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 have 20+ years in large corporates - nobody's talking about move, they just do it. In the last few years tens and tens of my immediate colleagues on 150k+ packages left UK or took early retirements. Their jobs moved abroad. Immediate loss to HMRC from income tax and NI is at least £2m pa - I know packages due to nature of my job. This is before we take into account loss of their money spent on goods and services here.

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

Sensible suggestions. Things like the changes to how private equity carry is taxed. I'd just have all income taxed on the same basis with some sort inflation adjustment on gains but the same inflation adjustments they apply to benefit and minimum wage increases!

Not necessarily- that only works for higher rate tax payers who won’t be higher rate in retirement. That reduces the benefit and incentives of saving a lot which is not desirable. Lots of people won’t bother saving if the incentive is just deferring taxable income.

I have been a higher rate taxpayer at times but I might be in retirement too. I would save elsewhere or not at all if pensions were not tax advantaged with 25% tax free so I’m guaranteed a benefit.

The reason tax laws are so complicated though is because some people try to game the system. Making them less complicated would mean even more people could avoid tax when we don’t want them to.

Dont agree with any tax rises, except maybe inheritance tax. And I would stop the loopholes that have enabled my staunch labour supporting relatives to keep as much money via their properties as possible.

CGT on the principal residence is doable if there's a decent allowance, say £5k or £10k per year you've owned the property.

CGT in general should be charged at people's marginal tax rates. It's silly that hedge fund managers are only paying 28% on billion pound deals.

Plenty of people use the tax free amount to pay off their mortgage. If they weren't allowed to do that, they could be loosing a far higher amount depending on interest rates in the future.

This.
I am liquidating assets to move abroad.
Its laughable to assume that increased tax receipts would lead to better public services -would just be public sector salaries increasing and leading to inflation.

I really dislike the idea that unearned income is somehow the equivalent of sitting on your arse doing nothing.

Investment = risk. That's why CGT rates are lower. They reflect that someone has taken a risk to invest their own (often, post-tax) cash to help grow the economy.

A windfall tax on top level civil service pensions.

From the Taxpayers Alliance

Key findings

• During 2020-21, 187 of the most senior civil servants had a cumulative pension pot of £122.9 million. This is an average pension pot of £657,128 in 2020-21. Of these, 38 civil servants’ pension pots are worth more than £1 million.
• Excluding those who have since left, the civil servant with the largest pension pot is Sir Philip Barton, permanent under-secretary of the Foreign, Commonwealth and Development Office. His pension pot was valued at £1,690,000.
• During 2020-21, the mandarin with the largest annual pension was Lord Sedwill, whose pension pot was the equivalent of £102,500 per year in retirement. This is over three times the median annual pay for full-time workers in the UK in 2021 (£31,285).[7] The average pension for departmental heads upon retirement was equivalent to £39,904 per annum.
• 94 of the civil servants will earn a lump sum upon retirement. The average lump sum was £99,894 in 2020-21.
• A further five mandarins were entitled to annual pensions of between £80,000 and £95,000 per year. These are permanent secretaries Matthew Rycroft, Tamara Finkelstein, Christopher Wormald and Simon McDonald, and first parliamentary counsel Elizabeth Gardiner.

I agree with this. Inheritance should be taxed in the same way as income/bonuses. Inheritance is a massive problem when it comes to inequality as it tends to build with each generation.

It’s not on the cards but: Higher tax on heavy personal vehicles. Massive SUVs originally designed for farming/heavy loads do not belong in urban streets and if people insist on owning them then the higher tax should be annual.

Fact is the majority of tax take is raised by a low percentage of the working population already.

Seems to me the majority feel entitled to pay less, knowing others pick up the tab. When a question like this is asked, the undercurrent saying to increase taxes more by those earning more.

They are already paying more.

The super wealthy earners, (I would say an annual income excess of £500k qualifies), will always make financial moves to minimise or avoid tax, so it won't affect them. They are the people who can shoulder it but get away from responsibility.

Personal tax allowance should be raised by perhaps £5k, which proportionately would help lower income earners the most.

Thereafter perhaps the starting rate of tax should be 30%, and the tax burden would be shared more equitably.

The burden cannot be always passed up the chain, when that section already subside the majority. They are also less likely to be net beneficiaries of public services, so is grossly unfair to place any higher burden on them.

Removing the 25% tax free from pension lump sum would remove most of the incentive for lower rate tax payers to pay money into a pension.

They (I) may as well just put it in an ISA instead as they are unlikely to have more than £20k p.a. floating around spare. Which the government would hate as the ISA savings would be accessible at any age

I would support CGT going up to 25%, but not on primary residences as I think it would be a huge barrier to older people downsizing, which we actually should be encouraging. I would support the removal of the IHT exemption on pensions. I would support the re-instatement of the lifetime allowance on pensions at about £1.5m.
i would also support an increase in all rates of income tax by 1%.

I would (eventually in some cases) be affected by all of those. I think it is easy to support taxes you wouldn’t pay, so I haven’t mentioned any that wouldn’t apply to me.

I agree. Because whilst the money that you put into a pension is income, whilst it grows in the pension that is mainly capital growth. Which at the moment is taxed at much lower rates than income tax. Whereas all money that comes out of a pension is taxed as income, after the 25% tax free. So removing the 25% tax free allowance would mean (ignoring timing differences) that you could easily pay more tax by saving into a pension than outside it!

Labour governments. Seeing how many times we can tax the same pound of earnings.

Yes good point on the downsizing.

My plan at the moment is to sell, and then buy a house £100k cheaper and downsize when I retire, to free up cash. If I have to pay both stamp duty and CGT on the transactions, there is little point in doing it.

Put income tax rates back to what they were for the first 7 years of the Thatcher government: 60% top rate for the rich, 30% basic rate for the rest of us. Taxes today are far too low to sustain basic levels of public services.