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

@WowIlikereallyhateyou

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

Any links please? I haven't seen this and I'm usually pretty on top of things like this. Thanks.

@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

Ah, I see ths trouble. I've been looking at the source. Unlike the planted press reports, it says:

"We present below our conclusions on the principles, design and delivery of a wealth tax for the UK. We consider both one-off and annual wealth taxes, reaching different conclusions on the merits and practicalities of each. We also make recommendations on specific design choices
where there are clear reasons to take a particular position, leaving open some remaining issues where there are trade-offs that require the exercise of political judgement.

In particular, as we have made clear from the inception of this Commission, it is not our business to make recommendations on the rates or thresholds that should apply under a wealth tax. Nor
do we endorse any specific revenue target. These are archetypal matters of political judgement and democratic deliberation, since they form the main levers that determine the distributive effects of the tax i.e. who pays and how much. Our own views on such issues carry no special weight, and indeed since we do not agree amongst ourselves on these questions, it would not in any case be possible for us to venture a consensus opinion.

That said, we do provide a separate report with detailed modelling containing our estimates of how much a wealth tax could raise, and from whom, at different rates and thresholds. The options presented there, and referenced in this report, should be read as possibilities, rather than our own prescriptions. We also highlight certain key design issues and trade-offs"

Spot the difference?

www.wealthandpolicy.com/wp/WealthTaxFinalReport.pdf

Higher earner lost job.

Low earner gets to help pay for furlough of people who earn loads more than them (despite not enjoying a paid feet-up themselves) by working and paying tax, while simultaneously trying to educate future taxpayers.

And now to find a wedge of money because of ‘owning’ a home in the SE of England.

So "It would be 5%" and "it would start at £500,000" and "it is proposed"
are parts of the press plant, not the report.

That's the Express for you!

The suggestion that we wait until the country has recovered somewhat and unemployment has dropped is sensible. Apart from it giving the most wealthy time to hide their assets of course! Maybe just target the most wealthy short term. Especially those with multiple multi million pound houses which sit empty most of the time!

Not when you've paid inheritance tax, stamp duty, tax on salary and incomes to get a home to live in.. then VAT on any updates or work on the house to hit a value and then get taxed again, it's piss poor and I can't see why they would do this when it impacts on their own voters, who I assume are mostly in the south east and will have a house worth over 500k

What would they do when an ex-council house hits this mark? Which many do in our area? Tax the families that saved to buy who maybe still need support?

Given the lack of any support for 3 Millikan excluded I'd assume they would be exclude from this tax as well?

Bungle the most wealthy won't hold assets in their name, most will hold them in trust or in a company structure I suspect. So they are already geared to tax avoidance tax efficiency

Our house is worth 500k. We’d struggle to find £25k. We’re already net contributors to public funds.

My mums house is worth £500k. She’s struggled to sell it this year though wants to downsize in the future. There is no way she could afford £25k.

I’d be up for increasing inheritance tax as a means of raising funds.

@itwillbehormones

Not when you've paid inheritance tax, stamp duty, tax on salary and incomes to get a home to live in.. then VAT on any updates or work on the house to hit a value and then get taxed again, it's piss poor and I can't see why they would do this when it impacts on their own voters, who I assume are mostly in the south east and will have a house worth over 500k

What would they do when an ex-council house hits this mark? Which many do in our area? Tax the families that saved to buy who maybe still need support?

Given the lack of any support for 3 Millikan excluded I'd assume they would be exclude from this tax as well?

It doesn't have to be £500k. That's part of the press plant. Nor even £1million for a couple.

The average house price in London is around £650k. We have council blocks near us with flats selling for £450k.

It’s like my dad used to say - you pay bloody tax when you earn it, save it, spend it, and die...

All of the "soak the rich" taxes beloved of some on here only ever affect the middle classes. The very wealthy can afford to employ accountants far more skilled than HMRC and HM Treasury are prepared to pay for so they'll be able to find loopholes to avoid paying it. It'll be everyone else who shoulders the burden as always.

The house I own is worth around 500k ish but I have less than half that in equity. I have no savings and a six year old car. So in my case, I would need to downsize and sell up to pay that. Or get a loan somehow?

Be interesting to see if they do this and if not what they will do to claw back.

It's all out of my league to stress but it does make me feel that your home should be a safe place. Like others have said 500k could be a fairly modest family home in most parts of the SE.

If we mortgage free, adult kids, no liquid cash I would be downsizing at that news and getting my remaining assets protected from IHT tbh as if your hand is being forced, best to do it all in one go.

Well, our house is worth more than that BUT, it's split between two of us and our equity is not that much!

If they were going to tax 'wealth' to include your main residence, then what about your mortgage? People with houses worth less than us but more equity technically have more wealth.

I can see that property based on its current value, rather than estimated value in 1990 would make sense, but then councils would really vary in the amount of tax they could raise. A three bed semi can easily fetch £650k here, so our council would rake it in compared to places where they are £200k.

[quote Marinaloves]@Pukkatea
Why would he have to sell his home
That’s just a sort of weird bonkers knee jerk thing to say[/quote]
This is just a lack of understanding of other people’s circumstances. She has explained the situation and you seem to not understand or be lacking in empathy
This would affect all sorts of people and yes, many would have to sell.
Single parents who own a house would be also adversely affected.
It would be political suicide.

@ThatIsNotMyUsername
Yeah and you have a fucking nice life out of it.
And if you think you don’t then check your privilege

Aside from those in London, I'm surprised how many people live in houses worth so much. I only know one couple who live in a house worth anywhere near a million and they are bankers. I live in the South West and of the people who own I know most of their houses are around the 200/250,000 mark.

The area I live (small commuter town) most places bigger than a 2 bed terrace will likely be over 500k. The town I grew up (London suburbia) is the same.

This kind of move as well as income tax increase would hit regular working middle class. Someone like me, I am not cash rich, i am comfortable atm, but i have (mortgaged) assets which was to secure my childrens future.
Any change to my monthly income will make huge difference to my lifestyle.
Yes, we should all now just level down why should I have more than neccesities if there are poorer people like bloody communism, but aside from the fact that I worked hard, not got lucky how is making middle class poorer on top of rise in council tax, cost of commute, food and other everyday stuff going to help economy???
Who will spend money in shops and restaurants? or will we pay tons of tax for gov to spend on eatouthelpout so mcdonalds gets more profit?
Who will be booking holidays or go to Legoland? After spending all this money fourloughing people in hospitality, travel and retail are we now going to collapse half of it.
Who will employ cleaners, builders, party entertainers etc etc?
And how will provide for our children in 20 years.

We've had the huge expense of keeping society and the economy running, without breakdown, and we have ongoing costs until COVID is truly dealt with, plus the Brexit economic damage.

The country could just stay in debt, that's not impossible, but it's thought that there must be a practical limit, so we're going to have to raise taxes. There isn't scope to increase income tax or, so we're left with reforming property taxes, or Capital Gains, or some kind of wealth tax.

It makes sense to take the money off people who've got some.

You can't build prosperous society by a programme of austerity.

Surely this is really unfair on single property owners? A widow in a fairly ordinary London house worth £1m (buys a 4bed semi on my unfashionable zone 4 road) would have to pay the tax on 500k of the house value, whilst her neighbours - a couple - would pay nothing. Completely unfair.

Capital gains is clearly the one that needs looking at. It is based on income- the point at which a notional increase in value becomes an actual profit and real money. It is taxed at lower rate than income tax so there is a discrepancy.
The inflation of house prices has really skewed perceptions of wealth.

@Thedogisdrivingmemad
You’re right. I’m in that situation ( a widow with children). It actually feels quite worrying. I have the same responsibilities and costs as a couple raising children. The only reason there is only one adult on the deeds is that my husband died!

Aligning capital gains rates with income tax rates would raise £14bn if nobody changed their behaviour (which is highly unlikely). I agree we should do it but it won’t get close to the cost of covid unfortunately.

A little bit of background (copied from last year's thread on this subject):
Austria, Denmark, Finland, France, Germany, Iceland, Ireland, Italy, the Netherlands, Luxembourg, and Sweden all had wealth taxes and abolished them, leaving Norway, Spain, and Switzerland as the only countries that still have one.
France (which is the most heavily taxed country in Europe) keeps toying with the idea. Up to 2017 (when they mainly abolished it), 10,000 French citizens had left France taking 35 billion euros with them over the previous 15 years.
The rich find wealth taxes easy to avoid. If farmland is exempt from a wealth tax, the rich purchase lots of exempt farmland, borrowing heavily to do so. The borrowing reduces the net worth of their other taxable assets.
Labour tried very hard to introduce a wealth tax in the 1970s. Denis Healey said "We had committed ourselves to a Wealth Tax; but in five years I found it impossible to draft one which would yield enough revenue to be worth the administrative cost and political hassle."