lowly paid workers a hefty tax bill.
That's not to say it shouldn't be done but it is riddled with difficulties as well as reducing future tax takes.
Interesting take on “Rishi’s” measures to deal with the effects of coronavirus on the economy.
Damn those unelected bureaucrats!
Given the lifetime limit of just over £1m, you’d struggle to achieve the 40% tax bracket unless you used a very aggressive draw down which wouldn’t last more than 20 years.
note that the limits for a defined benefit pension (which, conveniently, MPs have) are significantly higher, and worked out by income (I think its something like £55k/year) so you can just retire earlier to keep the whole lot. This compares to less than £20k/year you would get if you put £1mm into your pension pot and retired at 55 as a normal punter
Yep. If you have over 16 houses you don’t pay mortgage interest. But if you have less, you do.
I'm not sure where you've got that from. If you have a lot of houses it makes more sense to wrap them in a corporation, yes, but there's nothing to stop you doing that with a single house. You still have to pay the mortgage, and pay different tax, but there is more relief than a high tax rate payer gets on their mortgage.
As for CGT – it’ll hit couples who’ve moved in together and rented the other house out
good. this is far more of a problem than the few people who have lots of houses.
Inheritance tax should be 100%. Why should some people get an enormous boost in life through an accident of birth?
. Why should some people get an enormous boost in life through an accident of birth?
all people get boosts in life through accident of birth. Whether your parents die and leave you cash or not is a fairly small part of that
Would a lot of charities not struggle if IHT were to be 100%?
Inheritance tax should be 100%. Why should some people get an enormous boost in life through an accident of birth?
I earn some money, pay tax on it, save it up. I’d like to give it to my children. Money can be gifted without tax issues in the normal run of things.
Then before I give them it, I get killed while out my bike by a selfish person in a car who *just had to* be in front.
Why should this money be taken by the state?
Fine, inheritance tax reinforces inequality, and is a good thing. It may even need to be higher & at a lower threshold than right now.
But don’t go all nuclear and claim it should be *all* of it.
Some folk deserves somewhat of a boost because their parents worked hard, paid tax and saved. That’s why.
a bigger priority is tax avoidance and legal tax loopholes.
+1.
Inheritance tax should be 100%. Why should some people get an enormous boost in life through an accident of birth?
Why not? Some folks are born short, some tall some thick, some stupid, some ugly....wanna penalise the brains & Adonis’ just ‘cos they were born lucky?
🙄
all people get boosts in life through accident of birth. Whether your parents die and leave you cash or not is a fairly small part of that
It's not that small a part of it and it's a part that could easily be controlled by the state. Randomly giving people large amounts of money increases inequality and it would be better for society as a whole if inequality was reduced - clearly it'd be worse for the individuals concerned, but that's the trade off.
Why not? Some folks are born short, some tall some thick, some stupid, some ugly….wanna penalise the brains & Adonis’ just ‘cos they were born lucky?
You can't legislate for those things, you can legislate for inheritance.
I earn some money, pay tax on it, save it up. I’d like to give it to my children. Money can be gifted without tax issues in the normal run of things.
A greater societal good (equality) is achieved by not allowing this. I'd deal with the gifting issue, by saying you can give your money (or assets) to your kids, but if you die within 15 years, they'll be subsequently taxed on it.
Good job I don't rule the world eh?
now it's getting interesting...
Fine, inheritance tax reinforces inequality, and is a good thing. It may even need to be higher & at a lower threshold than right now.
is there a typo in there? Because it don't make no sense to me...
Then before I give them it, I get killed while out my bike by a selfish person in a car who *just had to* be in front.
Why should this money be taken by the state?
Hmmm, introducing the bike/driver angle into this isn't really relevant or helpful, just emotive.
But don’t go all nuclear and claim it should be *all* of it.
Some folk deserves somewhat of a boost because their parents worked hard, paid tax and saved. That’s why.
I don't agree. People don't deserve a boost because their parents did x,y, z any more than people deserve to go to jail for what their parents did.
However I do agree with you that people who have worked hard/saved etc deserve the opportunity to be able to support their kids when they die. Up to a point. But given that point is currently £1m.... I'll just write that in words.... One million ****ing pounds. Bullshit.
OK, so many rich people work hard, saved and paid tax, so ****ing what? So do lots of poor people. The same nurses/cleaners etc that the scum were out clapping for last week... The majority of people handing down £1m+ to their kids didn't get that money by working hard, paying tax and saving; they got that money, or at least the breaks to make that money from their parents.
This saved hard, tax, work hard, deserve to pass it (£1m+) thing is just bullshit that the upper classes have devised to make stupid poor people support their enequous sordid laws so that they can continue to keep their grubby paws on what they
Sorry, I'm ranting. But
just out of interest,
I earn some money, pay tax on it, save it up. I’d like to give it to my children. Money can be gifted without tax issues in the normal run of things.
How much money do you think you should be able to pass on to your children without them paying inheritance tax?
And taking it further, how many generations do you think that should be passed on without inheritance tax?
Whilst I fully support your right to pass on a bit of cash to your sprogs, there is a point where I'm sure you agree it becomes too much and too many times?
no?
Sorry, I’m ranting. But
But you're correct!
Would a lot of charities not struggle if IHT were to be 100%?
IHT is calculated on the estate AFTER such deductions are made.
Personally I think inheritance should be paid by the recipient and taxed as income in the year it is received. A few complicated tax returns I grant you but still that would be fair would it not?
Well said generalist
May intimated an independent review of IHT & found it wasn't working, wasn't fair & thresholds should be lowered
a cross party committee of MPs also agreed it was unfair & threshold lowered
So obviously Johnson ignored that & Sunak did as he was told & left it as is for his 1st budget
He just said in the commons 'You don't tax your way to prosperity'
This review will go the same way as the last one
You can’t legislate for those things, you can legislate for inheritance
Just because you can - doesn’t mean you should..
Just because you can – doesn’t mean you should..
Is that an argument? Legislating to reduce inequality seems like pretty much the best thing any government could do.
now it’s getting interesting…
Fine, inheritance tax reinforces inequality, and is a good thing. It may even need to be higher & at a lower threshold than right now.
is there a typo in there? Because it don’t make no sense to me…
Yes! A typo. What I was trying to type...Inheritance entrenches inequality.
Inheritance tax is a good thing and likely the threshold should be lower.
Then before I give them it, I get killed while out my bike by a selfish person in a car who *just had to* be in front.
Why should this money be taken by the state?
Hmmm, introducing the bike/driver angle into this isn’t really relevant or helpful, just emotive.
just trying to make it relevant to the audience. I forgot no one here rides IRL! 😉
Also I carefully didn’t use ‘driver’ but ‘person.’ That’s my other traditional rant, so I’ll leave it there.
But don’t go all nuclear and claim it should be *all* of it.
Some folk deserves somewhat of a boost because their parents worked hard, paid tax and saved. That’s why.
I don’t agree. People don’t deserve a boost because their parents did x,y, z any more than people deserve to go to jail for what their parents did.
However I do agree with you that people who have worked hard/saved etc deserve the opportunity to be able to support their kids when they die. Up to a point. But given that point is currently £1m…. I’ll just write that in words…. One million * pounds. Bullshit.
OK, so many rich people work hard, saved and paid tax, so * what? So do lots of poor people. The same nurses/cleaners etc that the scum were out clapping for last week… The majority of people handing down £1m+ to their kids didn’t get that money by working hard, paying tax and saving; they got that money, or at least the breaks to make that money from their parents.This saved hard, tax, work hard, deserve to pass it (£1m+) thing is just bullshit that the upper classes have devised to make stupid poor people support their enequous sordid laws so that they can continue to keep their grubby paws on what they
Sorry, I’m ranting. But
i agree that it shouldn’t be as high as £1M, only the richest have that left once care is paid for. Those complaining about inheritance tax being too onerous are almost without exception talking hoop.
I was responding really to the idea that it should all be taxed at 100%. And yes, my typo made it rather meaningless.
But I stand by the idea that passing on some earned, tax-paid income as being ok: that’s a world away from saying that the super rich should ring fence their 100s of millions essentially forever.
Is that an argument? Legislating to reduce inequality seems like pretty much the best thing any government could do.
My point being the Gov is going after the low hanging fruit. Its multi-billionaires & tax avoiding mega-corps that are really the culprits when it comes to hoarding wealth.
I see this as an easy way to appear to be taxing the rich, and thereby appeal to the formerly red wall new blue voters.
Those with great wealth will simply find more ingenious ways to avoid paying these higher taxes.
We don’t need higher taxes, we just need to close the loopholes that allow people to make money in the UK and keep it in foreign places that hide the money away from HMRC, albiet in legitimate ways.
TBH I expect there will still be plenty of ways for people to avoid/minimise their CGT bill. I doubt Rishi is really counting on a massive capital gains windfall, more likely a smaller income tax contribution to the coffers from the financial consulting industry, who will be busy helping the wealthy navigate those loopholes.
I honestly believe one of the main reasons we still have an overcomplicated, archaic tax system is precisely because advising the rich on how to minimise and avoid tax is in itself a lucrative industry...
This saved hard, tax, work hard, deserve to pass it (£1m+) thing is just bullshit that the upper classes have devised to make stupid poor people support their enequous sordid laws so that they can continue to keep their grubby paws on what they
I live in the south east, have a house that's probably worth £700k. Its not particularly lavish (130sqm).- I wouldn't be surprised if in, say, 5 years, it breached the £1m threshold (not that I'm doing anything to it, thats just inflation for ya). I have 2 kids aged under 4.
Would it be fair that if my wife and I were killed, the kids couldn't continue to live in the same home (along with, presumably, some relatives or something) just because its in an expensive area? if you, say, halfed the threshold, you would make that the default stance for a lot of people living in the south east.
I don't generally mind inheritance tax - I think inheritance is generally becoming less relevant to life anyway, as people are living so long their kids are often retired by the time they die, but I think there are opportunities to improve it so (for example) actual children aren't disproportionately affected.
Please tell me that post is a joke and you've already established what will happen to your kids if you both die in an accident. I assume whoever you've asked to be their guardians already has somewhere to live, or else they may not be the most sensible choice...
erm, also, you have done some IHT insurance provision I assume.
My point being the Gov is going after the low hanging fruit. Its multi-billionaires & tax avoiding mega-corps that are really the culprits when it comes to hoarding wealth.
Going after mega corps for tax is not really about reducing inequality (it is a good thing to do tho). The existence of billionaires is essentially a failure of social policy - no one should have that much money. Anyway, there is no reason we could go after both of those AND have a 100% inheritance tax - it doesn't have to be an either or.
I live in the south east, have a house that’s probably worth £700k. Its not particularly lavish (130sqm).- I wouldn’t be surprised if in, say, 5 years, it breached the £1m threshold (not that I’m doing anything to it, thats just inflation for ya). I have 2 kids aged under 4.
Coincidentally, I am in a near identical same situation as you, the main difference being that my kid is on the way (gulp!) rather than having arrived. I would think in that situation there would need to be the ability to pass a house onto a partner - this would be fairly easy to do and not create a loophole. I'd assume that the majority (tho by no means all) would be in a situation where the house is in joint names anyway. Most people in this situation will also have some kind of life insurance that'll pay out if someone suddenly dies in an accident!
My fundamental point is that I already pay lots of tax, and i'd be happy to pay more to have a better, more equal society. And that would also include having what i leave my kids taxed at 100% if it meant that all kids would have an equal start in life (i duno, you could stick all the money in a pot and everyone gets 30k at 21 or have better schools).
(And no, i'm not going to do it unilaterally! I'm not an idiot.)
To answer the OP
You have to applaud him for looking at this rather than the usual suspects.
It's just lip service. Nothing more.
AND have a 100% inheritance tax – it doesn’t have to be an either or.
You’re in la-la land if you think that’s ever going to happen. That idea has zero chance of ever becoming real.
For a start not a realistically electable single party has that in their manifesto.
Focus on the achievable, not what’s on your fantasy utopia wish list.
You’re in la-la land if you think that’s ever going to happen. That idea has zero chance of ever becoming real.
Clearly. Doesn't mean it shouldn't tho. I thought this was a conceptual discussion about inheritance tax.
Wow
Find it amazing that people think if I save up all my life to leave something for my kids that the Govt should take it all and they should get nothing.
Astonishing.
Property is a crime I assume.
Yeah well, welcome to stw. For those suggesting 100% tax, is there anything stopping you from doing this in your will?
You taxed on income, you tax on purchase, you then tax on savings and then tax on death. The reality of this tax is that the super rich won’t end up paying it. It’ll be the middle class and upper middle class, especially the way properties in the south are going.
Luckily the majority of the uk think this tax should be abolished or the threshold increased.
But given that point is currently £1m…. I’ll just write that in words…. One million **** pounds. Bullshit.
Is it? I thought it was £325k per person, or £650k When the second person in a marriage dies? It’s a lot, but it’s not a million.
note that the limits for a defined benefit pension (which, conveniently, MPs have) are significantly higher, and worked out by income (I think its something like £55k/year) so you can just retire earlier to keep the whole lot. This compares to less than £20k/year you would get if you put £1mm into your pension pot and retired at 55 as a normal punter
Amazingly, all wrong, in every way.
Would it be fair that if my wife and I were killed, the kids couldn’t continue to live in the same home (along with, presumably, some relatives or something) just because its in an expensive area? if you, say, halfed the threshold, you would make that the default stance for a lot of people living in the south east.
About as fair as them pocketing the thick end of half a million quid each when they come of age.
There should never be a 100% tax rate on anything, ever, even with a very high threshold.
Property is a crime I assume
You're ok if the particular property is an artisan made wood fired beard clipper that has been in the family for generations.
Other examples of acceptable property can be produced on request.
FWIW I expect to inherit a big fat zero from my parents. However I don't want the government taking anything I manage to accrue before it can go to my offsprogs.
Is it? I thought it was £325k per person, or £650k
Away with your facts, swine!
Amazingly, all wrong, in every way.
care to educate us as to why? Working on this https://www.moneyadviceservice.org.uk/en/articles/the-lifetime-allowance-for-pension-savings
the lifetime allowance is £1,073,100 for a pot, or an annual income of £53,655 (around £55k) if you are on defined benefit. According to the best buy table here -> https://www.hl.co.uk/retirement/annuities/best-buy-rates an RPI linked (as a lot of defined benefits would be) pension drawn at 55 on the max pot would give you an annual income of just £16,976 (under £20k).
I have just taken the time to re-read. My original post needs adjustment....
I agree with CGT being aligned with income tax.
I still think there is too much tax avoidance and evasion - let us close loopholes down.
I disagree with heavier inheritance tax - if we get the pre-death taxes right, folk have paid and contributed to society already, no need to extract more.
Away with your facts, swine!
It's not a fact, or at least it's not a relevant fact in isolation. It's a gross oversimplification of the situation
from https://www.gov.uk/inheritance-tax :
If you give away your home to your children (including adopted, foster or stepchildren) or grandchildren your threshold can increase to £500,000.
If you’re married or in a civil partnership and your estate is worth less than your threshold, any unused threshold can be added to your partner’s threshold when you die. This means their threshold can be as much as £1 million.
Is it? I thought it was £325k per person, or £650k When the second person in a marriage dies? It’s a lot, but it’s not a million.
see above
Not really the same as giving someone a million quid though, is it, especially if those inheriting it already live there.
I'm opposed to the state profiting from the death of its citizens.
Which is a problem because I favour inheritances being limited to say no more than a freehold house each and about a years income equivalent for each adult offspring. There would need to be special measures for youngsters and dependent offspring.
But taking an entire legacy is like cancelling Xmas.
When you're failing if there's no incentive, there's no motivation for one of your kids to hold the pillow over your face to help you on your way... 🙂
care to educate us as to why?
You are talking about the LTA for pension savings. Nothing to do with either CGT or Inheritance tax. It's just the amount you can have before being hit with a 55% tax on your pension.
Pensions are outside your estate for Inheritance tax purposes but that does not mean your kids will not be taxed on the money they get from it (if any)
No one in there right mind buys an annuity with 1 million. It will easily provide 40k per annum for a retirement without affecting the pot total.
The LTA is worked out for DB pensions using an amount of years, not a yearly sum. Two very different things.
So yup, wrong I'm afraid
It’s just the amount you can have before being hit with a 55% tax on your pension.
You mean before the additional 25% rate kicks in on top of your existing tax rates, but only for the part of your pension over the LTA. 55% only applies to the part of lump sums over the LTA.
So, you too are wrong I'm afraid.
You mean before the additional 25% rate kicks in on top of your existing tax rates, but only for the part of your pension over the LTA. 55% only applies to the part of lump sums over the LTA.
So, you too are wrong I’m afraid.
What are you on about ?
I said they apply a 55% tax and that is exactly what they do.
if you take the sum above you LTA as a lump sum they apply 55%, if you take it as drawdown they apply 25% before you take it and pay your normal tax rate.
So no, not wrong in any way. I know exactly what they do. Please do not try an apply pedantry because you want to make me look like I do not know what I'm talking about.
It still has nothing to do with CGT or Inheritance tax.
I earn some money, pay tax on it, save it up. I’d like to give it to my children. Money can be gifted without tax issues in the normal run of things.
Then before I give them it, I get killed while out my bike by a selfish person in a car who *just had to* be in front.
Why should this money be taken by the state?
Because the bulk of inheritance is property. It wasn't earned income that tax was paid on.
Someone earning an average income bought a house for 3x their salary at that time. Then there has been a massive increase in house prices and their lucky offspring get to inherit (if they're in the south east of England) a house that might be worth 20, 40 or even more x average incomes now. There's an argument for there not being CGT on your main home (in order to make it easier for people to move to follow work or whatever else during their lifetime). I'm not sure theres a good argument for there being no CGT on property on death.
You want CGT added to Inheritance tax ? Based on what increase ? from when to when ?
Increase in property value since purchase up to changing hands (death), I presume. (Not something I’d like to see).
I cannot think of a more stupid idea.
I’m not sure theres a good argument for there being no CGT on property on death.
Because the longer you’d owned your house, the less likely your kids will be able to afford to keep it?
I cannot think of a more stupid idea.
it would be massively unpopular but doesn't mean it's not a good idea. Not every country has a CGT exmempion on the main home.
it would just operate the same as other CGT rollovers - you don't have to pay until you actually leave the housing market (whether during your life or on death).
Having CGT on housing (even if deferred until death) would have a big impact to help keep prices lower and more affordable.
Fair few people have children doing school runs down to south side who are aggrieved. Also some estate agent rumours about negative effect on house prices.
Do people really want to live in their parents house? if more than one child who gets it? Second homes are a massive negative impact on housing supply.
Our housing market is a mess - the only way you can afford to buy in many parts of the UK is because of a big transfer of wealth from parents. Anyone who's parents weren't lucky enough to buy when prices are low is locked out for generations.
Our housing market is a mess – the only way you can afford to buy in many parts of the UK is because of a big transfer of wealth from parents.
Indeed. The difference between have and have not today is usually due to inherited wealth.
That conflicts with my feeling that if you've earned and paid tax all your life, why do you then pay again on death.
CGT should be payable on all income and growth (houses, shares, investments, company dividends etc) that isn't your main home, and CGT should be aligned with income tax + NI rates.
Come to think of it, scrap NI and roll it into one income tax payment, aligned with CGT.
matt_outandabout
SubscriberThat conflicts with my feeling that if you’ve earned and paid tax all your life, why do you then pay again on death.
The counter to that is that if you earn and pay tax, why do you pay tax again when you spend it? Taxing spending but not taxing inheritance basically rewards taking money out of the economy.
Ultimately "why should" is a pretty good argument against all taxation, and is countered with "because it's necessary, not because it's necessarily right" And the cold equations of that mean that anything that benefits someone passing on a million pound estate, is to the detriment of people who pass on a funeral bill and an old tea set.
Thing is, I'm pretty sure the balance is wrong now- the amount you can pass on tax free is huge, and considering that pretty much everything in our economy is weighted towards the already wealthy, that's a problem. It's just, I don't know where the right balance is. But I do know that when my mum passes away, I stand to inherit a decent amount and I really don't think it makes sense that as it stands it's tax free. OTOH I pay tax on the far smaller amount that I actually earn.
If feel a compulsion to pay tax on the portion of untaxed inherited wealth, you can.
Hands up who would, voluntarily? There’s lots of ferry contracts to be awarded, and bridges from Scotland to Ireland to fund...
Thing is, I’m pretty sure the balance is wrong now- the amount you can pass on tax free is huge, and considering that pretty much everything in our economy is weighted towards the already wealthy, that’s a problem. It’s just, I don’t know where the right balance is
I agree with both parts of this.
I also think our tax laws are so complex that they help tax avoidance and tax evasion.
You are talking about the LTA for pension savings. Nothing to do with either CGT or Inheritance tax. It’s just the amount you can have before being hit with a 55% tax on your pension.
correct, I never mentioned either CGT or inheritance tax. I was making another, correct point
Pensions are outside your estate for Inheritance tax purposes but that does not mean your kids will not be taxed on the money they get from it (if any)
again, agreed, I didn't claim otherwise.
No one in there right mind buys an annuity with 1 million. It will easily provide 40k per annum for a retirement without affecting the pot total.
an annuity is just as valuable with larger sums as it is with smaller. a £40k (inflation linked) drawdown on a moderately invested portfolio would run out of money after approx 30 years (depending on the exact calculations you choose to use), So there's a decent chance of outliving the cash - 1 in 8 men live to 100 at the moment.
The LTA is worked out for DB pensions using an amount of years, not a yearly sum. Two very different things.
yes, they calculate the amount, multiply it by 20 (an assumed likely length of drawing a pension, not a number of years you may actually take it for), and see if its under the limit of £1,073,100. 1073100/20 is, err, 53655.
So yup, wrong I’m afraid
not sure where