Wealth Tax in the UK

[Dumbstar]

I didn't know which forum to put this in or to use the Economics thread, so I've created this one from a social effect perspective. In other words, how the heck do I avoid it since Sunak is about to drop a one off stinker on us vulnerable middle class.

So I'm at a stage of my life where I have worked hard, paid every penny of tax since uni and I'm sure a bit more, got my parents to sell up to contribute to our current (and only) abode of which the mortgage is nearly paid, and in which they live too. I also have some pension built up, nothing I could comfortably live off when I retire unfortunately. However the number is big enough to affect my illiquid 'wealth'.

I've used a wealth calculator and I will be due a tax bill of a few thousand if Sunak goes ahead with the 500k band. What the feck is he thinking? I'm not rich because I have a house worth over 400k. If I sell it yes I'll be rich but then my elderly mum and my four kids will also be on the street.

So anyone with their finger on the pulse know how serious he is with this? There is one get out for me if I put my wife as joint tenant but is it too late for that now?

 

[Wumminator]

Should happen and would be great.

Won't happen.

 

[DoomSlayer]

If the UK government need new methods, I can share with them my idea of "Oxygen tax".

 

[ClaytonBlackmoorLeftPeg]

There could be stamp duty implications if you put your wife on the deeds.

there is one hell of a Bill to be paid. We live in London, and know people who have a far higher standard of living elsewhere in the country, earning less and living in a less expensive home.

Could be a very bleak budget on 3rd March.

 

[K Stand Knut]

I didn't know which forum to put this in or to use the Economics thread, so I've created this one from a social effect perspective. In other words, how the heck do I avoid it since Sunak is about to drop a one off stinker on us vulnerable middle class.

So I'm at a stage of my life where I have worked hard, paid every penny of tax since uni and I'm sure a bit more, got my parents to sell up to contribute to our current (and only) abode of which the mortgage is nearly paid, and in which they live too. I also have some pension built up, nothing I could comfortably live off when I retire unfortunately. However the number is big enough to affect my illiquid 'wealth'.

I've used a wealth calculator and I will be due a tax bill of a few thousand if Sunak goes ahead with the 500k band. What the feck is he thinking? I'm not rich because I have a house worth over 400k. If I sell it yes I'll be rich but then my elderly mum and my four kids will also be on the street.

So anyone with their finger on the pulse know how serious he is with this? There is one get out for me if I put my wife as joint tenant but is it too late for that now?

As I refuse to read the news because it depresses me, what is his plan??

One question to your specific plight though. How is your wife not a joint tenant in your house?? Did you not buy the house together??

 

[Classical Mechanic]

I didn't know which forum to put this in or to use the Economics thread, so I've created this one from a social effect perspective. In other words, how the heck do I avoid it since Sunak is about to drop a one off stinker on us vulnerable middle class.

So I'm at a stage of my life where I have worked hard, paid every penny of tax since uni and I'm sure a bit more, got my parents to sell up to contribute to our current (and only) abode of which the mortgage is nearly paid, and in which they live too. I also have some pension built up, nothing I could comfortably live off when I retire unfortunately. However the number is big enough to affect my illiquid 'wealth'.

I've used a wealth calculator and I will be due a tax bill of a few thousand if Sunak goes ahead with the 500k band. What the feck is he thinking? I'm not rich because I have a house worth over 400k. If I sell it yes I'll be rich but then my elderly mum and my four kids will also be on the street.

So anyone with their finger on the pulse know how serious he is with this? There is one get out for me if I put my wife as joint tenant but is it too late for that now?

The proposal is to let you pay over a number of years.

 

[Sweet Square]

I didn't know which forum to put this in or to use the Economics thread, so I've created this one from a social effect perspective. In other words, how the heck do I avoid it since Sunak is about to drop a one off stinker on us vulnerable middle class.

So I'm at a stage of my life where I have worked hard, paid every penny of tax since uni and I'm sure a bit more, got my parents to sell up to contribute to our current (and only) abode of which the mortgage is nearly paid, and in which they live too. I also have some pension built up, nothing I could comfortably live off when I retire unfortunately. However the number is big enough to affect my illiquid 'wealth'.

I've used a wealth calculator and I will be due a tax bill of a few thousand if Sunak goes ahead with the 500k band. What the feck is he thinking? I'm not rich because I have a house worth over 400k. If I sell it yes I'll be rich but then my elderly mum and my four kids will also be on the street.

So anyone with their finger on the pulse know how serious he is with this? There is one get out for me if I put my wife as joint tenant but is it too late for that now?

Should of worked harder tbh.

joke

 

[SinNombre]

Wealth tax in general is a good idea as long as it goes hand in hand with higher inheritance taxes and lower income taxes.

 

[MikeUpNorth]

I think it's unlikely they'll bring in a one-off wealth tax, partly because it would be an extremely work intensive, controversial and costly thing to do if only for a one off gain. And a permanent wealth tax seems unlikely from the Tories.

That said, if they did decide to do it, they'd have to come up with a way to deal with asset-rich but cash-poor households - especially if the threshold is below the price of an average London house - otherwise they'll have another poll tax fiasco on their hands.

Ultimately, I don't see it happening. I expect 'stealth' taxes such as:

• Freezing basic and higher rate tax bands in nominal terms
• Lowering the annual capital gains and dividends tax allowances
• Increasing capital gains tax rate to bring closer to income tax rates
• Restricting higher rate pension tax relief or lowering the annual allowance

The big one which they arguably should (but won't) do is to merge income tax and national insurance, thereby removing the exemption from NI that pension payments currently enjoy.

The UK tax system is mess and needs to be rebuilt from the ground up.

 

[F-Red]

As I refuse to read the news because it depresses me, what is his plan??

https://www.reuters.com/article/uk-health-coronavirus-britain-tax-idUSKBN2AF0K6

 

[K Stand Knut]

https://www.reuters.com/article/uk-health-coronavirus-britain-tax-idUSKBN2AF0K6

Thanks mate

So, simplistically, if me and the wife have assets of over £1m, we pay 1% tax for five years on whatever amount we have?

 

[F-Red]

Thanks mate

So, simplistically, if me and the wife have assets of over £1m, we pay 1% tax for five years on whatever amount we have?

Yeah in principle, how they get to the property element valuation will be interesting as there's plenty of people living in expensive houses that necessarily might not have the liquidity to pay a tax without selling their home.

 

[MikeUpNorth]

Yeah in principle, how they get to the property element valuation will be interesting as there's plenty of people living in expensive houses that necessarily might not have the liquidity to pay a tax without selling their home.

And for volatile assets the precise date and time of the valuation is critical. If you own stocks/commodities/bitcoin etc, it's possible the wealth tax is based on a calculation on say, 1st April at 12pm, and then the market happens to crash 50% shortly afterwards before the time comes to sell and pay the tax. Yikes.

 

[Dumbstar]

And for volatile assets the precise date and time of the valuation is critical. If you own stocks/commodities/bitcoin etc, it's possible the wealth tax is based on a calculation on say, 1st April at 12pm, and then the market happens to crash 50% shortly afterwards before the time comes to sell and pay the tax. Yikes.

True, but you're assuming they will use a date in the future, i.e. 1 April 2021, as opposed to one in 2020 for example. If they are going to use a cut off date in the future then it gives people a chance to move stuff/money around. Or in my case get my wife on the deeds.

To answer the other question above, there will be a solicitors fee (£199 ish) but no Capital Gains Tax or stamp duty from what I've read so far if I include a spouse in a joint tenancy.

 

[MikeUpNorth]

True, but you're assuming they will use a date in the future, i.e. 1 April 2021, as opposed to one in 2020 for example. If they are going to use a cut off date in the future then it gives people a chance to move stuff/money around. Or in my case get my wife on the deeds.

To answer the other question above, there will be a solicitors fee (£199 ish) but no Capital Gains Tax or stamp duty from what I've read so far if I include a spouse in a joint tenancy.

The further back in time they go to do the valuation, the worse the duration and volatility risk will be. Also, I could have given away, donated or lost some of the assets I had 3 months ago.

 

[Jippy]

I think it's unlikely they'll bring in a one-off wealth tax, partly because it would be an extremely work intensive, controversial and costly thing to do if only for a one off gain. And a permanent wealth tax seems unlikely from the Tories.

That said, if they did decide to do it, they'd have to come up with a way to deal with asset-rich but cash-poor households - especially if the threshold is below the price of an average London house - otherwise they'll have another poll tax fiasco on their hands.

Ultimately, I don't see it happening. I expect 'stealth' taxes such as:

• Freezing basic and higher rate tax bands in nominal terms
• Lowering the annual capital gains and dividends tax allowances
• Increasing capital gains tax rate to bring closer to income tax rates
• Restricting higher rate pension tax relief or lowering the annual allowance

The big one which they arguably should (but won't) do is to merge income tax and national insurance, thereby removing the exemption from NI that pension payments currently enjoy.

The UK tax system is mess and needs to be rebuilt from the ground up.

I can't see them introducing a wealth tax as it would directly whack the Tory heartlands. Sunak has already rejected it once too.

Far more likely they do one or both of the above imo. They'd have least impact on the poorest too (not that the Tories will give it a shit).

 

[MikeUpNorth]

I can't see them introducing a wealth tax as it would directly whack the Tory heartlands. Sunak has already rejected it once too.

Far more likely they do one or both of the above imo. They'd have least impact on the poorest too (not that the Tories will give it a shit).

Agreed. But those two both whack the Tory heartlands too. Pretty much any fair tax does as that’s where income is highest and assets are held.

 

[Jippy]

Agreed. But those two both whack the Tory heartlands too. Pretty much any fair tax does as that’s where income is highest and assets are held.

True, I just the property tax is too emotive- cash poor grannies having to sell the family home is a much more stark DM headline than a higher earner seeing a reduction in their pension tax relief.

 

[dal]

I didn't know which forum to put this in or to use the Economics thread, so I've created this one from a social effect perspective. In other words, how the heck do I avoid it since Sunak is about to drop a one off stinker on us vulnerable middle class.

So I'm at a stage of my life where I have worked hard, paid every penny of tax since uni and I'm sure a bit more, got my parents to sell up to contribute to our current (and only) abode of which the mortgage is nearly paid, and in which they live too. I also have some pension built up, nothing I could comfortably live off when I retire unfortunately. However the number is big enough to affect my illiquid 'wealth'.

I've used a wealth calculator and I will be due a tax bill of a few thousand if Sunak goes ahead with the 500k band. What the feck is he thinking? I'm not rich because I have a house worth over 400k. If I sell it yes I'll be rich but then my elderly mum and my four kids will also be on the street.

So anyone with their finger on the pulse know how serious he is with this? There is one get out for me if I put my wife as joint tenant but is it too late for that now?

If this did come into action and your house is debt free could you not put your house on your mothers name also and change the title deeds

Given your circumstances, it would be unfair if this applied to you.

Also if it’s 500k wealth I suppose that is net wealth, I mean they must be doing this by cash in the bank or company personal accounts.

I doubt they have the resources to conduct a nationwide real estate valuation programme.

 

[Sleigh]

You’d be annoyed if you’d paid a load in Stamp Duty, then got hit with a “wealth tax” on your property as well.

I could see people challenging it, should they try and implement it.

Surely a better tax would be to get the seller to pay stamp duty on property they sell, or even capital gains on property. They’d soon scope some tax back in that way.

 

[Rado_N]

I actually think this has legs and we may well see it happen. When you stack up the amount that needs raising and the various options to achieve it this is by far the least offensive method of getting there.

CGT rates is are a drop in the ocean, as a tax it just doesn’t bring in sufficient revenue and hiking it too high will have a detrimental impact as M&A activity will just grind to a halt.

Personally I think the most likely things we’ll see are marginal increases in the CT rate and the CGT rate because increasing CGT is an easy political win, and a one-off wealth tax which will allow for payments being made over 5 years.

 

[Rado_N]

Also, it’ll be assessed on net wealth, and I’m sorry but if you own a £400k home without any borrowings, and over £100k of net wealth elsewhere then you’re certainly asset rich at the very least.

 

[MikeUpNorth]

Also, it’ll be assessed on net wealth, and I’m sorry but if you own a £400k home without any borrowings, and over £100k of net wealth elsewhere then you’re certainly asset rich at the very least.

Depends on your age.

 

[Rado_N]

If people are sufficiently interested there has been an enormous study and report published on the concept.

The full 126 report can be read here - https://static1.squarespace.com/sta...2ff/1610414842497/A-Wealth-Tax-For-The-UK.pdf

And the 12 page exec summary (much easier read) can be found here - https://static1.squarespace.com/sta...01677/A-Wealth-Tax-For-The-UK_ExecSummary.pdf

 

[Rado_N]

Depends on your age.

Not really, no, if you have £500k plus in net wealth then you’re sufficiently rich that a tax on your wealth at a modest rate payable over 5 years is far more fair than any of the alternatives.

 

[MikeUpNorth]

Not really, no, if you have £500k plus in net wealth then you’re sufficiently rich that a tax on your wealth at a modest rate payable over 5 years is far more fair than any of the alternatives.

I don’t think any of the suggested plans have people with modest net wealth of £500k paying a wealth tax. The absolute lowest threshold I’ve seen starts at £500k.

A 65 year old with a house and just £100k in a pension pot is going to have a very meagre retirement, I’m afraid.

 

[Sleigh]

We can’t even assess Manchester City’s finances ........ how do we expect the Government to work out the net wealth of every individual with relative accuracy.

 

[LuisNaniencia]

Why not reintroduce the top tax rate for people who earn over 150k that the Tories were so quick to cut when they got in?

 

[Rado_N]

I don’t think any of the suggested plans have people with modest net wealth of £500k paying a wealth tax. The absolute lowest threshold I’ve seen starts at £500k.

A 65 year old with a house and just £100k in a pension pot is going to have a very meagre retirement, I’m afraid.

The first paragraph is confusing me. I said “£500k plus”, and the main suggested threshold is £500k. At the suggested rates a person with, let’s say £600k in net wealth would be liable to a total wealth tax of £1,000 per year for 5 years.

Forgive me but I have a hard time getting on board with the idea of increasing taxes on income or sales based on the above being too much to swallow.

 

[ClaytonBlackmoorLeftPeg]

Why not reintroduce the top tax rate for people who earn over 150k that the Tories were so quick to cut when they got in?

the highest rate tax payers make a big contribution already, and they are the ones who are in a position to take their wealth elsewhere...

It’s not just as simple as taxing the rich.

we have a hole that will take at least a generation to fill from everyone.

 

[Skills]

Phew, got lucky that GME didn't go to the moon

 

[sullydnl]

If the Tories are resorting to a wealth tax then things must be bad.

Makes sense as an emergency measure, I think. If it was structured as a one-off retrospective tax then it would be very difficult to avoid and wouldn't have the behaviour-changing effects that an annual wealth tax (or changes to other taxes) would.

If it was something they were planning to keep then there would presumably be more effective ways of taxing wealthier people.

 

[Dumbstar]

Also, it’ll be assessed on net wealth, and I’m sorry but if you own a £400k home without any borrowings, and over £100k of net wealth elsewhere then you’re certainly asset rich at the very least.

All sounds nice on paper don't it? Except I can't spend a single penny of it to feed my kids or keep my elderly mum warm. And when my mum has passed and my kids are grown and I need to draw my pension which looks nice and large now for tax purposes, it won't keep me or my wife warm either in our old age.

 

[Pogue Mahone]

I think it's unlikely they'll bring in a one-off wealth tax, partly because it would be an extremely work intensive, controversial and costly thing to do if only for a one off gain. And a permanent wealth tax seems unlikely from the Tories.

That said, if they did decide to do it, they'd have to come up with a way to deal with asset-rich but cash-poor households - especially if the threshold is below the price of an average London house - otherwise they'll have another poll tax fiasco on their hands.

Ultimately, I don't see it happening. I expect 'stealth' taxes such as:

• Freezing basic and higher rate tax bands in nominal terms
• Lowering the annual capital gains and dividends tax allowances
• Increasing capital gains tax rate to bring closer to income tax rates
• Restricting higher rate pension tax relief or lowering the annual allowance

The big one which they arguably should (but won't) do is to merge income tax and national insurance, thereby removing the exemption from NI that pension payments currently enjoy.

The UK tax system is mess and needs to be rebuilt from the ground up.

About fecking time!

 

[NotThatSoph]

I didn't know which forum to put this in or to use the Economics thread, so I've created this one from a social effect perspective. In other words, how the heck do I avoid it since Sunak is about to drop a one off stinker on us vulnerable middle class.

So I'm at a stage of my life where I have worked hard, paid every penny of tax since uni and I'm sure a bit more, got my parents to sell up to contribute to our current (and only) abode of which the mortgage is nearly paid, and in which they live too. I also have some pension built up, nothing I could comfortably live off when I retire unfortunately. However the number is big enough to affect my illiquid 'wealth'.

I've used a wealth calculator and I will be due a tax bill of a few thousand if Sunak goes ahead with the 500k band. What the feck is he thinking? I'm not rich because I have a house worth over 400k. If I sell it yes I'll be rich but then my elderly mum and my four kids will also be on the street.

So anyone with their finger on the pulse know how serious he is with this? There is one get out for me if I put my wife as joint tenant but is it too late for that now?

Taking "a few thousand" to mean the lowest possible, 2k, this means your net assets are worth £700 000. It's not rich rich, but you're almost a millionaire. Yes, a lot of it is illiquid, but you're just as rich as someone who chose to rent instead of own and consequently has £400 000 more than you sitting in their bank account or stock market or whatever. "If I sell it yes I'll be rich" doesn't make much sense, you'd be just as rich as you are now. If you need liquidity it would probably take around five minutes for the bank to lend you a couple thousands with your £400 000 nearly paid off home as security.

 

[Rado_N]

All sounds nice on paper don't it? Except I can't spend a single penny of it to feed my kids or keep my elderly mum warm. And when my mum has passed and my kids are grown and I need to draw my pension which looks nice and large now for tax purposes, it won't keep me or my wife warm either in our old age.

Whilst I sympathise with your circumstances there’s no denying that in order to face a liability under the proposals you have a significant personal wealth and the alternative options are far more regressive.

About fecking time!

All well and good in theory and I can fully embrace the rationale for wanting it but it won’t achieve much.

 

[Vidic_In_Moscow]

We pay so much fcuking tax as it is.

 

[Cheimoon]

We pay so much fcuking tax as it is.

Well, given levels of poverty in some areas of the UK, it's either not nearly enough or the government is grossly incompetent in its administration of socioeconomic support programs.

 

[Pogue Mahone]

All well and good in theory and I can fully embrace the rationale for wanting it but it won’t achieve much.

It will instantly resolve my burning jealousy. So, on that basis alone, would be a fantastic result.

 

[MikeUpNorth]

All well and good in theory and I can fully embrace the rationale for wanting it but it won’t achieve much.

Pogue’s just bitter over having to hand over a big wedge to the Irish treasury on his gains while we live it up on our sweet tax free returns.