Viewing 40 posts - 201 through 240 (of 287 total)
  • Have we done the potential hike in N.I. payments?
  • Premier Icon gonefishin
    Free Member

    Well that would put my partner and I in the not millionaires category 😉

    Premier Icon thegeneralist
    Full Member

    And also I’d exclude pension funds from it. However I fully accept that I’m probably wrong in this.

    To me a couple with a niceish £500k semi in the southern ‘burbs of Manchester and £250k in each of their pension pots are not millionaires in any useful definition of the term

    Premier Icon matt_outandabout
    Full Member

    That seems a pretty dodgy definition of a millionaire TBH. I imagine a lot more than 22% are in that category

    I think it reflects how much wealth many people have – and how many expect their ‘asset’ of a home to be protected at all costs, if not rise in value constantly….

    Premier Icon gonefishin
    Free Member

    And also I’d exclude pension funds from it. However I fully accept that I’m probably wrong in this

    Why? It’s an asset like any other. In fact the two biggest pots of wealth in the country are property and pension funds.

    What other definition of millionaire is there anyway other than “are your total assets worth more than a million pounds”. A quick google shows that in the U.K. if you have assets of more tha £300k then you are above average for the U.K. These people, myself in ncluded, may not feel ric but it doesn’t mean we aren’t.

    Premier Icon poly
    Free Member

    Total value of all assets seems like a pretty good definition to me. What else would you propose?

    It does – except that it’s the first time I’ve ever seen someone judge if you were a “millionaire” based on a household – i.e. in many cases they will be “half-millionaires”! Probably also misplaced to include the value of your home in there, since its not like you can liquidate all of that without causing yourself a bigger issue!

    I think that’s actually the problem when people talk about “wealth taxes” – its doesn’t really make sense to apply a tax which makes people less wealthy so they have less wealth tax to pay the following year! Its far more logical to have a capital gains tax – that taxes the money you make from your wealth, but that should be taxed similarly to income tax. It should also apply to homes (and get rid of stamp duty/land tax). Tories are never going to do that – and I suspect even Labour would be too scared. Personally, I’d massively overhaul inheritance tax too – I don’t care if you might have already paid tax on it (that’s certainly not always true) – I’d have no objection to getting rid of the lower limit, or making the limit apply per recipient rather than per estate (encouraging it to be shared more widely). And I’d make it apply on any (large?) disposal – so there’s no way to give it to your kids early to dodge it.

    Premier Icon gonefishin
    Free Member

    Its far more logical to have a capital gains tax – that taxes the money you make from your wealth, but that should be taxed similarly to income tax. It should also apply to homes (and get rid of stamp duty/land tax).

    I totally agree with you and said much the same thing earlier in the thread.

    Premier Icon grum
    Full Member

    Its far more logical to have a capital gains tax – that taxes the money you make from your wealth, but that should be taxed similarly to income tax. It should also apply to homes (and get rid of stamp duty/land tax).

    Agreed. It will never happen though.

    Premier Icon thegeneralist
    Full Member

    Why? It’s an asset like any other.

    Well, it’s patently obviously not ” like any other”. Apart from the fact I can’t currently lay my grubby paws on it, even once I’m 55, if I try to lay my grubby paws on it then I’d end up paying so much tax on it that I ( by which I mean our theoretical millionaire) wouldn’t be a millionaire any more.

    PS, don’t get me wrong, being a millionaire by any GBP definition ( apart from the stupid couples definition obvs) is a very lucky place to be.

    Premier Icon gonefishin
    Free Member

    Okay so there are some rather niche tax rules surrounding pensions but those rulesgenerally act to increase its value rather than reduce it. Beyond that it’s a pot of money nested in the stock market like any other and as such has value.

    Premier Icon thegeneralist
    Full Member

    Bob is 60 and lives alone in his house worth £600k. He has £450k in his ISA and sod all other assets.

    Betty is 60 and lives alone in her house worth £600k. She has £450k in her pension pot, from which she draws down an income of £16k each year and sod all other assets.

    Brian is 60 and lives alone in his house worth £600k. He gets £20k a year from his luvvly final salary pension, but has sod all assets.

    Which of them are millionaires?

    Premier Icon gonefishin
    Free Member

    Pretty much all of them, initially at least. Not exactly sure what your point is.

    Premier Icon footflaps
    Full Member

    Which of them are millionaires?

    All three of them have roughly equivalent pensions / savings which could easily be taxed. The fact they’re held in different structures doesn’t change anything, they all have a pot of money sat behind them (assuming the final salary is funded and not a civil service one).

    Premier Icon mefty
    Free Member

    Which of them are millionaires?

    All of them. The pensions are going to be taxed in full, the ISA isn’t but then it has been built up out of post-tax income whereas the pension comes out of pre-tax income. To the extent wealth taxes exist in other countries the only one that would be subject to a wealth tax is Bob in respect of his ISA. Wealth taxes are expensive to collect and distort efficient allocation of capital. Seriously dumb policy.

    Premier Icon thegeneralist
    Full Member

    All of them

    Bollocks. No way Brian is a millionaire. He’s got a £600k house and that’s it. The rest is just future income which he may or may not get.

    Premier Icon footflaps
    Full Member

    He’s got a £600k house and that’s it

    No, he has a £600k house and entitlement to £20k a year for life and probably £10k a year for his wife if she suceeds him.

    The actuaries of his pension fund will have a large sum invested to pay that benefit, the value of which is pretty easy to calculate (all heavily regulated). The fact he can’t see that large sum in an online account doesn’t mean it doesn’t exist. If he dies after a couple of years, the fund makes a profit (on him), if he lives to 120, they make a loss, but overall the fund will break even.

    So, if you wanted to tax it with a wealth tax, the simplest would be to just tax his annual pension a proportionate amount, or you could make the actuaries pay a % and they would then reduce his £20k a year by a small amount to reflect the fact his allocated investments had been diminished.

    Premier Icon mefty
    Free Member

    Brian is actually probably the best off, an actuarial valuation of his pension is likely to be far greater than £450,000 and I would guess more than the £100,000 more so greater than the tax advantage that the ISA holding has.

    Premier Icon footflaps
    Full Member

    Using annuity rates for a 60 year old man, Joint life 50%, 3% escalation, no guarantee (not quite as good as a final salary but close enough) we get £2,287 per £100k, so £20k / 2.287 * £100k = £874,508 lump sum equivalent.

    So in terms of wealth, he’s actually the best off and should be taxed the most by a wealth tax.

    Premier Icon homer
    Free Member

    Brian has no access to the capital and most final salary schemes are already in deficit. How is he to pay a wealth tax when earning 20k income. Much better to tax his estate and let him live in peace. We need to start taxing the dead, not the living!

    Premier Icon tjagain
    Full Member

    Some thought provoking stuff here.

    I do not mind paying more tax to improve public services – I think we in the UK do not pay nearly enough tax.

    However I am n the position of being income poor but capital rich which puts me in an odd situation.

    So I am not sure what would be the best way to tax someone in my position. I own outright the flat I live in. I own outright a small flat I let out. I have a bunch of capital (low 5 figures)

    I will pay some GCT when I sell the small flat. Not a lot – a few hundreds
    MY inheritance is below the inheritance tax threshold
    My income is low enough that I will not pay any ( or only minimal) income tax ( even including the rental income)

    Taxing that reduces the capital assets would soon reduce my income to the point I would need benefits ( as I lose the rental income)

    So while its obvious I am rich by the standards of most of the UK in terms of my capital its hard to see how I could pay more tax without either reducing my income to below benefit levels or without eroding my capital which over time would have the same effect

    Just wait till when I die? What I have to leave will be above IHT levels

    Premier Icon poly
    Free Member

    TJ – only above IHT threshold because it’s set where it is. What if either it was treated like income for the recipient (most tax efficient route would be to distribute widely in smaller chunks to lower income people) or was all taxed (if you want to be nice it could be on a sliding scale although I don’t think that’s needed). Special rules required for couples; children under 18; and where someone is still living in a house they inherit (it could just be added as a floating charge on the property though).

    Premier Icon gonefishin
    Free Member

    Brian has no access to the capital and most final salary schemes are already in deficit. How is he to pay a wealth tax when earning 20k income. Much better to tax his estate and let him live in peace. We need to start taxing the dead, not the living!

    Well there are actually ways to access that pot of wealth but you’re correct there shouldn’t and no one is really proposing a wealth tax on Pension income although I think NI should be charged the same as if he were earing 20k and 50 years old!

    However I am n the position of being income poor but capital rich which puts me in an odd situation.

    It’s a far from uncommon position exacerbated by the large rises in property prices in the last 30 or so years.

    I will pay some GCT when I sell the small flat. Not a lot – a few hundreds

    TJ whilst I obviously don’t know your circumstances, are you sure you’ve got your figures right? That would mean that you only gained about 15k in the value of your flat. I bought a (one bed) flat in Leith in 2000 and sold it in 2009 for a gain of around 45k!

    Premier Icon poly
    Free Member

    Betty and Brian both do pay tax on their pensions. I think there is a legitimate question if they should also pay NI (actually at 60 they might until they are 65/67? But should they then?)

    Premier Icon thegeneralist
    Full Member

    Footflaps, mefty, homer. It appears we are arguing/ discussing different. You’re going into loads of [ perfectly valid and interesting] detail about wealth and tax etc. All I debating was the strict definition of a millionaire. So I’ll leave it there.

    Just wait till when I die? What I have to leave will be above IHT levels

    Depends on your circumstances. I can’t recall if you were married or not? I presume not based on your statement…
    (Apols)

    Premier Icon scotroutes
    Full Member

    Good example TJ. We need more outliers when considering these options. Have you taken into account that all three incomes – NHS Pension, Rental and State Pension (when it comes)?

    Premier Icon tjagain
    Full Member

    NHS pension £550 pcm. Income from rental approx £300pcm ( dunno exactly could be more – probate and all the financials not sorted) 7 years until I get state pension

    gonfishing – its only been rented a few years so by my understanding its only the increase in value since its been rented which is not a huge amount as prices have been flat here the last decade ( having gone up hugely before that) also complicated by the fact I have put £12000 in cash into the property during the last 4 years thus vastly improving it.

    I was not married. My partner died and left everything to me. I have no dependents to leave it all to and if I die tomorrow my entire estate will be 3/4 of a million ish

    I am rather financially illiterate so not fully aware of everything here. Its a mighty mess. I suspect that settling Julies affairs may mean that there is going to be a calculation showing taxes are due on her income ( as the rental was owned by her alone)

    Its a decent example tho of assett rich and income poor. while I have no issue with paying more tax in general its hard to see how I could here without being badly compromised

    Premier Icon Del
    Full Member

    I think we in the UK do not pay nearly enough tax

    According to a lady from the IFS on this week’s more or less the UK is a ‘middling’ taxed country when comparing taxation vs. GDP. Apparently we’re higher taxed than any other country in the oecd.

    Premier Icon tjagain
    Full Member

    Del – that is nonsense. gawd knows what definition they are using to come up with that.

    We are much lower taxed than most european countries. Thats why we have crap public services.

    Premier Icon gonefishin
    Free Member

    I heard the same interview as Del. N.B. it is calculated as total tax take (so direct, indirect, corporation taxes etc) as a proportion of GDP.

    This is the link to the show.

    https://www.bbc.co.uk/programmes/p09vyy6h

    Premier Icon nickc
    Full Member

    Wealth taxes are expensive to collect and distort efficient allocation of capital. Seriously dumb policy.

    Not necessarily, depends on how it’s implemented and collected. Norway, Spain and Switzerland all operate them (with varying levels of capital gains property taxes and inheritance taxes). Look at the WTC (wealth tax commission) report Nov last year, it’s recommendations are pretty level headed and the return on a one off tax is staggering (hundreds of billions of pounds) and pretty popular, I doubt it could be done without reform to capital gains and inheritance though  Given that Sunak’s room for maneuver is limited, I can see this being an option, although I could understand why many wealthy folk in the S.E. would squeal about it.

    Premier Icon mefty
    Free Member

    Look at the WTC (wealth tax commission) report Nov last year, it’s recommendations are pretty level headed

    They don’t recommend an annual wealth tax because they don’t really work very well, instead they recommended a once off unannounced raid on people’s wealth, I think that is the very opposite of level headed.

    Premier Icon Flaperon
    Free Member

    To me a couple with a niceish £500k semi in the southern ‘burbs of Manchester and £250k in each of their pension pots are not millionaires in any useful definition of the term

    Depends whether you see the hike in NI as directly funding social care or, in reality, protecting elderly Tory voters’ homes from taxation.

    Premier Icon nickc
    Full Member

     instead they recommended a once off unannounced raid on people’s wealth

    They say nothing of the sort. Daft thing to write

    Premier Icon nickjb
    Free Member

    instead they recommended a once off unannounced raid on people’s wealth

    They say nothing of the sort. Daft thing to write

    Really?

    Seems to be reported a lot.

    https://www.withersworldwide.com/en-gb/insight/uk-wealth-tax-commission-publishes-report
    “The self-appointed ‘Wealth Tax Commission’ has published a report recommending a one-off wealth tax on total wealth”

    https://home.kpmg/uk/en/home/insights/2020/12/tmd-wealth-tax-commission-final-report-recommends-a-one-off-wealth-tax.html
    “The Wealth Tax Commission has published its final report and concludes the UK could benefit from a one-off wealth tax on all assets.”

    Premier Icon kerley
    Free Member

    Depends whether you see the hike in NI as directly funding social care or, in reality, protecting elderly Tory voters’ homes from taxation.

    That is exactly what it is. Not sure what measurements will be used to evidence improved social care but I will be amazed to see any improvement at all.
    People having to use up their assets to fund their own care home bills is not even part of the social care problem.

    Premier Icon nickjb
    Free Member

    All I debating was the strict definition of a millionaire.

    Its an arbitrary level. Maybe replace “millionaire” with “wealthy”. All of those people are wealthy by pretty much any definition so are a reasonable target for a little more tax

    Premier Icon tjagain
    Full Member

    on using the house to pay for care.

    If you do not do this a large tax increase would be needed.
    The only people to benefit from not selling a house to pay for care are the children of middle class parents who still get their inheritance.

    Why should my taxes pay for someone else to inherit?

    its one of those situations that seems unfair however you look at it

    Premier Icon mefty
    Free Member

    To prevent avoidance through forestalling, the tax must not be pre-announced.

    Conclusions and Recommendations Section 6.1

    Premier Icon nickc
    Full Member

    They recommend that it’s not pre-announced. ie. don’t tell people in 2021 that there’s going to be a wealth tax in 2025. As that will encourage avoidance measures by those wealthy enough to implement them. They recommend decision of an assessment date on or before announcement date.

    It’s not an un-announced raid on people’s wealth at all.

    Premier Icon kerley
    Free Member

    I don’t think people should need to fund their own care. They are in care because they are ill, i.e. having dementia is an illness and needs caring for just as any other medical conditions does. Should all be within NHS.

    Whether wealthier people are taxed more to pay for improved NHS is separate to that but this change seems to be focused on protection of wealthy peoples houses more than anything.

    Premier Icon thegeneralist
    Full Member

    They recommend that it’s not pre-announced. ie. don’t tell people in 2021 that there’s going to be a wealth tax in 2025. As that will encourage avoidance measures by those wealthy enough to implement them. They recommend decision of an assessment date on or before announcement date.

    It’s not an un-announced raid on people’s wealth at all.

    Eh? Makes no sense.

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