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

Saski precisely. It is also becoming increasingly difficult to use and find the loopholes based on what even wealthier friends are tellingl me.

YABU
My elderley neighbours (ex factory worker) lives in a 2 million house. they have lived in it for 60 years. It's a 3 bed terrace and they scrap by on a small pension. Yes they could sell but if they bought anything else round here it would be the same price.

Oops, sorry Saski' I apologise.

you can't be non domiciled if you live abroad for three months (which is a generalisation on how rules work) , you are non resident. Non domicile is a different concept entirely that relates to where you were born and have family ties .

Wealth = capital-liabilities. The average wealth in the UK is £204,000. Everyone with greater wealth than that is richer than average and so should pay a higher proportion in tax. How high above this threshold you have to be to be 'rich' is rather more subjective. IMO you are certainly rich if you have wealth of over double the average.

Saski - they are closing tax rules which have been abused. one changing at the moment was designed to incentivise people set up businesses, build up a pot of money for retirement then take it out at a lower tax rate (10% on everything) due to the fact they had already paid corporation tax (& many of them generated jobs along the way).

unfortunately some entrepreneurs set up a company, didnt take an income, wound up the company & paid the lower rate.

it probably didnt make the news because it look my accountant about 10mins to explain is so not really a sound bite. NB: i was not trying to use the tax rule.

as giondas post shows thrre is lots of confusion about non dom & i think there is a general assumption that everyone on a high income is benefiting from lax tax laws when i dont think it is the case.

My greatest tax fiddles are my home computer which is 5 years old (& used for work most weekends), toilet rolls & herbal tea bags!!

Wasabi I agree- there is a misconception about loopholes. For example, abuse of dividends out of companies is already covered by case law and statute.

There are some loopholes (eg on stamp duty) but IMe the issue is that the various laws already there aren't enforced. Better staffing and support of hmrc might help here.

There is definitely room for collecting more tax but I don't think the answer is completely about more law only but better enforcement.

I don?t really know much about this type of thing but wouldn?t it make sense to lower the TAX rate for really high earners to encourage more multi millionaires to set up businesses in the UK thus creating new jobs.

bijou - Not that I know any multi millionaires but i doubt they are sitting there thinking - its not worth my while to invest in x because I'll only make £100 million but if the Gov were to give me a tax break then £120 million is worth me getting out of bed. :) [no sarcasm intended]

In a recession every penny counts the rich are no exception. What?s to stop them moving their company to India and employing people there most big companies seem to be doing just that at the detriment of the UK

i am very small fry in the grand scheme of things but all the anti business sentiment & passive envy in the UK has certainly made me think where will the country be in 10 yrs time & do will i want to be here?

"What?s to stop them moving their company to India and employing people there"

Businesses often wheel out this argument when they want to pressure the Chancellor. Some business models don't lend itself to outsourcing overseas.

Wasabi - in 10 years time sentiments will have changed.

Various studies have shown that the youth of today aspire to be Internet entrepreneurs, rich footballers and even reality show stars (WTF?) In 10 years time those who are passive envy will be in the minority and the majority will be those who aspire to be rich themselves.

Perhaps I'm not making my point very well.

The London housing market is completely distorted not because of the average 2M home owner, but because of the super-wealthy. Who are largely international non-dom's. Until this particular point is addressed, it's kind of silly to try to fix the UK housing market on the back of the 2M homeowner. Who may or may not be "wealthy", but they are almost certainly not super-wealthy.

I read that the government recognises that non-domiciled individuals ('non-domiciles') can make a valuable contribution to the UK economy ? through the money they spend here, the funds they invest, the skills they bring as employees and the tax they pay. They bring in more than they take out in other words.
Last year, half a billion pounds of property was bought in London by Greek and Italian buyers alone. A large part of their motive, to be sure, was simply to get their money out of their own country and out of the euro; the acquisition of a bolt-hole here is a pleasant way of hedging against troubles at home.

Darleneconnor gives a great summary of wealth:

"Wealth = capital-liabilities."

FWIW I think the new proposal of a higher rate of stamp duty on the purchase of houses worth £2m plus is MUCH fairer than taxing people on the value today of a house they may have bought 50 years ago.

bijou - rich foreigners forcing up property prices is a negative, not a positive. It makes housing even more unaffordable, with knock on effects at all the other levels.

YABU. It may be something that has been handed down from generation to generation and if you sell it, you'd be the first in a long line of descendants to do so. As it is, many of the owners of those sorts of houses have had to sell up especially after the estate taxes which came in after the war. Very sad. You are rich if you have lots of money.