My mate works for the civil service. They pay in 28% on top of his contribution (8% I think).
Wealth Tax in the UK
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In the latest episode of the United Hour Podcast, Nik (@Rood) and Imran (@Annihilate Now!) look forward to a new life under Ruben Amorim. What system will we be playing? What players will impress? and how will it all go? We also say goodbye to Ruud Van Nistelrooy and review United's 3-0 win at home against Leicester City.
We have that. It's called 'equity release' and it's the next major financial scandal brewing, in my opinion.
It's better for me to keep my mortgages for the tax benefits. I get to write off all kinds of expenses and depreciation is ace too. I'm about to refinance though as the rates are too good to ignore now. I'll pull some money out and use elsewhere for a better return.
Everyone is envious of the civil service Alpha scheme. To be fair, I console myself that they get paid like shit for the amount of work stress they have to endure.
If the oldie times it right then doesn't it work out well? It's only the kids who get screwed out of their inheritance?
There's generally a lot of nasties lurking in the small print.
Well obviously in that situation, it would be extremely unfair to ask that 80 year old to pay 2k a year for 5 years, but that isn't what the majority of people in here are talking about. My specific points are related to some people saying that earning 150k a year doesn't make you wealthy.
Yeah you get all kinds of tax perks like that- we just get taxed on everything, making it barely worthwhile. We might be renting our place out if we potentially move this year, so will be asking advice on that in a few months hopefully.
With equity release, you tend to get a shite lump eroded by charges and the provider creams off any rise in property value when the oldies croak it.
The problem is that tens of thousands of pensioners in SE England will be caught by this purely because of property price inflation. I'm not defending people earning £100k+ who are moaning about having to pay more.
Then surely there is a niche for offering a much fairer version of the service?
Interesting question of how you calculate that for a wealth tax. I'm not sure on who is technically the legal owner/beneficiary of the property in the period between equity release and death, and whether the delayed liability would be able to be offset from the property price.
If they're sat on a £1m property but surviving on £80 a week then they'd be best advised to sell up, down size (in terms of value) and live far more comfortably. They could also pay the wealth tax too.
Yes, but I'm not sure it should be encouraged from a public policy perspective. It would be much more beneficial for oldies to sell and move out of the houses they've outgrown and free them up for families who need the space.
My mum has a flat worth 500k in London and lives on a small pension. She doesn't want to move though because her whole social life is in London and she would have to move somewhere new and start all over with making friends and whatnot.
That's actually a really good question. I'm sure that the insurers running the schemes will have something in the small print making sure they don't have to pay a share. If they took the amount due in tax off the end value of the property when the person dies, not sure who'd stump up the cash in the interim. Guess it would be the policyholder somehow.
Yeah it sounds easy, but you're asking an elderly person who's probably paid tax all of their lives to move out of the family home, away from their established friends and networks, to live in a shitter area. It's not exactly a silver bullet to the problem.
I keep threatening to put my Mum into a home but I fear for the other pensioners if I did that.
There will be losers no matter what tax grab is implemented. Old people sat on large assets have options where many in society have none.
Agree with all of that, it's just that for me the name is a bit misleading in that case (not sure if it's proposed as an actual "wealth tax" either). Because it seems like it's the (upper) middle class that's gonna be bearing the majority of the the cost and not exactly the extremely rich (not sure that that was the aim to begin with, mind). It's basically coming down to taxing those who can afford it to dig yourself out of a hole, and whether that is fair or not is a different discussion.
I mean, this is a reach. They could just move into a smaller place locally?
So you support the idea of winners and losers in society then. Like those who get good jobs and homes and those who don't.
The response to that argument is the same as when people ask why those in council houses in central London can't be moved out to cheaper areas to free up billions of pounds of property.
I guess if the government forces the elderly into moving house it can scoop up more cash in stamp duty too, win win.
Why don't we just burn the elderly as an untapped and abundant source of fuel? If a government policy is to potentially turf tens of thousands of pensioners out of their homes, then it probably needs rethinking.
My mum's bloke is ablebodied and able to look after hopefully. I occasionally threaten my wife with moving my mum into my spare room.
Yea I think that’s part of the problem, it’s semantics around the word “wealth” which most people automatically connect to “high wealth” and think of the super rich rather than it simply meaning assets less liabilities or “net worth” which is what it means in this context.
It’s essentially just distinguishing it as being a tax on accumulated assets rather than the movement of money, be that as income or sales.
I think the point about forcing people to raise cashflow from illiquid assets is a fair concern.
Just taking the case of property, why require people to pay 1% of the value now? Why not just say the government effectively owns 1% of all property in the UK and require payment of 1% of the sales price whenever someone sells a house. The net effect is the same and the government is far more able to cashflow this than an individual, and at a far cheaper borrowing cost.
EDIT: I mean 1% of the realised price, after paying back the mortgage.
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It’s absolutely a valid concern that would need to be factored in to the design of any policy, but it’s still fairer than alternatives.
Your suggestion there could work, but I do think it would massively reduce the yield because a huge portion of the population won’t be moving house at any point in the next 10+ years, if even ever in some cases, so it doesn’t solve the immediate problem.
What's the alternative? Young people bear the burden of cost and be worse off than their grandparents?
There isn't really an immediate problem. The government can borrow at historically low rates.
It can borrow for 10 years at 0.62%, and 30 years at 1.22%.
If you send 2/3 of people out to work without higher education and only 1/5 of the current levels to university we could have free university. Would you want to swap to that system?
Bolded part; why?
That would be more a punishment for me, not her!
I don't know, but it's not like property wealth hasn't already been taxed, given it was bought out of taxed income and stamp duty paid.
The government can borrow at record low interest rates, so it's not an immediate problem. They'll probably look to erode the debt pile by trying to stoke more inflation.
The increase in the asset price, hasn't been taxed, isn't that the point? I am not agreeing with either way but you purchase a house twenty years ago and haven't sold, what tax have you paid?
No you haven't paid tax on the price rise, but if you're buying out of taxed income and are taxed on the way in, do you think further tax is really warranted? We are a high tax country as it is. Target corporation tax, not the average Joe.
Hope they listen to that recommendation, it sounds sensible. Lower the higher rate tax threshold, surely that can grab a decent chunk of money.
You think targeting it at people earning below £50k is fairer than at people with a net worth in excess of half a million?
Settle down Jippy. Is there even any evidence that there are tens of thousands of property rich but impoverished old people that this would affect anyway?