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

So those with no savings and/or very little income are forced to sell. (Anyone who has just bought and anyone elderly with no income) Everyone is terrrified of a further tax so people who would be stretching themselves don't buy. That drives the price down. The billionnaires buy because they can rent out and make a killing. (They might do rip off equity release or rip off loans to pay the tax)
Mortgages won't be granted because the price of the asset is at risk.

Even more businesses will be hit> builders, furniture places, anything connected with making your property nice - because if you add an extension or do up your kitchen it increases the value and you just have to pay tax.

One option to raise tax that may be worth consideration is to tax properties abroad owned by Brits. If you have a second property in Cornwall, you pay UK tax on it relative to its value. Why shouldn't you pay an equivalent tax if the second property is in Spain?

A couple of other ideas others have raised that I liked are to legalise weed and tax it, and to make VAT progressive so the more expensive items in any particular market attract higher VAT. An imitation of this already exists for cars where the more expensive attract higher taxes.

Unfortunately I fear that the governments of whatever persuasion over the next few decades will use the tried and tested but terrible old method of reducing debt ie. High Inflation.

Also £500k is only £500k if you have it in hard cash and are sleeping under a bridge. You have to live somewhere and if you work in London or Manchester or Edinburgh or several other places I could mention you have to live nearby.

It's like people who say "A pint of beer is so cheap in X country - if I lived there I'd be pissed every day!!" - Yes and if you lived there you'd be earning £X a day - so you wouldn't.

Tax what people spend. Encourage and support work and tax income - up to a point - but don't tax homes.

The UK's housing stock is worth £7.4 trillion. Gains in value over the past decade (excluding new builds) total £2.74 trillion. This could be a very tempting target for a government wanting to raise revenue.

Council tax raises about £30bn/year and stamp duty about £13bn/year. This is less than 16% of the average gain in residential property value each year.

@Blackberrycream yes that would be appallingly unfair - you have to pay for largely the same on one income with no support as a couple with the potential for two incomes. The thought of this disparity between couples and 'single' people makes my blood boil.

[quote Marinaloves]@ThatIsNotMyUsername
Yeah and you have a fucking nice life out of it.
And if you think you don’t then check your privilege[/quote]
What’s your problem @Marinaloves? There’s no need for this aggression. All @ThatIsNotMyUsername said was...
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...

Talk of people having to sell their house is most likely nonsense. If your "wealth tax" bill in a year is £5000 mainly due to the value of your house, and you have insufficient liquid assets to pay it in that year, then maybe it could be deferred. You could have a charge put on the house so the tax becomes due when it is sold. You could be charged, say, 1% simple interest (ie. £50) for each year it is deferred.

@NotDonna
I think you’ll find I was upset and annoyed about the quote
“ It’s like my dad used to say - you pay bloody tax when you earn it, save it, spend it, and die...”

Check your privilege was about the fact that yes we pay taxes and in real life terms in the world, we get a fucking decent life out of it. We really do. We really shouldn’t forget what a great life we all lead. Some bits are a bit shit. But mostly and for most people. It’s about as top of the tree as the world gets.

American here. Property tax in the US is the equivalent of council tax. It is paid to the local authorities for local expenditures, mostly schools. It is nothing like what is being proposed here.

Oh the irony, Rishy introduces stamp duty holiday - house prices go up by 7% as a result as well as various other prop up housing schemes (help to buy/shared ownership) and then taxes people on them via a wealth tax, clever man! Bet people aren't happy their houses have gone up 150% over the past 10 years now!

Not RTFT

on the OP.

It would catch a massive amount of people in the SE who have huge mortgages and may well have lost jobs/ be on furlough etc.

It would also in that part of the country massively impact pensioners.

For that reason I don't think it sounds likely for the Tories to do.

@Chihuahuacat

I’m not sure how it would be feasible. On one hand you’d have people who bought a house for £200k years ago but it’s now worth £800k. So they’ve gained £600k but would have to sell the house to access that gain.

On the other hand you’d have young family’s who have scraped to buy a family house worth £600k, have a £500k mortgage and a bill like that would ruin them.

An average family house in the SE costs that now and an average family don’t have £25k lying around.

A family with a 500k mortgage on a 600k house don't have over 500k in assets, the bank owns it. Someone who brought a house for 200k all them years ago should have paid their mortgage off by now and have savings or investments to cover the tax bill if not the government takes a charge out on the property and the tax is paid when the property is next sold. Simple.

[quote Marinaloves]@CakeRequired
Well i guess that’s one small advantage for the renters! It’s not like they have many!![/quote]
Landlords would put up the rent to cover the bill, so renters would be shafted as well.

In theory I have no issue paying additional tax on the increased value of my house, as its money I didn't earn. But we would have to sell the house and downsize in order to pay it, as would many other people. So house prices would drop as there would be oversupply in the market. Which means less tax would be raised.

I quite like the idea of 0 5% of the value of the house each year, even though it would hammer us. Our house has increased massively in value since we bought it. 0.5% would equate to about £3.7k a year for us which is basically our savings. We would probably still have to sell.

Why don't they bring in an extra tax band for "super rich" people like footballers, instead of a 50% highest rate, make them pay an extra 5% on all their earnings, not just the amount over the tax band. Do this on anyone earning over say £5k a week. Like many of you have said you may have a £500k house but be on the breadline in actual cash for living.

It's not feasible.

An awful lot of pensioners are property rich but cash poor.

No way will the Tories do this. It's their voting base.

A couple of weeks ago he said he wasn't going to do this in all the papers so sounds like old news that has been resurrected by certain parts of the press. It was going to be over £500k for single people and over £1,000k for couples.

www.dailymail.co.uk/news/article-9152933/Rishi-Sunak-rejects-wealth-tax-cover-280billion-spent-fighting-coronavirus.html

citywire.co.uk/wealth-manager/news/sunak-shuns-wealth-tax-with-cgt-hike-considered/a1451176

Rishi rejects wealth tax, capital gains reform likely

@Marinaloves

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

Except it doesn’t work in America when there’s a real estate boom and the house you bought for $200k is now worth $600k and you can’t afford the property tax. Lots of people lose their houses when that happens.

Capital gains tax reform far more sensible

Taxing wealth and savings will have very detrimental impact on investment and growth. And the credit system could come crumbling down e.g. mortgages. How happy will you be if penalised for saving vs taking those Caribbean holidays 10 years ago?

I voted YABU as I think it’s a good idea to do a 5% tax on assets over £500k. It wouldn’t be £25k in tax though until the person had £1m in assets because it’s 5% of each £1 over and above £500k. The £500k threshold would allow those with average family homes in even very expensive areas to avoid the tax.

Calm down people. This is did not come from the Gov but from a "Think" Tank of 3 socialists (of which 2 are clueless academics with axes to grind).

Germany tried this but it was found to be illegal as it is a retrospective income tax. So if you never inherited but earned all in the last 40 years, at an income tax rate you accepted, the Gov cannot effectively change the goal posts, as it is effectively changing past contract conditions. But the German are more sensible than us

There's already discussions about reviewing house values ahead of a property tax alternative to stamp duty and council tax, so the wealth tax would presumably work alongside this.
As long as there was a payment programme or say loan system like say the student loans to ensure that the money could be paid over a realistic period, I see no issues with it. And yes I love in the South East.
It would also be a good move if it encouraged people to perhaps relocate away from the more expensive Southern areas, as this would encouraged a greater equality across the UK of services and for London not to be centre of everything.

Someone like me, I am not cash rich, i am comfortable atm, but i have (mortgaged) assets which was to secure my childrens future.

I'm in a similar position and I think this bit secure my childrens future is actually the biggest and most unjust part of the problem we have in the UK today, everyone loses with this and I don't think life used to be like that. I know parents have always tried to give their children a hand up but I don't think children needed it so much in the past. I have three children and three rental properties (not a coincidence) I do struggle with the morality of this and wish we lived in a fairer society. The best life chance I can give my children though is a huge hand onto the property ladder so they can have a secure home. Many, many (most?) young people in the country won't get this and will really really struggle to ever buy a home regardless of how hard they work, instead they will end up paying rent to me and my children and buying them (another) house. The relationship between hard work and prosperity has been broken instead it is assets that bring prosperity. Everyone loses this way. I lose because I became responsible for my children's future in a way previous generations weren't, my children lose because they become more dependent on me and don't get the independence my generation had, and the people without assets lose because they struggle to ever get a secure foothold in society.

It wasn't always like this. I came from a poor family, worked a normal job and could afford a good life. This is no criticism of the poster who first posted the above btw, I'm doing the same thing. I just wish it wasn't this way and if me taking out a massive loan to pay a tax bill to try to redress the balance, I'm all for it.

@PlanDeRaccordement

I voted YABU as I think it’s a good idea to do a 5% tax on assets over £500k. It wouldn’t be £25k in tax though until the person had £1m in assets because it’s 5% of each £1 over and above £500k. The £500k threshold would allow those with average family homes in even very expensive areas to avoid the tax.

It also included pensions and assets like cars so people could quite easily go over the amount of £500k each.

Cant see anyone whose not calm blueberry