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

£500k isn't much, they should be targeting the super rich.

I mean we fall in the category of people who literally couldn’t pay it as we’ve just bought a house and have barely anything left in savings. If we had several years to pay it then maybe we could but it would mean we weren’t spending on all the other things we normally would that help the economy, like restaurants, holidays, pubs, cleaner etc.

I also heard they were considering capital gains on sales of first homes which I think is much fairer - why should you not be taxed on money you did literally nothing to earn? The thought that some older people will release hundreds of thousands of pounds they have gained from house price rise on their home when they sell, and not pay a penny of tax on it does seem unfair. But we’re all so used to it being untaxed I don’t think it would it go down well either. But it seems more reasonable as it doesn’t confuse assets with liquidity.

I haven't rtft but my instinct is that a wealth tax is the correct way to deal with the growing inequalities left behind by CV-19.

Or how else do we pay for it?

Of course, as someone on a not massive household income (by Mumsnet standards anyway) living in a million pound house, it's going to hit us hard. But that seems to me the fairest way to deal with it?

Just so long as Rishi and Boris and all their billionaire friends get hit harder than me.

It looks like the IFS are strongly recommending an overhaul of the tax system before introducing a new one. So Sunak is probably looking at a broader reform first.

I think uprising and political suicide aside, there is growing appetite for this politically even amongst the Tory base. The 'baby boomers' with mortgage free assets are a decreasing voting demographic, future generations will be holding the political power and will be looking to the politicians not to saddle them with debt. Each person only gets one vote and as one group declines another rises with new priorities.

There won't be rioting in the streets as with poll tax because the demographic targeted is unlikely to start throwing petrol bombs at the police, so in terms of policitical backlash it will be limited demonstrations and angry rhetoric in the press but manageable.

The ultra rich will be holding their properties in trusts or as part of holding companies, so unlikely to be hit hard. So suspect the time this is rolled out they will be bullet proof.

It will be those in the middle who will get the squeeze sadly

@SonjaMorgan

£500k isn't much, they should be targeting the super rich.

Of course, since the richest 10% own about half the total wealth.

And if you make a £500k personal allowance, a lot more of the taxable wealth.

Taxing a large number of people for a small amount of gain is uneconomical.

I'm pleased that nobody has come up with a way of moving castles, grouse moors and country estates to Switzerland.

Maybe even Viscount Rothermere would have to pay.

£189k a year tax free income, how is this fair?!

It depends on the assets they are going to levy it on. I for one would be unhappy if it was levied on a family home but not on pension funds as the equity in my home is in lieu of my pension. I think that the best suggestion so far has been that there should be a levy of 7% on all income but with a deduction from this for NIC. It means that the pain is spread more fairly across the generations and so that both pensioners and landlords take an income hit as many of those who rely on working income have had to do.

We would fall into this category, purely because we live in SE and our house has gone up in value. We absolutely couldn’t afford this tax. It would eat up every penny of savings and mean we’d have to sell up to pay it.

You can guarantee it wouldn't be a one off. This government is always advertising things as a "one off" and then rapidly changing its mind and keeping them repeating.

No doubt the next year it would be another one off to save the NHS or similar, and then the following year to "improve the budget deficit" and so on.

Ok, so assets owned jointly by a couple (eg, a house) would be split between the two. So in essence, a couple would have a joint total of £1m which is much more palatable.

We bought our house in 1995 for £600k and we really stretched ourselves. It's now worth £1.5m. It's far from a mansion. It's a 4 bed house in London. My DH is working earning £50k. I've been made redundant due to covid, working in the travel industry. We don't have thousands of £s lying around to pay £25k+. We would have to sell the house or increase our mortgage which until I can find another job we are struggling to pay as it is.

[quote GappyValley]@Marinaloves

Umm, so let me get this straight...

The government desperately needs billions of pounds.
So to achieve this, it sets up a scheme to put together a pot of money, to lend money to homeowners so they can give that same money straight back and in exchange, gets a promise to be paid back without interest when the homeowner dies..?

So the government is so desperate for my £25k that it lends me £25k to give back to itself and has to pay a load of staff to run the scheme, AND when I pay it back in 40+ years when I die, inflation means that £25k is the equivalent of about £10k

Do you see a teeny tiny little problem with your idea..?[/quote]
I think you’ll struggle to get through to them. They sound determined to make the “rich homeowners” pay, with no thought to exactly who or how

How much of your 1.5 million house is mortgage? That would come off the value.

If your house is worth 1.5m do you have any idea how rich you are...? 700k of wealth (inc house and pension) would put you in the too 10% in the country. Who else should pay, you are incredibly rich.

We need enormous amounts of money to pay for this pandemic. Take out an interest only mortgage on the house or do some kind of equity release scheme.

@BungleandGeorge We have about £250k left. We've saved hard to pay off as much as possible until I was made redundant.

I can’t see this happening.

@Rhayader There's a huge difference bewteen cash rich and asset rich. We can't afford to increase our mortgage. I've been made redundant. We're struggling as it is. We would have to sell and move out of London. Which we can't do. DH's job is London centric and my mother is in a care home locally and we can't abandon her.

@Quaversplease

But you have made 900k of tax free income. Would you be happy to pay capital gains tax on it when you sell because I think that’s the only other option open right now that could raise the amount of money we need.

My bil owns 4 houses, one that he lives in and 3 which he let's out on long term contracts. Potentially, he's sitting on £2+ million worth of property in the south east. I think he should pay a wealth tax on the additional rental properties rather than his family home.

£500,000 will buy you an ex council house in a dodgy part of my area of the south east. So that tax would affect lots of ordinary working people who would struggle to pay it. So it should be levied on £750,000+ and on those with multiple buy to let properties.

@Rhayader Absolutely. I think that's much fairer. We can't raise the cash right now but eventually we will sell to downsize and I'd much rather pay any property tax then. I'm not saying that we are not asset rich and we've been lucky although it wasn't easy. We just can't pay a tax of £25k at this time.

Needs to be much higher than 500k, that's ridiculous.

I don’t think there are any easy answers. The suggestion of those who’ve benefitted from furlough paying a higher tax rate isn’t popular either. I don’t think it would be fair for people with assets over 500k to be immune because they are on low or no income. 5% is a lot though, perhaps having a tiered rate above 500k would be fairer and more achievable

I would fall into this bracket but my home houses three generations and my income is just under £1k per month which with what the other contribute is enough to pay the bills and the house is paid for.
But no way could I afford this payment.
If I had to sell up then my mother who is in her 80s, disabled and in a wheelchair would need to go into a home as my house is adapted for her wheelchair, disabled bathroom, ramps and bars etc. Without these adaptations which I have paid for (no grants or government funds used) she would need to go into a home suitable for her needs. She has no money apart from state pension and some DLA so this would cost the state a minimum of £1k per week but more likely £1.6k based on what someone with similar needs is paying at a care home a relative works in.

With my home I do the care for £67 per week carers allowance.
One of my adult sons has special needs. He works but will never be in a position to earn enough to fully support himself. He will need supported accommodation and universal credits. How much these are/will cost I don’t know but it would be over £25k per year.

So I might have a reasonably large house in the SE but that house not only benefits my family but in having it I save the tax payer money by taking on the caring responsibilities that otherwise the tax payer would.

That tax is never gonna happen. Never ever gonna happen. Never. Probably just leaked the idea to convey to the masses that they’re “gonna make the rich pay their fair share”.
They won’t.
And to be honest it sounds BS unbelievable anyway. The Rich are the ones sitting on millions of invested funds and dozens of property. They are the 0.1/0.2%.

They’re not the same group as the “500k” family that owns a 3bed most anywhere in the SE and virtually bugger all else.

Personally think it should be all wealth considered. Why should someone with 2 million in 4 properties be hit more than someone in a 2 million pound property, or someone with a large pension or savings.