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

blueberry that's under EU law though so no longer applies to the UK. Post brexit the UK is autonomous in it's legal system. It can effectively demolish worker rights, change taxation laws and dismantle existing EU legislation.

Whilst it was revoked as it was unpopular, Thatcher implemented the Poll Tax, which was a new system of tax (lated revoked by Major). It is possible.

Whilst I agree that this probably won't be implemented just yet, there is likely to be an overhaul of the taxation system which will lead to new and streamlined tax systems. The current system isn't fit for purpose and it's clear a significant amount of revenue needs to be generated.

Suspect Sunak said no this time round as there is a lot of ground work to do before they can get to this point. Plus until we are out of furlough era, they probably don't want to panic people.

Why did you post this OP when Rishi said 2 weeks ago that he wasn't going to do this, was it to scaremonger?

I remember there was a thread a while ago about poverty and posters were complaining about care workers 'wasting' money on take away coffee and that they should work harder get promoted etc and basically it was their own fault they were poor. WTF! Why can't we live in a society were care workers can afford a home AND a take away coffee every day, it's a cup of coffee ffs, it's not champagne at the Ritz every day.

@Lovelydovey

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.

If you cant afford 25k, there is no way that you can possibly be net contributors to public funds.

Only a tiny percentage of the most wealthy are net contributors. Most people, even most higher rate tax payers, are not.

RedRiverShore

No, to have an informed debate with those interested in this subject and it's long term feasibility. The Tory manifesto in 2020 was not to raise taxes, but the pandemic has changed everthing and is sweeping aside party politics. The situation is continuing to evolve and there maybe no way to keep that promise long term and tackle the huge looming national debt issues.

^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^

Well seeing as it's 5% of the amount over £500k, neither of you would pay anything.

But there's definitely an argument for taxing the unearned wealth some people have gained by being lucky with the property market. People in 'normal family houses' that are worth a million plus more than they paid for them can afford more than most to give up some of that wealth when they no longer need the house.

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?

This was in the OP which is misleading as it is assets above £500k

Cripes!! Placemarking...

It's a hideous idea and it won't happen.

Start this sort of thing at, say, £5m perhaps. £500k hits hundreds of thousands of average families in London and the SE. My 2 bed flay in London is worth £600k; there's no way I could afford £30k in tax - additional tax on top of the income tax, stamp duty, council tax etc I already pay. It's just madness.

This is a useful article about it:

www.wealthadviser.co/2020/12/21/293816/uk-wealth-tax-nothing-worry-about-yet

I agree @roarfeckingroarr.

It's only really fair if you start at over about £5M, as people in that bracket would no doubt have a large disposable income to pay it with.

Red

Yes I was incorrect on that statement, however 5% of assets over £500k would still hit some people hard if they were asset rich and cash poor. Payment of 1% a year as proposed seems more reasonable though and would soften the blow somewhat.

House price rises destroy social mobility. Houses are already under taxed and seen as investments. They removed one of the few taxes linked with actual house prices (as opposed to council with links to prices not updated for many years) and buyers generally did not save anything as prices rose more than stamp duty. We need a fairer way of taxing all income (eg CGT online with income tax,a tax on non earnt house price rises above inflation -whoch would help by controlling house price growth) .

10% capital gains on sale of property with no get out clauses, 5% inheritance tax across the board with higher % as value of estate increases over £500k.

@JayAlfredPrufrock

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

No you wouldn't , you could just borrow it against the value of your house and pay it back when the house is sold- which could be when you die.

The thing with pension and land information is it should be reasonably accessible ( assuming tax relief is given on pension contributions and land is registered). Some land e.g. by gentry may not be registered and there are tax relief systems in place ( eg with farm land for inheritance purposes that may complicate the system).
If it is pensions and property I think the limit above which it is subjected to tax should be raised. For pensions alone it should allow for circa £400000 ( so annuity of around £20000 a year which is added to state pension to hopefully equal around mean average earnings a year).

Tax should be paid where purchase is made especially for goods brought online.

Thanks @JanuaryJonez

It's like with the second home surcharge (stamp duty has an extra 3% if it's not your only residence). It makes sense, but on say the third home onwards as many perfectly average people have a second home unintentionally. I'm trying to shift a property on dire need of repairs I can't afford that I unexpectedly inherited. The council tax costs alone are crippling me (on maternity leave).

I'm trying to shift a property on dire need of repairs I can't afford that I unexpectedly inherited

So just put it up for auction. All property will sell for something, even if it's at the side of the motorway and riddled with asbestos.

But there's definitely an argument for taxing the unearned wealth some people have gained by being lucky with the property market. People in 'normal family houses' that are worth a million plus more than they paid for them can afford more than most to give up some of that wealth when they no longer need the house.

The government gets their share of that unearned wealth eventually either through stamp duty when the person moves, or by taxing them when they die. We don’t really need another mechanism to make that money end up back in the system.

It would probably stop people putting money into pensions because you could accrue too much, if you are in your 50s/60s and getting towards looking to retirement and also paid off your mortgage this would not be a good thing.

The doctors and consultants would be cutting their hours like they did because of the pension allowances in the last couple of years, didn't they have to be changed.

PP
"
The government gets their share of that unearned wealth eventually either through stamp duty when the person moves, or by taxing them when they die. We don’t really need another mechanism to make that money end up back in the system."
They may buy a far cheaper property with tiny amount of stamp duty especially compared to the money they have gained on the property. London property and other areas are superb investment opportunities people can buy a property not even live there and sell at a vast increase and not taxed if not buying another property in UK above stamp duty threshold. There may be a benefit to CGT on above inflation and maintenance/extension costs on sale of properties ( including main residence).

It would be grossly unfair to levy a tax on assets that have already been taxed (either by income tax, inheritance tax or capitol gains tax). I would have made different life choices (better holidays and cars etc) if I’d known that a further tax would be levied at a future date.

This coming week, I’m opening accounts for our DC. A medium term plan to purchase homes in their names. Also, our planned home renovation will be shelved if there would be an assessment on the increased value of our property as a result of making changes. It makes no sense for us to invest in our home and then be penalised with even higher taxes (it’s already band H). There will be work arounds.

@BootsieBarnes

blueberry that's under EU law though so no longer applies to the UK. Post brexit the UK is autonomous in it's legal system. It can effectively demolish worker rights, change taxation laws and dismantle existing EU legislation.

Whilst it was revoked as it was unpopular, Thatcher implemented the Poll Tax, which was a new system of tax (lated revoked by Major). It is possible.

Whilst I agree that this probably won't be implemented just yet, there is likely to be an overhaul of the taxation system which will lead to new and streamlined tax systems. The current system isn't fit for purpose and it's clear a significant amount of revenue needs to be generated.

Suspect Sunak said no this time round as there is a lot of ground work to do before they can get to this point. Plus until we are out of furlough era, they probably don't want to panic people.

No it was rejected under German constitutional law - nothing to do with EU.

We also have contractual law which do not allow retrospective changes in terms and conditions of contracts.

I think they should close the tax avoidance loopholes as that would have more support from the general public. The government should ensure that companies pay their fair share of tax like we do. Amazon & Starbucks are clever at paying the bare minimum. I think this is better than taking the rest of us who are financially on our knees anyway.