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

[quote Rhayader]@user1467048527

Just numbers on a page if you are already on the ladder. Not for young people and renters, for them it’s a huge barrier. A property tax would lower house prices for everyone.[/quote]
Yes, you’re right of course. I was trying to make the point that homeowners are not rubbing their hands together and counting their wealth as some posts suggest because it’s all tied up with no way to get at it except downsizing, moving to a cheaper area or equity release.

But, yes, the values concerned are a real problem for those who want to own a first house.

I’d not be opposed to prices being lower.

Well this in interesting...

"Chancellor Rishi Sunak has agreed to tie his own hands at next month’s Budget by sticking with the Conservatives’ “triple tax lock”, which stops him raising the rates of income tax, national insurance or value added tax".

"Treasury officials had hoped Mr Sunak would ditch the Tories’ 2019 election manifesto commitment, which stops him using the three biggest tax levers to start curbing a deficit that is expected to top £400bn in 2020-21 because of the coronavirus crisis."

"Instead, Mr Sunak has agreed with Boris Johnson that the triple tax lock must be maintained, according to government insiders — a move that could force him to seek increases in other taxes, including corporation tax and possibly capital gains tax."

www.ft.com/content/9d5b8500-73d8-4d6a-b0e5-7b13b1668a63

How does anyone know how much their house is worth until it’s sold? Are we going to have to get them valued each year with valuations sent to the treasury? I’ve no idea how that would work.

@kittenpeak

How does anyone know how much their house is worth until it’s sold? Are we going to have to get them valued each year with valuations sent to the treasury? I’ve no idea how that would work.

I imagine it would be the same as for probate which is usually market value, whatever that is, from the average of 3 estate agent valuations on a certain date. Everyone will suddenly be wanting to lower the price of their house instead of the usual inflation that goes on when they are put up for sale.

As far as I see the whole process will be similar to doing probate for IH tax purposes which would mean that everyone would have to get these valuations even if you were not going to be reaching the amount for wealth tax

How many votes would they actually loose from doing this anyway. Tory voters would just think that property taxes would be much worse under labour. I don’t think they would do a one off like this but 0.5% a year sounds very likely to me.

A lot of people would not be able to afford that. If my house is worth what I think it might be (though I have currently no idea), that would mean a bill of £4000 a year for me. Yet I am a single parent to three teens, on 25K a year, and currently receive tax credits. If they are going to tax property, they would only feasibly be able to do it at the point that people are selling.

They should tax their offshore hoarding mates first, and claw back the billions they have just this year given to their useless cronies eg. Dido Harding and others - at our expense fiscally but also at the expense of our health.

Rishi has already said a wealth tax isn't happening anyway but I have seen lots in the newspapers about CGT, corporation tax, and also fuel duty. PigletJohn linked to one report above. Would expect CGT to be aligned with income tax and maybe exempt rate lowered to be likely

Isn't there a g7 in Cornwall this summer?
I wish countries around the world would all close tax loopholes and impose a global covid wealth tax. I don't know why they don't, it would benefit all their people and actually not that many of the actual leaders are billionaires themselves. I suppose it only takes one to break ranks though, plus, I know it would never happen.

@Kendodd

Isn't there a g7 in Cornwall this summer? I wish countries around the world would all close tax loopholes and impose a global covid wealth tax. I don't know why they don't, it would benefit all their people and actually not that many of the actual leaders are billionaires themselves. I suppose it only takes one to break ranks though, plus, I know it would never happen.

That’s way too sensible.

@AskingQuestionsAllTheTime

I bought a house back when I was earning. The estimate of its value (I just looked) is something like four times what I paid, and would make me liable for this tax.

My pension would take over a hundred years to provide £25,000, assuming I didn't need to eat or pay for any services like electricity and water, or a local tax of any sort. If I ate or drank or heated the house, it would be two hundred years or more.

This is a good example of why what OP is saying isn’t really fair.

My pension would take over a hundred years to provide £25,000, assuming I didn't need to eat or pay for any services like electricity and water, or a local tax of any sort. If I ate or drank or heated the house, it would be two hundred years or more

Your pension’s £250 a year? And it feeds you and pays all your bills? You should be a budgeting guru, can you give me lessons, please?

Most people would be able to pay. Someone could quite easily live in a house worth a million but have no real savings

*wouldn't!

@recluse

The problem with taxing people when they are selling is that it dries up the market because nobody would move. Then you have the same problem that we have now which is an inefficient use of the property market with lots of middle aged couples with empty nests in large family homes. My in laws live in a cul-de-sac of 5 large (6+ bedroom) homes. When they moved in it was all young families with kids but now it's all people in their 50s or retired people.

You would effectively be a prisoner in your home as you wouldn't be able to afford to move because of the high tax bill.

You would effectively be a prisoner in your home as you wouldn't be able to afford to move because of the high tax bill.

That makes absolutely no financial sense for the so called 'prisoner'.
So to avoid paying a sort of stamp duty on selling they would stay for years paying higher council tax, higher utilities, higher maintenance. Plus, if they sold a family home for £600,000 and bought a smaller place (less cleaning as well!) for £300,000, they have £300,000 cash to spend! Instead I see pensioners rattling around in big houses unable to afford to have the heating on living like King Midas.

@Kendodd

It doesn't make sense to me but this is what older people say all the time. They "can't afford" to downsize.

@kittenpeak

How does anyone know how much their house is worth until it’s sold? Are we going to have to get them valued each year with valuations sent to the treasury? I’ve no idea how that would work.

An app on your phone would do a 3D scan of the premises every year and send it it to the treasury where an algorithm would determine the worth of said property? 🤔😶

[quote Rhayader]@Kendodd

It doesn't make sense to me but this is what older people say all the time. They "can't afford" to downsize.[/quote]
It's a euphemism for 'I don't fancy living in a pokey little flat like a poor person'

[quote Rhayader]@Kendodd

It doesn't make sense to me but this is what older people say all the time. They "can't afford" to downsize.[/quote]
As an “older person” who can afford to downsize but doesn’t want to, this is completely bonkers. Of course they can afford to. Usually it’s not for financial reasons, it’s because of the hassle of sorting through and moving decades worth of possessions.

We want to stay in the small town I first moved to almost 50 years ago when I was 18. It’s my home. If we could find a smaller, non estate house here with a south facing garden, I’d grit my teeth and do it but there’s been nothing that fits the bill on the market for years.

Yes, there are small, beautiful, expensive retirement flats with gardens running down to the river but they have minuscule kitchens and no storage space. Everyone who’s bought one has lost money and who wants to live in a geriatric ghetto at 60 odd?

who wants to live in a geriatric ghetto at 60 odd?
It would no doubt be compulsory if some posters got their way.

I would be annoyed if main residences were included in this. It would penalise people like me who bought a house smaller than they could afford and paid off the mortgage as soon as they could, rather than buying a mansion on a 100% mortgage and not having to pay anything.

I would tax second homes and look at the allowances on IHT - when you inherit, you get something for nothing so I don't have a problem with IHT. It would also encourage people to give away money during their lifetimes rather than hoarding it.

I'd also look at taxing SUV ownership and look for other ways to nudge people into more environmentally friendly decisions through new taxes.

@adriennewillfly

We should be taxing the things we want people to do less of. Taxing wealth hoarding instead of taxing income. We want people to work harder, and we want people to spend their money (beyond a reasonable amount set aside for emergencies etc) so tax wealth rather than (not as well as) income. We want people to own a home, but not to hoard housing, so tax second properties, not first.

But if we tax them so much people stop doing them - no tax - so then the tax has to come from somewhere else.

As far as I can see the Conservative philosophy since Thatcher has been to jack up tax on things poor people have no choice in - like VAT, and make income and CGT taxes less for the well-off.

Given house prices in the South of England that would be insane to try to bring in based on someone’s main home. Our house is now worth more than that but we still have a massive mortgage and are down to one income. A £25k tax demand would put us immediately in £25ks worth of debt with no obvious way to pay it back.

It would also mean that someone in a fairly ‘normal’ house elsewhere with savings or pensions could suddenly face a massive tax bill. It’s needs to be a higher threshold or exclude main residences.
What would make more sense would be putting all income tax up by a % and let people get used to have less monthly.

This could work if it did not include the family home.

Not going to happen though.

I'd also look at taxing SUV ownership
Eh? They are already highly taxed.