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

@recluse
Yes. I’ve actually found it really chilling.

@Barbadossunset

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?

These are great examples. I stopped using Facebook because they don't show any respect for the laws of the UK. At the point I gave up, it was littered with adverts that were illegal, often in several ways. These large US corporations don't give a rats ass about our tiny country and piffling things like tax and laws - and no-one is stopping them. Maybe some people it if we're run by silicon valley rather than the politicians we elect, but I don't - and I'd certainly vote for a government that stood up to them. Unfortunately as we can see from the fact that Nick Clegg now works for Facebook, they are all in it together for whatever they personally cream off.

@Blackberrycream

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.

And some people make it a priority to pay off their mortgage but are quite frugal in other ways.

It is the house price inflation that is frustrating as it's only on paper to some extent and you have to live somewhere

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.

THIS. There are some extremely left-wing Marxists mistaken attitudes on here that are sadly very prevalent.

@VinylDetective

Trouble is they’ve painted themselves into a corner with the manifesto promise not to raise income tax, VAT and CGT. All the ways they could use to raise money are sure fire vote losers.

That is not true.

The Conservative manifesto promised not to increase the rates of Income Tax, National Insurance and VAT. It still leaves room to close loopholes and adjust thresholds. They made no pledge on CGT.

The Labour manifesto contained the same pledge, but restricted to those earning less than £80,000.

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.

I agree with some of this and think we need a massive increase in inheritance tax, I don't know why we don't just treat it like income for the recipients and tax accordingly. As for children inheriting, the average age to receive an inheritance in the UK is 61 so hardly giving youngsters a start in life.

I think this wealth tax would be a good idea if brought in.

The argument of ‘a profit on a house isn’t true profit unless you sell’ doesn’t really stand. It is similar to saying the cash in my bank isn’t really an asset until I withdraw it in cash.

Wealth is calculated on assets less liabilities. If you own a mortgage free £1million house you are wealthy! I understand maybe some people don’t have high incomes to pay the tax but in theory it can be deferred until the profit is released.

Also if you do own a mortgage free £1million house, you have either inherited money Or the property, benefitted from the property boom or previously had a large income I order to pay for it.

There is no arguing that you are not wealthy and fortunate. I can’t understand how these people can sound so entitled.

But it's always set too low so those who are not very well off get drawn in.

I understand maybe some people don’t have high incomes to pay the tax but in theory it can be deferred until the profit is released.

The point is that some posters are suggesting that these assets should be sold now in order to pay for the tax, regardless of the fact that they are family homes.

The argument of ‘a profit on a house isn’t true profit unless you sell’ doesn’t really stand. It is similar to saying the cash in my bank isn’t really an asset until I withdraw it in cash

It’s completely different. Our house is allegedly worth 350% of what we paid for it but it’s fairy money unless we sell it. We can’t pay our bills with it unless bricks become legal tender.

@recluse

I understand maybe some people don’t have high incomes to pay the tax but in theory it can be deferred until the profit is released.

The point is that some posters are suggesting that these assets should be sold now in order to pay for the tax, regardless of the fact that they are family homes.

I doubt the government would suggest people sell family homes. But it would be fine to defer the tax until you were able to pay it say on sale or death.

Any wealth tax on property is always biased against the south east.

How is it fair that someone living in a two up two down in London has to pay, but someone living in a mansion in Scotland doesn't?

Anyone saying tax the second homes needs to bear in mind that btl landlords have already been clobbered with numerous big tax rises in the last few years and yet another would considerably impact the number of houses left to rent.

Overall I think it would also lead to a slump in house prices as those around the million mark would all drop by £50-100k and that would ripple down to thd whole market. So massive negative equity all round.

@VinylDetective

The argument of ‘a profit on a house isn’t true profit unless you sell’ doesn’t really stand. It is similar to saying the cash in my bank isn’t really an asset until I withdraw it in cash

It’s completely different. Our house is allegedly worth 350% of what we paid for it but it’s fairy money unless we sell it. We can’t pay our bills with it unless bricks become legal tender.

It’s not fairy money. It’s your net wealth. That is how wealth is calculated. Obviously you can’t spend bricks but would you be happy to defer the bill until you sell or die?

The argument of if people actually have the cash to pay is a distraction to the discussion. People won’t be made to sell their family home. The actually discussion should be around would you be happy to pay the wealth tax either now if you can afford it or later if you don’t yet have the actual cash.

No-one is being told to sell their house, only that the tax should be applied, based on the gain over the purchase price when the property is sold.

Not the same at all, and also only above a very generous threshold of untaxed gains, beyond the wildest dreams of wealth for the majority.

Btl landlords have been taxed highly because we don’t want people owning multiple houses. The government is trying to disincentivise this.

A lot of other countries have wealth taxes. It is harsh as it’s a dry tax charge, lots of people are asset rich cash poor. But it’s never stopped this sort of thing. I think a tax on assets to the extent they exceed £500k is fair if they spread the cost over say 5 years

Well don't include houses, it's way too low otherwise especially in the SE.

@goteam

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.

Agree

Any wealth tax on property is always biased against the south east.

Is it? Presumably property prices in the SE are high because of higher than average earnings compared to cheaper parts of the country. So, the people in those areas are earning more to be able to afford to pay more.

I mean your only residence, btl by all means especially when some people are dishonest about declaring these on their self assessments

@Kazzyhoward

Any wealth tax on property is always biased against the south east.

Is it? Presumably property prices in the SE are high because of higher than average earnings compared to cheaper parts of the country. So, the people in those areas are earning more to be able to afford to pay more.

Many people in our street who bought 30 plus years ago. They are not high earners at all. Far from it.

But houses have gone up. They couldn’t afford it. Nowhere close.

@Kazzyhoward

Any wealth tax on property is always biased against the south east.

Is it? Presumably property prices in the SE are high because of higher than average earnings compared to cheaper parts of the country. So, the people in those areas are earning more to be able to afford to pay more.

Why is then on property programmes to buy abroad e.g. Place in the sun most of the participants seem to come from the Northern regions, it seems they have more disposable income as property is cheaper relative to earnings

But people in the SE will only have the charge if their home is £1million mortgage free! I think people on this thread still don’t understand that the mortgage is deducted. If someone in the SE has £1 million home mortgage free they are wealthy and should pay.

@XjustagirlX
If it’s on death, well just call it inheritance tax then. Job done. We already have that. Add to it if really needed.
Anything else is just weird social engineering where lower income families need to move out of area if for any reason they decide to move. Suddenly a tax is payable and they are left without enough to buy an equivalent to what they already own and have paid for. I suspect you would be quite happy with that scenario though.
The attitudes on display here also make clear that this would not be a one off. This is not about revenue generation for quite a few posters. It’s a general nastiness towards pensioners, hostility to city dwellers and those in the South East ( and yes, widows at one point!)

*Many people in our street who bought 30 plus years ago. They are not high earners at all. Far from it.

But houses have gone up. They couldn’t afford it. Nowhere close.*

But they have benefitted from a massive property boom and therefore are incredibly fortunate so should help get the country out of the financial mess it’s in.