“Tax the wealthy” (RR budget) what does this even mean?

Just read in The Times that she expressly ruled out a property based wealth tax at the IMF in Washington, though, so I think everyone here is panicking needlessly. I think she’ll raise tax on the higher rate tax band, currently 45%, but may go up to 47% - maybe going higher still to a straight 50%. People who are tied to the UK will have to suck it up, but a percentage who are not will leave. Some corporations may have to mitigate it with payrises next year to soften the impact and keep employees, so Labour will lose their support too (if they still have it after the NI fiasco).

I do think this may be her last budget. I think she will be gone in due course, in part as a last ditch effort by Starmer to save his position. Not sure that will work, though. I doubt he’ll be standing at the PM at the next GE. I’d be surprised if Labour stay in for the full 5years as at some point Starmer will try to save his skin by timing a GE when he has an uptick in approval or when he knows (I think like Sunak knew) that things were/are only going to get worse before the GE so best bail sooner rather than later and let Reform/Tories deal with the mess.

Really? If that’s not just a rumour they are mad.

As somebody whose home in the Midlands is worth nowhere near £500k (not that much more than half that), I think that's a horrendously low value to have as the cut-off, if the rumours are correct.

Living in the South-East means that not only do you have to pay a huge amount more to buy a house than the equivalent house would cost you in most of the country, but you're then told you're rich because of that and then taxed even more?!

They always overestimate how much they will raise as they never seem to take into account behavioural change. I don’t think you will see a mass exodus but it’s just not the money spinner they expect

but if they put a tax on houses over £1m they will eventually reduce it so everyone pays - not because those people have left but because they can and they’ve got people used to the idea of this tax

Yes because the wealthy will just piss off leaving an enormous tax void that will be foot by the middle and working classes.

The rumour is they will be going after home owners whose house is valued over £500k. Basically taxing you to live in your own home! Imagine being a mortgage free retired couple getting slapped with a 2% of your house value 'wealth tax,' you'd be paying £12k a year just to live in your £600k house. I think part of the idea is to force old people into smaller properties to free up homes for families.

I have to say I've never been so concerned about an incoming budget in my life!

DH and I are often talking about where we will move to once the kids are fully independent and our parents are gone.

Realistically they are already out for at least two future GE's as Reeves/Starmer are so unpopular. If Labour are serious about winning the next GE, they both need sacking now, and they need to find some competent people to replace them.

Well, precisely. And the mortgage companies will lap it up as they’ll be making interest on it. Also is it a person-centred tax or asset tax. So, say, my DH and I jointly own our property as tenants in common, is the tax us jointly due on the total lump sum? If, in the above example where we have 800k equity, could we simply change to joint tenants, so we both own 50%, ie only 400k… and would be each be exempt?

All the 2-5m house where I live are unlikely owned by an individual but held in a family trust (something we are considering)… so how would they levy that tax?

I think whichever way she does it, RR will find it doesn’t recoup the money she thinks it will.

Exactly, taking out a mortgage is actually one commonly used means of reducing inheritance tax in some circumstances too as it can reduce the "net value" of an asset that has no other exemptions and the funds can be used to invest in an asset that does have exemptions, such as a business asset!

Nail on the head. Also don't forget the 20% VAT as well as employers NIC, corporation tax on profits, and a whole raft of ancilliary support services for businesses with head offices in the UK from cleaning to IT supplies to property repairs to office equipment, to security systems etc etc. It makes no sense at all to increase big business taxes that may encourage them to relocate elsewhere or not move into the UK. Ireland have it spot on. Labour havn't a clue.

any tax they put on ‘the wealthy’ will end up being extended until it hits everyone

And if they do deduct mortgages from wealth, how many people will then mortgage themselves up to the hilt to minimise their tax exposure and have money to spend. I have friends in Norway where there is a wealth tax and property value is actually the valuation of the equity so they make sure equity is minimised.

Ok. My error.

As I have said before, if Reeves imposes CGT on main residences, it will compel the banks to re-mark their mortgage books, which in turn, will reduce lending multiples, and broader lending availability. Some homeowners will be forced into technical breach of covenants.

The law of unintended consequences in action.

This is my issue - given a tax on wealth/property would likely see the immediate devaluing of those houses would you be allowed to apply for a revaluation every year reduce the tax charge on your rapidly depreciating asset? Plus how does it work if you, say, have 1.5m property, but the mortgage is 700k? Would you only pay a wealth charge on the 800k that you actually own? Because to tax you on the notional wealth of ‘owning a 1.5m house’, when you don’t really, seems extraordinarily unfair.

Do you understand a cost of carry, without resorting to google?

Yes and the stalling impact @EmpressoftheMundanetalks about.

The UK tax system is overly complicated and poorly drafted in a lot of cases. Unintended drafting means businesses make decisions to move activity out. Cliff edges mean people work less, not more. Increased employment taxes mean UK staff become much less attractive than staff in other countries.

but this government don’t seem to be able to look at cause and effect. The problem they have is that the black holes are computed based on forecasts and that Nic decision has fed into the black hole. So put up taxes then impact employment/growth and forecasts grow the hole despite a short term boost in tax revenue. So we are going to end up in a death loop

If Reeves imposes CGT on main residences, Labour will be out for a multiple of 14 years.

No question.

What worries me is the talk about taxing pension pots. Public servants have protected pensions which are good value and protected but the rest of us are not going to be so lucky from what I’ve read with talk of taxing the 25% and cutting allowances; it’s all very scary.

‘You’ are you reading the posts. It’s another poster. And now the tax paid here is gone. That’s the loss.

Any capital gains on housing would distort the market and create negative, secondary effects. Everyone would hesitate to move. Old people wouldn’t downsize, young people would find it hard to move for jobs. People in the Southeast who had to allocate more of their salary to housing with the expectation of downsizing upon retirement and living in part on the proceeds (since high housing costs meant less could be saved in pensions) would be screwed.

The answer is not CGT on main residences, but to build adequate amounts of housing.

You relocated as a tax avoidance measure

I mean if she does tax 'gains' on your main property then quite frankly who will be able to move ever again.

You sell you 2 bed house for 200K. You pay out estate agents fees, removal fees, solicitor fees, a lump to the goverment in tax on your 'gains'. You then look for another similar house for 200K except now you've only got 170K to spend (made up number). So you find a house and now you have stamp duty and more solicitor fees and surveyor fees potentially. So these taking your spending pot to 150K.

So now moving from a 200K house to a 200K house costs you 50K. The biggest part going to the goverment. Look at how well increasing house 'wealth' is working out for them.

And how often are you going to have to cough up? Once? Every five years? On any gain?