Meet the Henry- High Earner not rich yet

@PutThe as you say it doesn't make sense!

I'm also wondering why it's a problem when inheritance tax or care costs are payable on an asset that's been partially funded by taxed money, when loads of other taxes are payable from taxed income.

As an example, I have to pay council tax from my wages, which have already had tax and NI taken out of them. Same with VAT, some of which is payable on purchases I can't realistically do without. But apparently the portion of home equity that isn't unearned should be treated differently.

@Bubblesgun I’ve lived and worked in London myself in the not too distant past. In fact the only reason I don’t still live there is because I decided I would prefer to move to a surrounding area where housing and the cost of living was cheaper. So I fully understand the costs of living and working in London as a young professional. And yes there is competition for flats but someone like Henry is going to be in a very strong position to win that competition let’s be honest. And you can definitely find a one-bed flat without mold in it within zone 1-2 for that level of rent. He also doesn’t have to rent (or wouldn’t have to if he had saved hard previously or has access to the bank of mum and dad for a deposit), and could look at a mortgage or part rent/part mortgage scheme. I agree with you not all “Henry”s have access to the bank of mum and dad but many do and the article states that he does which is why I mentioned it. I don’t come from London and I was very downhearted for a long time thinking I was doing something majorly wrong as I struggled to understand why I couldn’t afford the lifestyle and housing options my colleagues seemed to have. But over time it became very clear that nearly all of them had been gifted part or all of their housing costs by their parents.

@waryclam “The ones who pay in the most do get the least back. That's the entire point of a progressive tax system.”

Errrr… is it? I’m not sure I agree actually - and I think this is why Henry is getting a bit annoyed.

The objective of a progressive tax system is that higher earners pay more towards public services so the burden falls more on higher rather than lower earners.

That those who pay in the most should get the least back… why? Should we not be funding equal services for all?

How do you know they are 'rich'? They both came from poverty, and when they bought their first modest 2 bed house they couldn't afford any furniture, they slept on airbeds and sat on garden chairs. No phone, a gas powered camping stove to cook on, old sheets for curtains etc.
They didn't have high earnings, my mum didn't work due to sustaining an injury which left 1 arm paralysed, so a single salary household. They just didn't spend much so had enough to pay mortgage.

Henry on his earnings could i actually buy. We bought in London zone 3 on combined earnings of much less than him. My brother bought in zone 4 London on a single salary not much above minimum wage (but did loads of overtime). But he chooses to spend 600 a month on food plus pubs eating out etc. Which he should be able to afford to do plus buy somewhere on his salary, but our tax system doesn't allow this.

I am on Henry's side, I think he should be taking home much more if his money, I think people should be able to keep more of what they earn in general.

Yes I know there'll be no inheritance. What we're discussing is what would happen if the state funded their care costs instead, so they could instead pass the value of their home on.

If you're talking about it being in part earned wealth, hopefully that means you agree that much of it won't be. They'll have paid absolutely no tax on that increase. Whereas if the state steps in for their care costs, lots of the burden is going to fall on earned income. I work much harder for my taxed wages than your grandparents did for their unearned equity (or indeed than I have for my unearned equity). So do you. Placing a greater burden on workers, many of whom will have no access to unearned wealth at all, isn't fair. The money to pay for their care has to come from somewhere, however sad it might make anyone.

And you seem to have missed that there are people sitting on unearned wealth who never paid much tax in. Someone who never earned much and made huge sums because of when and where they bought their house is not someone who paid in the most. There are a loooooot of them who've paid less in than Henry, or indeed you and I.

I don't know what you do, but there isn't a chance that being tied in to be paid a lowish salary for 3 years covers the actual costs of the healthcare training you received. If the value of a newly qualified person in that part of healthcare is so high and the NHS so underpays in the first three years, then private employers would be funding people to break that three year deal, and offer to pay them a bit more but have a longer commitment.

The reality is that had you had to have paid privately, you would not have been able to recoup the costs in three years even if you had been free to work wherever you wanted for three years. I can't think of any degree you could do where you have to pay the full actual fees where you could recoup the costs in three years, let alone something particularly expensive to run as a health care degree.

The ones who pay in the most do get the least back. That's the entire point of a progressive tax system. But why do you think your parents have paid in more than Henry is/will?

If you're saying it's because they had high earnings and shouldn't be penalized because this allowed them to buy a nice house i.e. because they're rich, this sort of the point of a Henry - he has the high earnings but he actually can't buy the house because he's not rich. Your parents should have to be paying more than Henry because they are richer than he is.

Is it 'fair'? Well it depends on what your view is of a progressive taxation system, but this is the society the UK has chosen to build.

There won’t be any care home fees to pay @Bushmillsbabe as explained this morning by @bookdook

But they haven't already paid tax on the income used to buy that house. They've paid tax on the income to used to pay the mortgage for the amount that they borrowed to buy the house when they first bought it. They haven't paid any tax on the increase in value. So by your reasoning, the only part that should be 'safe' would be the amount of the original purchase price.

But the logic doesn't work. Henry is paying tax on the income he uses to pay rent. He doesn't get to save that money and pass it on to his children. Why should he have to pay more tax to fund your parents care because your parents were in the position to buy a house, and he wasn't? Both have had to spend taxed income on housing throughout their lives, but somehow if that is a mortgage rather than rent it's more virtuous.

They don’t have “nothing to show for it” though, and they will be able to pass on significant wealth to the next generation. I don’t think anyone is saying that there should be inheritance tax of 100%, but it should certainly be higher than it is now.

It makes no sense that people’s earnings are taxed to the hilt but unearned wealth is not. It is a disincentive to work, it entrenches inequality, it stifles social mobility, it reduces the tax take for the nation which has a knock on impact on all of our public services, it’s bad for diversity.

There will be no inheritance, as stated above it will all go on care home fees! I don't want nor need their money, but I do feel its unfair that tĥe ones who pay in the most get the least back, and vice versa.

It is at least in part earnt wealth. They paid tax on their mortgage, tax on upgrades to the property or did the work themselves, increases in value are not only due to house price increases, but also due to investment, in todays money they have probably spent at least 250k on extending and improving . There should be a way to offset all these at today's prices against any inheritance tax.

He can’t afford to save up for a deposit and the train costs would be high, so he may as well stay in London for the convenience.

He isn't real. It is an example showing how much less a salary of £100,000 is worth now than it was 10 years ago. He isn't looking for budgeting advice.

I find this really odd. There are loads of places where he could buy/rent cheaper and commute maybe 30-40 mins on a train and still afford to save.

Of course choosing to live in central London is ridiculously expensive.

I'm going to feel sad and demoralised if I'm expected to pay more in taxes so people who want to pass on their unearned equity to their children can do so. Speaking of the same people paying and paying again, which is what happens when we tax productive labour more than we do unearned wealth.

And it almost certainly is unearned, as the pp explained. There are vanishingly few properties that are worth the same in real terms in 2025 as they were before the spiralling of house prices earlier this century.

But they haven't paid tax on the increase in value. If they're currently 60+, they could have seen a significant six figure increase in the value of their home over what they paid for it. Some people's homes have earned them more than they have from working and it's all untaxed. Plus if owned by a married couple, the first £1M of value is exempt from IHT.

🤣🤣🤣

you seem to have 0 idea of the reality in London.

”he can easily move to another rental”
hum no. For every flat to rent there is competition. The demand is far bigger than the offer, often you need a super commute to afford your flat.
£2,000 wouldnt give you zone 2 for a 1 bed

“he can access bank of mum and dad”
sounds very presomptuous. Some people do earn 6 figures but have no access to funds from parents.

when you re a young professional living i. london is costly unless you live with pain for future gain. Each to their own, but there are some factors that you cant control such as rentals.

But they have already paid tax on the income used to buy that house, that 'debt' (and i use that term veey loosely) to the country has already been paid. They paid tax on the income used to extend the house which increases its value, they have worked to maintain it in a good condition.

And how about when that 'charge' on the house exceeds what's it worth? And then if my mum later needs care? There will be no inheritance, which I'm absolutely fine with, but they feel sad that after paying in for so many years and working hard, the country expects them to pay again and again. They wanted to leave the house to their grandchildren, and it is demoralising for them that after all their hard work, coming from nothing, they will have nothing to show for it. The same people pay again and again.

Nope, no state secondary education, my parents paid for private as state school didn't meet my brothers needs, and our local comp was so awful that I got a scholarship to private too. My degree - I was tied in to work for nhs for a lowish salary for 3 years post graduating to effectively pay back my uni fees. Parents paid for private healthcare due to long waits.

Why should Henry have to pay even more tax so that your parents can pass on generational wealth to you and your brother?

this is the crux of it isn't it

Thing is, tax has to come from somewhere. Our population pyramid is such that we can't assume we're going to be able to keep getting what we do from taxing labour. I can't say I'm too keen on paying more tax so some people can eventually keep a larger share of their parents primarily unearned equity. Which it almost invariably will be, regardless of whether those parents also happened to work hard or not.

It should be taken from you because there is no reason you should tax someone who has money because they earn a high salary, but not tax someone who has money because they managed to buy a house and that price has gone up lots. If anything the equity in the house as a result of price increases should be taxed more because people have done absolutely nothing to earn that.

It's great that you and your brother have managed to do so well coming from very little and of course that should be praised. You mention graduating though so you have had material support from the government because they subsidized your university degree (on top of health care and presumably state education).

I'm not advocating for Henry to pay less tax but absolutely there should be a charge put against your parents home for the cost of your father's care (and no it doesn't mean your mother will be homeless). Why should Henry have to pay even more tax so that your parents can pass on generational wealth to you and your brother?

Why are you assuming Ethel is working in the service sector? Ethel could be an admin assistant in a small office, she could be in marketing, she could be in basic HR. She isn't necessarily working to do something that actually helps Henry. She might be of course.

No one is saying that Ethel should be paid less or that she's somehow less value to society than Henry. But the issue is Ethel thinks that Henry is being unreasonable not wanting to live in a house share at 34 when he is a high earner. The reason that Ethel is able to have the lifestyle she currently has is because Henry is a net contributor to the public purse. Ethel's lifestyle is being subsidized by Henry's taxes. If Ethel stops doing her job, then someone else does it. If enough Ethel's stop doing their jobs, then salaries will increase or cost of living will increase. Henry can absorb that, or if he can't he can decide to move to a cheaper area and take one of those jobs himself. But Ethel can only stop doing her job if she is able to live without a salary coming in, which is only possible because of the benefits system (paid for by Henry). Or if she is sitting on substantial assets that she can sell to fund life without a salary, which would mean she has substantial untaxed wealth.

This is how it should be - we intentionally have a progressive taxation system which means some people are net contributors and some people are net beneficiaries. Ethel isn't necessarily earning less than Henry because she works less hard, and yes some Ethel's are providing core services.

But Ethel needs to accept just how much she needs Henry to keep doing what he's doing. And people saying Henry should move out of London are missing the point that the UK can't afford for him to do that. And we should recognize that if you are in the top 4% of income in the UK, and advise is that you should be living in a house share and shopping at Aldi, something is going very very wrong because thinking you can afford your own flat in London is just unreasonable.

Life gets much, much worse for Ethel if Henry decides that he's going to go and work somewhere else for less money but a better standard of living. But if you were Henry's friend, you'd be telling him to cut his losses and move because it's probably the only way he's going to build up substantial wealth.

We are loosing the incentive to work hard, progress, which is a very dangerous place for our country to be. We are stagnating due to attitudes and policies which penalise hard work and progress.

We never recovered from the 08 crash and high housing costs & wage stagnation are stifling productivity particularly amongst young people.

People who work hard all their life, take very little, pay in a lot, then end up with nothing to show for it, which is very wrong.

What do you mean nothing to show for it though? Your parents had children who were educated, have received healthcare & potentially social care.

I think we need to reframe what we think is nothing...