Rishi Sunak’s capital gains tax review may usher in higher taxes on wealthy

https://www.theguardian.com/money/2020/jul/14/rishi-sunaks-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 **** 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

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..