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

@VinylDetective

Isle of Man and Gibraltar? You can walk round both of them in an afternoon!

As you can for Monaco too. But that's not the point. The super-rich don't spend all their time there, they don't even spend most of their time there. All that matters is that it's their "base" and they don't spend too much time in any other single country. Same with all the limited companies with head offices in these tax havens - some tiny "one man" offices are the "head office" for hundreds of companies. Take Nigel Mansell who "lived" in Isle of Man - what mattered was that he was out of the UK for enough days not to be taxed in the UK.

Wealth creators flee taking their assets with them

I'm not sure billionaires create wealth for anyone other than themselves though anyway. I don't know why we suck up to them.

In fact I wonder if theres ever been any research into a company like Amazon (or example) or hedge funds to work out there economic impact?

*Their

It will hit ordinary people in the south east and the super rich and corporations will continue to be tax efficient and avoid paying. I think any wealth tax needs to be on larger amounts. Eg £1m plus and not include any house that is a main residence. Second homes etc fair enough.

Historically a wealth tax has never worked out. It costs more to actually chase after and to try and bring in a wealth tax than the actual tax itself brings in., as proven with France, for example, in the 90s.

My PIL have a small bungalow worth about £650k. It’s adapted to their needs and near family. They have a tiny pension, but they live modest lives and are happy. They’d have to sell their home to fund something like this. Just doesn’t work in some parts of the UK.

It seems as if there is no workable way to make things fairer and better🙁
every option turns out to be full of loopholes🙁
meanwhile the rich get richer, laughing at our puny laws which turn to dust when confronted with the might of their enormous hoarded wealth

Thinking about a global wealth tax (I know it'll never happen) if all the tax haven countries got on board, they'd be the biggest beneficiaries. They'd be absolutely rolling in money.

@Kendodd

Thinking about a global wealth tax (I know it'll never happen) if all the tax haven countries got on board, they'd be the biggest beneficiaries. They'd be absolutely rolling in money.

The whole world would be. I do wonder at the mentality of people like Philip Green who has more money than he could ever spend yet still steals his former employees’ pension funds. What on earth goes on in those people’s heads?

@TheSockMonster

In the proposal that was published in the telegraph this morning your parents would be able to defer their tax until they sell the property.

www.telegraph.co.uk/property/uk/overhaul-property-tax-save-19-million-households-435-per-year/

I do wonder at the mentality of people like Philip Green who has more money than he could ever spend yet still steals his former employees’ pension funds. What on earth goes on in those people’s heads?
Perhaps it just comes down to 'power corrupts', the ring of power transformed a simple Hobbit into a twisted amoral creature.....
called Philip green🤭
(I jest, but I think it's obscene 🤬)

[quote Rhayader]@TheSockMonster

In the proposal that was published in the telegraph this morning your parents would be able to defer their tax until they sell the property.

www.telegraph.co.uk/property/uk/overhaul-property-tax-save-19-million-households-435-per-year/[/quote]
That seems sensible, so long as it doesn’t impact their ability to fund their own care, but I’m guessing sale of assets to pay nursing home fees would be exempt. We certainly don’t want or expect to inherit anything once they’re gone. Would far rather they spent it making their later years as comfortable as possible.

Don’t pension pots just get paid out, so people dying early isn’t really a saving ?

Depends what sort of pension.

If it's a defined benefit, then the payout stops when a person dies, unless there is a widow's pension arrangement.

If it's defined contribution, then there's a fund that provides an income via drawdown and if there's some money left when a person dies, that amount forms part of the estate.

The former type relies on some people not getting value out of them, otherwise they'd go into deficit, which a lot have due to people living longer.

With regard to billionaires and governments sucking up to them, and my wondering if ordinary citizens actually benefit or not from billionaires, Philip Green is a good example. I remember reading once that his superyachts were equal in value to the amount paid out in tax credits to employees in his shops. Amazon is another one, I wonder how many small full tax paying (and not so small) businesses they have put out of business? Somebody upthread described billionaires as wealth creators, they are very good at creating wealth for themselves but I'm not so sure very many people benefit from that. I saw a programme about economics on TV a few years ago, one thing they said was that over the last 25 years in the UK we have had X amount of economic growth (it was a lot), but that every single penny of it had been sucked up by the super rich, average wages had hardly moved during that time. So maybe we'd all be better off without billionaires or their businesses and I much harsher tax system in the country. If you want to operate a business here, if you buy or sell here, you pay tax here. If that means you close your business in the uk, so be it. Maybe?

Billionaire's as wealth creators
Yes they create wealth.....but they use it in a socially destructive way🤬

Maybe would all be better off without billionaires
Agree completely, concentrations of unaccountable wealth and power are always a bad thing

Technically I have assets of that much but in reality I struggle to raise two children, both with childcare costs, on an insecure income of between £16k and £20k (pretax). So no, I cannot afford a fucking tax bill of that much.

If you owe income tax and you tell the tax man you can't afford it he will tell you to sell your assets and use that to pay
Presumably the same would apply if a wealth tax was in place?

Owning a house of 500k in some areas doesn't equate to being wealthy.

Example:
Huge mortgage, with little equity. Just because you have the ability to borrow a lot doesn't mean you have funds to suddenly pay a 25k tax bill

Reading this thread I think many people have been confused by the use of the word asset when in fact “net worth” would be better. Wealth taxes are based on tangible assets, but liabilities are deducted. So if you have a house worth 600k and a mortgage of 400k your net worth is 200k you wouldn’t have to pay the proposed tax. If you had no mortgage you would have 600k of equity and would pay 5% on the 100k over the 500k threshold, so 5K (although if you were in a couple you would still be below the threshold).

So maybe we'd all be better off without billionaires or their businesses and I much harsher tax system in the country. If you want to operate a business here, if you buy or sell here, you pay tax here. If that means you close your business in the uk, so be it. Maybe?

Kendodd that’s an interesting idea but then presumably that would mean Amazon wouldn’t operate in this country?
That may not be a bad thing, but it’s very popular and is an intermediary for lots of small businesses.
Also what about Facebook? Does that pay tax in UK?

There are some lovely attitudes on display here.
Single mothers are being told to sell their house if they can’t pay their (new) tax bill ( tough luck and all that ).
It’s an echo chamber of some really unpleasant attitudes.
House price inflation is an issue. It has been driven by low interest rates and inherited wealth. I do worry about those without parents who own houses. Most of those on this thread are not in that position. I have friends grappling with this right now and considering right to buy. In my own family we are the first generation where some of us have been able to buy houses. When I bought though, interest rates were 13%. Prices were lower but payments were difficult ( for those unfamiliar, look it up, look at the payments and see what is affordable in today’s conditions and with today’s prices.
There does seem to be a generation of middle class children who are unable to afford the lifestyle and houses of their parents and the anger is palpable ( comments about pensioners hogging their houses). Ironically, these are the same people who will be feeding into house price inflation when they inherit from parents and in laws. Inherited wealth is the real driver of wealth inequalities.
Misinformed percentages about who has assets over 500 000 are also quoted. Like any data, it can be misused. It is often based on a lifetime of saving and making mortgage payments so will obviously skew towards smaller percentages and an older demographic. An older demographic who may well be in low income situations as many have pointed out.

There are some lovely attitudes on display here.
Single mothers are being told to sell their house if they can’t pay their (new) tax bill ( tough luck and all that ).

^ this - I am on my own with three teens, on a low income, and would have to sell going by what people are saying here