Proposed Wealth Tax

[BootsieBarnes]

It's been discussed in the press that the Chancellor is considering a one-off wealth tax of 5% on assets over £500k. Allegedly this is being considered as part of the March budget to make a dent in the huge Covid debt the UK is facing.

So in real terms that would be a £25k tax bill for someone who has assets valued at £500k, such as property.

What do you think about this? would your family be able to swallow a tax bill that size?

I'm not doing any research, I just read that and thought about the impact it would have on families living in houses in that price bracket.

I've put on voting as well for interest. I'm not actually sure where I stand on this as I can see both sides, so this is just an arbitrary allocation just for voting.

YABU - people with assets that big should pay

YANBU - that would be unfair

Well people on here are always bragging about how much money they have, surely they won't notice?

In all seriousness though, this probably will happen and we will all be getting taxed more soon, via council tax (although those of us in Scotland already are despite sturgeon saying they wouldn't go up). That was a pre covid promise and it went up ore covid, but still.

Unfortunately for huge swathes of the south east and some areas outside it, that is not ‘wealth’, it’s an average family home.

A one-off tax, to be paid in one go, on the government's demand, which could be massive, especially to families who are asset-rich but income-poor, as their income had just been snatched away? Would people have to take out new mortgages to pay this?

If it's demanded in one go, it would go down like a lead balloon: many people will have had their incomes destroyed by lockdown, their mental health ravaged, and now this! But if it was more incremental, in the form of a bit extra on the top of normal income tax, that would be another matter.

Are the government now leaking to the press how they intend to claw back furlough money, as per their usual strategy of leaking their plans to test the public reaction? I find it hard to imagine "my rich mates" Tories implementing something like this.

Hard to say without knowing more detail, and you've provided very little.

Capital assets don't always translate easily into liquid cash. Someone who owns a house worth £500,000 but nothing else won't be able to lay their hands on £25,000 easily.

So, what assets are being included?

Who will be valuing these assets and at what date?

How long would you have to pay the tax? Would it be a one-off lump sum or would they take it out of your wages like student loans?

What happens if your assets depreciate and their value falls below the threshold?

I don’t agree with a one off swoop but people living in expensive houses should have to pay a wealth tax. You can take the money out of the house via equity relief if you don’t have it to hand. Wealth inequality is much more polarised than income inequality and the more we tax income the less productivity we have. 1p on all tax bands only raises 5bn a year, and further pennies raises less because people don’t work extra house or cut down to part time as it’s not as worth it.

If someone has assets of 500k just because of their main residence then no. Other assets, yes.

Equity release** 🤦‍♀️

There's no point asking the question, as they're not going to demand lump sums of £25k from people who only have that amount of money due to housing, or pensions for that matter. Impossible to pay in many cases and too politically unpopular.

They could increase inheritance tax and make it harder to avoid. It's only paid after people die so doesn't actually affect anyone.

In America they pay property tax on the value of their home. Paid yearly.
I guess they might go down these lines.
I do not personally think this is a bad idea. Regardless of it’s supposed fairness.
Because in all honesty it affects such a tiny proportion of the population, and they invariably can afford it.
People of course will say, oh my house is 800k but it’s a 2 bed terrace etc etc and a 2 bed terrace is only worth 80 in (insert some northern town) it’s not fair... well the only reason I know people who own 800k houses in London is having made HUGE amounts over the years on their property purchases, or having been given HUGE amounts of help from parents. Neither of these reasons should make you exempt

@Rhayader

I don’t agree with a one off swoop but people living in expensive houses should have to pay a wealth tax. You can take the money out of the house via equity relief if you don’t have it to hand. Wealth inequality is much more polarised than income inequality and the more we tax income the less productivity we have. 1p on all tax bands only raises 5bn a year, and further pennies raises less because people don’t work extra house or cut down to part time as it’s not as worth it.

Really? So you're going to put a whole load of people in debt?! A scheme like could never work if you're including either houses or pensions. And they would never propose that as an idea.

I bought a house back when I was earning. The estimate of its value (I just looked) is something like four times what I paid, and would make me liable for this tax.

My pension would take over a hundred years to provide £25,000, assuming I didn't need to eat or pay for any services like electricity and water, or a local tax of any sort. If I ate or drank or heated the house, it would be two hundred years or more.

I suspect it is a drip feed into the press to test reaction. There aren't too many details available but I'm guessing the Government would enable a payment plan (with interest of course ).

How would they know what you have? Well land registry would be the obvious one I suppose. They would probably send a tax bill then it would be for the individual to appeal with individual circumstances. Not sure but this would be my guess. Anyone else hazard a guess at how they could do this?

Are you sure you are not talking about proposed capital gains tax upon disposal of assets OP?

A staggered additional income tax would be a better and fairer way to raise the money. A 2 bed flat in London costs 500k also the idea that a home you live in is a financial asset is warped. The value of your house is irrelevant unless you sell.

If it works in America where they hate tax more than we do then it’s easily workable here.

@Marinaloves

In America they pay property tax on the value of their home. Paid yearly. I guess they might go down these lines. I do not personally think this is a bad idea. Regardless of it’s supposed fairness. Because in all honesty it affects such a tiny proportion of the population, and they invariably can afford it. People of course will say, oh my house is 800k but it’s a 2 bed terrace etc etc and a 2 bed terrace is only worth 80 in (insert some northern town) it’s not fair... well the only reason I know people who own 800k houses in London is having made HUGE amounts over the years on their property purchases, or having been given HUGE amounts of help from parents. Neither of these reasons should make you exempt

My house is worth about 900k. I work for the NHS and my DH is currently unemployed. We bought our house in 2007 for 200k with money that we earned. Do you honestly think all the people in the SE who's houses are worth over 500k bought them for 500k with money handed to them by their parents?!

No the CTG tax is a different proposal wow

They could increase inheritance tax and make it harder to avoid. That could backfire spectacularly, though, if they timed it badly. As Saint Boris recently grovelled "I'm deeply sorry for the 100,000 dead, and I take full responsibility..." The press would follow it with "and now I'm taking more money from them as well".

This makes more sense....

The report proposes a one-off wealth tax of 5 per cent payable over 5 years at 1 per cent a year on all individuals with wealth over GBP500,000. It suggests that the wealth should be calculated net of mortgages and other debts. Pensions would also be classed as part of an individual’s wealth, and taxed accordingly. And finally, the GBP500,000 figure only applies to individuals and their assets – where assets are jointly-owned by a couple, the tax wouldn’t apply unless they totalled in excess of GBP1 million.

The authors of the report predict that this one-time levy would raise roughly GBP260 billion for the UK government

@mrdobalinamrbobdobalina
I didn’t say that, i said luck of property investment or external help. You sit in the first example.

@wanderings

Are the government now leaking to the press how they intend to claw back furlough money, as per their usual strategy of leaking their plans to test the public reaction? I find it hard to imagine "my rich mates" Tories implementing something like this.

I'm inclined to agree.

What wanderings said.
You can 'own' a house worth that much, whilst having a pretty big mortgage - ie 'debt'.

I wouldn't be 'hit' by this (well, depends what they count as assets I suppose - if you added together house, and pension pot^ and some savings and value of things like the car......) but I think it is too arbitrary and too low a figure to be considered.
People with a house worth that, don't generally have available cash to pay.

Our house is probably worth about £650k. I’d have to sell it to pay a bill like that.

This has been off the table since mid Jan.