To think if you own a £2 million house you are rich?

[lesley33]

I guess I am just surprised at those who think you can own a £2 million house and not be rich. Only 0.5% of sales in 2010/11 were for houses worth £2 million or more. Link below. So if you own a house worth this you are in a small minority of the population.

Yes I know its possible to be asset rich and cash poor (although you could always sell your house?) But AIBU to think anyone who has a house that is worth £2 million or more in the UK is rich?

www.propertywire.com/news/europe/uk-property-tax-prime-201202236204.html

"Friends are hard to find because people that have money are so materialistic (we are not into that at all"

But by God we want to keep our £2m house and not pay any more tax on it :o

Someone give me a house worth 2 mill and I'll admit to being rich even though our income isnt much
Having said if I had a house worth 200k at the mo I would feel lucky

whatmeworry We have a very large family therefore we need a larger house. We pay more than enough tax, quite rightly. I don?t claim child benefit, my children don?t go to state school, and we pay for doctors, dentists and prescriptions neither of us have ever claimed any sort of benefit. The area in which we live is prime commuter belt the houses are overpriced as a result, put in a different area our house would cost considerably less.

Whatme i am not sure there is a correlation between wealth & materialism.

you could live in a 150k house & always want to have a new car, designer clothes etc.

or live in a £1m house & be far less intersted in material objects.

tbh I think it si easier to not be materialistic when you have the money to buy those material objects - but choose not to.

Homebuyers should be able to reasonably understand the tax implications of buying a house prior to actually buying the house. Council tax, stamp duty, how much after-tax income they have available to pay a mortgage, etc - these are to be considered. I don't think that buying a 2M house means that you are so wealthy that you can easily cope with any post-facto tax that comes your way.

Not to mention that the house is purchase with after-tax income.
I agree that wealthy people have many loopholes at their disposal to avoid taxes, but why not close them rather than taxing wealth?

I agree that wealthy people have many loopholes at their disposal to avoid taxes

saski - which ones are you talking about?

There are quite a few people (mainly elderly) who live the South West and bought houses a long time ago which have increased greatly in value. As a result the council tax is also increasing. Many of these people have falling pensions and as a result are not rich. They struggle to pay their council tax. Yes, they could move house to a cheaper area but why is it that when anyone suggests that a poor person in a council house could downsize to free up a family home they are called every name under the sun, because that house is their "home" and they shoudl have the right to live there forever and a day among their friends etc, etc, but as soon as that elderly person is seen to be "rich" then suddenly all sympathy disappears out of the window.

wasabitillyminto- dividends, for one; being paid offshore, getting non-dom status, etc.

debsbear - Normally when peopel raect strongly to suggestions elderly people in council houses downsize, elderly peopel are being asked to move from a 2 or 3 bedroom council house which is rarely large, to a 1 bedroom flat. Of course people can see that that might be difficult for someone very elderly.

For a very elderly person downsizing from a £2 million to £1.5 million house will still be able to afford a reasonable amount of space in a nice area. tbh it doesn't seem as harsh.

Saski - non dom is not possible for most UK citizens, so i agree it should (& is) be reviewed but for most HR tax payers not relevant.

being paid offshore - again - i agree it should (& is) be reviewed but it is v specialist for most HR tax payers not relevant.

dividends - ok this is widely used but why do you think it is a tax loop hole?

Poor people aren't materialistic because they have no money as opposed to being well adjusted individuals who have their priorities right :o

Unless you are Mother Theresa or that couple from taht old BBC comedy series The Good Life, that leaves everybody else.

How can MNetters read and contribute to threads about moms complaining that other moms didn't bring a present to DCs party or how toe rag DH didn't buy her a anniversary present or how MIL bought a 2nd hand garment for baby DC AND THEN go on about how people with money are sooooo materialistic???

How is non-dom not possible for most UK citizens? All it requires is that you can move abroad for several months a year, for several years. And, how is being paid offshore "specialist"? I'm not trying to be confrontational, just wondering what you mean by this.

Dividend tax rate is, something like 20% and that's why I view it as a loophole. It's a much lower rate than the maximum income tax rate.
I think this attempt to target the wealthy is misguided, it should be moved to the income tax or capital gains side.

^^I guess I should clarify and say, how is this not possible for most WEALTHY UK citizens?

on non dom:
www.telegraph.co.uk/finance/personalfinance/offshorefinance/7465517/Non-dom-status-do-you-qualify.html

"The general message is that if you were born in the UK to a UK father it is very unlikely you are going to be able to benefit from the special treatment available to non-doms," says Mike Warburton, tax partner at Grant Thornton. "But if you or your parents have come to this country from overseas, you may be missing out if you are not already claiming non-domiciled status on your tax return."

Claiming non-dom status will be a waste of time if you have no savings or property overseas."

my mums IFA advised against offshoring (i dont know the details but i dont think it the same as it was 10 yrs ago)

dividends - first you pay your corporation tax (20% on all your profits), then your income tax, according to: Dividend tax rates 2011-12

Dividend income at or below the £35,000 basic rate tax limit 10%
Dividend income at or below the £150,000 higher rate tax limit 32.5%
Dividend income above the higher rate tax limit 42.5%

I think this might be a digression but I'm sure we can agree dividend rates are much lower than tax rates, and what constitutes a profit can vary because entrepreneurs can pay for all manner of personal things through their companies. If you have a reasonably sized international company, you can easily expense back: a good number of holidays, all your home computers, a lot of dinners out, a car, etc. This off the top of my head. Certainly there are more.

A lot of the super-wealthy in the UK are not actually British.

If you have a reasonably sized international company you have generated masses of tax revenue & lots of employment...

i do know people combining a holiday with a business trip (which employees can also do) but not putting a pure holiday through the books - i think my accountant would having something to say about that!

A car will be taxed. home computers - if you run a company that generates say £100k tax per year, i dont think HMRC are going to launch a raid on a £500 home computer per year or so....

so unless you non dom, i think the myths of tax loopholes are greater than the realities.

we can agree dividend rates are much lower than tax rates i dont agree! but i dont mind if you not want to debate it either!

All it requires is that you move abroad for several months of the year, for several years

What a ridiculous statement.

It's easy for someone to do that if they have a house that has increased in value so much that it's now worth £2m, because of course they won't have a job, or a family, or children in education, or a desire to live in their own country! And obviously, if they have a house worth £2m, then they must have one somewhere else, and be able to afford regular flights.

I agree completely with Debsbear. When people were discussing the benefits cap on here and it was suggested that people would have to move to cheaper areas, you wouold have thought people were suggesting that those on benefits sell their Granny to the devil. It was all about how people had support networks, children settled at school, etc etc.

So it's ok for someone who has a good asset to be told to turn their life upside down when they contribute a lot and take little. But when someone contributes little and takes a lot, they shouldn't be expected to move, oh no.

I really can't see wht difference it makes if we are talking about someone elderly being expected to move in to a small flat. What's wrong with flats? My 84yo Gran lives in one quite happily.

if you have 400k you are rich. if you have 2 million you are also rich..

married in white, whether your kids use state school/nhs or boarding and private I dont care how much you of it you dont use. You live in the UK, the majority of people in this country are not wealthy so you must help support them. Hell you shouldnt need laws to make you do this!

Of course you should pay tax at that level, you would perhaps be quite glad im not prime minister because you would probably be paying much more.

outraged - I agree about the benefits bit. I was one of the people arguing against the outrage. But I can see that for anyone very elderly however well off they are, downsizing from a large house to a one bedroom flat can be a big wrench. I have witnessed this happening when people have chosen to downsize and it can be very difficult. Its not that there is anything wrong with flats. But small 1 bedroomn flats rarely ahve much space for the souvenirs/memory items very elderly people have collected and rarely have access to a garden.

OutragedAtThePriceOfFreddos : you have misread my post, what I said is that the government should focus their efforts on closing loopholes for the super wealthy, such as offshore income & non-domiciled status (which requires only living abroad for 3 months per year, for 3 years, as you have quoted) RATHER THAN a mansion tax.

How is forcing a couple no longer having children living at home to a smaller council flat (i.e. taxpayer subsidized) even remotely as outrageous as a "mansion tax" on a house that is purchased with after-tax income? The only reason one would qualify for a larger house or flat in the first place is because they have children.

How does one circumvent a stamp duty? Buying through a corporation? It simply doesn't work.

midnight worry I said further up this thread that we already pay all of the taxes we are statutorily obliged to pay. Last year that was £250,000. In addition we voluntarily donate huge amounts of time and money to charitable entitities. Would you care to clarify precisely what more you would like us to contribute please? You have not made your point at all clear. If rates of taxation rise are you suggesting that it would be better for us to move abroad in which case the UK would lose the aforementioned funds?

Wasabi I was referring not to someone who has formed a huge mutli-national and takes dividends. I'm referring more to how a more typical "wealthy" person might operate, which would be smaller in scale than this; perhaps they've formed a small (but reasonably sized) international company such as an LLC and would their income in very clever ways, including (but not limited to) dividends. I'd wager that most "wealthy" people aren't paying taxes according to the standard Inland Revenue bands because as I've said, they're not taking ordinary income.

I might be wrong but I think probably the average person wouldn't be upset about a wealthy person who makes let's say, 500K a year and pays about 225 in taxes as you might expect, and goes on to buy a 2M house with their after-tax income of 275K. I think the outrage stems from the idea that the super wealthy (and maybe even the normal wealthy) are skirting the tax codes. Which is one of the reasons I don't agree with a mansion tax.