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

No. Some economists are expecting Sunak to introduce this entirely new wealth tax in his March budget. You'd pay 5% on assets if 500K or more.
The issue being discussed is how to get it as it cant be part of income tax, capital gains tax or inheritance tax so it will require a wholeload of new administration to sort it out.

I would be caught be this and am 100% for it. Also, I don't have the money knocking around, I would have to take out a loan.
I feel really strongly though that we can't just keep making the young pay. We have fucked them over so much, it's really got to stop and my baby boomer generation absolutely need to cough up.

Buying somewhere to sleep at night rather than renting doesn't feel much like "investment" if the mortgage is less then renting the same space would be, does it. It feels like "trying to get a bit of security and not boosting a landlord's profits".

In America they pay property tax on the value of their home

In theory, so do we in the UK - it's called Council tax (am aware the 'bands' probably need reviewing)

I doubt they’ll be forcing people to take loans etc
But it would be very interesting to hear from any Americans about how their property tax works. Because they have to pay it yearly!
And as i said earlier, Americans really are anti anyone taking what they feel they’ve earned through hard graft.

@BackforGood
Yeah the council tax i pay is £90 p/m my upstairs neighbour in a 5 bed penthouse work 3.5 million pays £120

I rent, the value of the flat is around 500k

Sounds fair !!!

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.

They could increase inheritance tax and make it harder to avoid.

Agree with this as well. And I'd be caught (both ways) by this.

I think something like this will be necessary. It could work if sold to people as a hypothecated levy for certain purposes such as supporting the NHS. Of course, as usual, the most wealthy won’t pay it - they will organise their affairs to avoid it. The other downside is that it penalises savers, particularly people who have made sacrifices in daily living to try to amass pension funds. However a wealth tax of some description isn’t unusual in Europe. Spain for example has had one for years. We’re going to be so broke post Covid that there may be no alternative.

I think they’d exempt main residence

We are so obsessed with properties being investments in this country. We love it when it works to our advantage
Not so much when it’s not

If your house is worth 900k and you bought it for 200k you have made a huge profit and can obviously afford it, it just comes out of the 700k profit you made for doing SFA

Just to be clear, I think 5% is mad. The proposal was 0.5% per year and this would replace stamp duty AND council tax.

House price would fall in london and the south east but arguably they are hugely overinflated anyways

[quote Marinaloves]@BackforGood
Yeah the council tax i pay is £90 p/m my upstairs neighbour in a 5 bed penthouse work 3.5 million pays £120

I rent, the value of the flat is around 500k

Sounds fair !!![/quote]
But you rent, you don't own it. Your landlord would have to fork out the money.

That's a point though, if this goes ahead, good luck to the landlords. Boy are they about to get a big bill.

Anyway, I can't see the Tories doing this.
The cost of covid and brexit will just be carried on the backs of the young and poor, as always, so everyone with an expensive house can relax, your millions are safe,

@CakeRequired
Well i guess that’s one small advantage for the renters! It’s not like they have many!!

@Kendodd
TRUE so true

Depends whether the assets include property (main home). That would see an awful lot of people struggling to pay.

I think its pretty rogue when Brexiteers like JRM campaigned under falsehoods to get Brexit voted through by those who don't recognise propaganda as a means of continuing tax avoidance.
The main reason for Brexit was ultra rich avoiding paying any tax and wishing to continue to do so when the EU change the tax rules.

I thin the threshold is a bit low - maybe the vast monies saved from paying EU could be used?

The irony is that the mortgage extension we’d have to take out to pay it would take our net assets below the threshold. I suspect you’d just see an awful lot of people increase their mortgages to take them below the threshold. Payday for banks.

@CakeRequired
Not that i know the circs of my landlord, but surely the proposal would be if you have a 500k mortgage you don’t actually own the asset so it wouldn’t be payable.
If they don’t have a mortgage what’s the problem in the tax?

A scheme like could never work if you're including either houses or pensions. And they would never propose that as an idea.

@mrdobalinamrbobdobalina spot on.

It would also be political suicide.

I personally would prefer this. Me and DH are higher rate tax payers, but came from working class backgrounds. In our friendship group we have lots of families where they can afford to have one SAHP, and I would say the majority is because they have inherited/been gifted deposits so have little/no mortgage (while we have a huge one on a semi). It seems unfair if tax rises should happen that it should only be on earnt income.

However, I can envisage it would actually be very hard to put in place compared to increase in income tax.

[quote Marinaloves]@CakeRequired
Not that i know the circs of my landlord, but surely the proposal would be if you have a 500k mortgage you don’t actually own the asset so it wouldn’t be payable.
If they don’t have a mortgage what’s the problem in the tax?[/quote]
I think even if you have a mortgage, you have to pay as its still an asset. Could be wrong though.

They'll likely have money for it, but won't want to pay so will find ways to hide it. This is probably the tories way of forewarning their pals to hide their assets.

All the rich people will just pay accountants to find loopholes.

It would have to take into account debts, like mortgages. If someone has 500k free cash in their accounts then sure, it sucks but we cant possibly all pay it back fairly because some people dont earn anything. I think everyone should be affected though. Benefits, pensions, no prescriptions available for anything you can buy from a supermarket- MIL gets bloody gaviscon for free on repeat prescription, that's costing the NHS a fortune. We need to tighten our belts big time, our kids shouldn't be shouldering this alone.

Council tax is based on value. The problem with that is, especially in London, you can rent an expensive house but be poor as fuck, on benefits. And you cannot take any money out of the huge profits your house has made, because you don’t own it.

Disproportionate amounts of poor people and young people rent - it’s not considered a lifestyle choice as it is in Germany

So council tax re-evaluation would really hurt poor and young, not hurt wealthy much at all.