Tax rises - which ones would you support?

[YaWeeFurryBastard]

I will preface this by saying we are a married couple, both well into to higher rate tax bracket, homeowners, saving for pensions and hoping to have two/three children, so this is not a post try and attack people I perceive as “richer”.

I’m interested to know what tax rises people would deem “fair”?

For me I’d say:

• CGT on primary residence, although I’m a bit nervous about what this would do to the property market
• Removal of the 25% tax free pension lump sum
• Removal of the tax free loophole for DC pensions under 75, unless to a spouse or dependent children
• IHT to be more like the Irish system which is based on the recipient I believe, I.e. I could receive say £500k in my lifetime, therefore a person leaving £1m to two people or £2.5m to 5 people would pay no tax

All of these would affect us, but it seems “fair” to me to tax unearned wealth and pensions have already had a lot of tax relief. I am against income tax rises and would really like the punitive rate between £100-125k to be removed.

What do you think? Any others?

I agree - all of those seem 'fair enough'. I think CGT will be raised across all categories. I may have to emigrate as a result, but I'm one of those non-'filthy rich' CGT exceptions that will unfortunately get swept up in the increases.

National insurance

An increase in taxes should be taken from the people who can most afford it.

I'm not sure about your idea regarding the 25% tax-free pension lump sum thing. I have several old workplace pensions scattered about, none of which amount to much at all, so if they were going to change this then they would perhaps need to think about a threshold whereby the lump sums below a certain figure are still tax-free, but above the threshold they aren't.

I would massively increase inheritance tax (and as things stand that would affect me, as there'd be inheritance tax to pay if both my parents were to die now). But even so, I'd really significantly reduce the threshold.

Agree with this - lots of people plan for lump sums to set them up for retired life - adapting property or downsizing costs etc.

So I think a capped allowance for that would be useful.

I like the sound of the inheritance tax changes.

I'm not so sure about CGT on primary residences unless it doesn't apply to house moves - for example my friends live in a three bed in an area that spiked in value unexpectedly. If they were taxed on the increase it might really affect their ability to upsize in the same area near family support.

Have a super VAT for luxuries.

Super tax car tax increase for SUVs.

Inheritance tax increase and remove loopholes.

Make unearned income and earned income equivalent in taxation.

Doubt whether any of these will happen.

Frankly I'd rather the tax laws just got simpler so people could get away with less. A few simple rules evenly applied to everyone would be ideal.

One thing I would increase is the personal trading allowance.

£1000 is peanuts in side hustle terms these days. I'd double it at least.

If you advance search me you’ll see otherwise……

Absolutely none of them. Tax needs to be lowered.

You need to familiarise yourself with the Laffer curve. Lower taxes equal more tax receipts from here.

Tax in the UK is way too high and we have a brain drain underway.

Amen to simplification. I'm a qualified pensions actuary (albeit I've been doing something else for many years) and I failed to calculate correctly how much I could contribute to my pension without attracting extra tax (I'm lucky enough to have a knowledgeable friend that helped me out). But

As per OP, I've never understood why people could pass DC pensions on except to Partners or dependents.

But I find the question worrying. The tax burden keeps going up without public services getting any better and those high taxes DO have economic consequences...

I was in a gathering last night and people I have not seen for years and were ok are struggling. Only the super rich are doing ok it seems. Salaries are stale and only the ones childless are getting by. However, not even saving. The ones trying to sell houses nothing waiting for a recovery of the economy.
Taxes can’t be raised and if they do. I hope they kick the government in 4 years for the betrayal.

Tax needs to be streamlined and made easier to understand, with fewer additional allowances for this and that. Earned and unearned income need to be taxed equitably. Unspent pension funds should be treated as other investments as a minimum for IHT, they already benefit from a tax break as they're accumulated.

CGT on primary residences is not something I'd favour. It would almost certainly be gamed by those wealthy enough to afford tax planning at the expense of the working and lower middle classes.

I don’t agree re the pensions 25% tax relief. Pensions are not taxed going in but they are taxed in full when paid so if no 25% tax free then there is little incentive to save. And as a society we do need to incentivize people to save for their retirement.

I think NI and income tax should be amalgamated so that working people are not carrying an unfair advantage.

Interestingly a lot of these taxes impact pensioners. The current generation of pensioners (boomers) have done very well. Sadly it will likely not impact them but the next generation who have not benefited as much.

Increase taxfree allowance to £20000 and tax rate to - say - 22%. Increase tax on tobacco. Add £5 excise tax to disposable VAPES and VAT to 50% on all vapes with a £1000 licence fee to any shop selling vapes. Increase tax on gambling. Increase air passenger duty by substantial amount. Increase VAT on alcoholic drinks to 25% except where provided in pubs and so on for immediate consumption. @YaWeeFurryBastard

I’m quite familiar with it thanks, I’ve studied economics at a relatively advanced level. It’s not as straightforward as that and there are undoubtedly tax rises ahead under a labour government.

Surely the incentive is the deferred income? If I take the money now I’ll be paying 40 or even 65% (when I lose my personal allowance), whereas most of it will be more like 20% if I wait until pension age.

Absolutely none. Look at France and their new wealth tax, the country is just bleeding the wealthy, who’s going to pay your taxes then? Heard of brain drain? Who do you think has more opportunity to leave and work in more favourable tax regimes? The £1m worker or the £40k worker? These shortsighted posts are just laughable.

We’ll be long gone back to my home country by retirement (low taxes, no IHT). I’m taking all my money with me and my kids are getting all their inheritance, tax free. I worked for it.

Go ahead a tax all the vapes, junk food, gambling etc…

That’s a valid point re your friend, not sure how they’d get round that one. It just does seem a bit “unfair” how some people are able to make whopping tax-free gains through property and others stuck renting.

Of course I’ve head of brain drain. I’ve had a relatively long career in high powered industries, I’ve found people tend to talk a good game about moving overseas etc. but when it comes down to it they’d rather stay put and suck up the extra tax. The only people I’ve actually known to follow through and move are nurses, gas engineers etc.

Not saying this is you but I’d be interested to know the stats on the real brain drain.

None I’m not sure why mn is so pro high tax when it’s already high.

and this post sums it up

Just that clarify, I’m not pro high tax, I voted conservative. I agree that MN is pro high tax so thought it would be interesting to see where people thought th should come from. The ones I picked were ones that seemed more “fair” than others.

I particularly hate the marginal tax on the £100-125k bracket and including the loss of childcare, I’ll actually be worse off as my earnings increase, which is bloody bizarre.

I don't support any tax rises at all. All abovementioned ones will discourage financial prudence big time.

Before any tax rises we need to see a fundamental reform of welfare system where support is linked to previous earnings and time limited, eg. 80% or your salary for the first three months, then 50% for another 3-6 months (but sufficient to live off) and then stopped. In parallel reform of NMW so full time worker can live off it with no state support and couple of FT can have family. If business can't pay this it's not viable.