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

The payment of it is a separate issue and could I imagine he find in various ways, on death, on sake, upfront, over 5 years, with a payment plan from HMRC

It’s not a separate issue. An integral part of taxation policy is how easy it is to collect.

As long as mortgages aren’t classed as ‘assets’ then I don’t care. I’d be livid if they tried to tax me for owning a property I don’t actually own because I owe the bank £300k and am currently paying that back.

@o8O8O8o

Have you really thought about what you are saying? which bits? I'm just musing, devils avocado etc:)

Do you mean devils advocate?

InSwitzerland you pay property tax but it's less than 0.5 percent and your loans are deducted. The issue in the U.K. is the massive increase in house prices over the last 20 years that make this impossible because your property value doesn't reflect your wealth in real terms. That's why they can't do it

There is stamp duty already which is a property tax

@gottakeeponmovin

InSwitzerland you pay property tax but it's less than 0.5 percent and your loans are deducted. The issue in the U.K. is the massive increase in house prices over the last 20 years that make this impossible because your property value doesn't reflect your wealth in real terms. That's why they can't do it

Is that 0.5% of the net, every year?

That must add up to quite a lot more than 1% of the net for five years, with a tax-free allowance that might be half a mil per person, or a mil for a couple.

I think a wealth tax is a great idea. Remember the guy in the question time audience a few years back who earned £80k and said he didn’t feel wealthy, why should he pay top rate tax? That’s presumably because people with assets such as large houses with no mortgage and no employment (retired, or people that live off inheritances, or people that have made massive untaxed gains on their houses) don’t get taxed on their assets. We tax income in this country, but not wealth. We need to start racing both.

If I paid 0.5% of the zoopla estimate of my house in council tax I would face a massive bill. I think that’s fair though. Hopefully it will also help encourage older couples to downsize from large properties too. We have a limited housing stock in this country and need to make more efficient use of it.

The problem with using this method for council tax is that areas such as Westminster Council collect a fortune but other councils would take much less.

elvesaremagic - if he lived in london he probably isnt wealthy, especially if he is trying to buy a flat for 500k! Other areas of the country on the other hand he probably has far more money than he needs.

we have saved hard for 30 years so we can retire and have put money into property as have a large family rather than luxury holidays, etc etc. I cant help that our house has gone up in value and we still need to live in it.

And if you move you have to pay stamp duty on the next house and EA fees.

What is the reason for the limited housing stock anyway?

i can see the argument for higher death taxes as that is money that the recipient hasnt earned. But if you have worked really hard long hours in a responsible stressful job and have saved that money why should you then be expected to pay 25k in tax and would that be each or per household? This sounds like the politics of envy to me

elvesaremagic - if he lived in london he probably isnt wealthy, especially if he is trying to buy a flat for 500k! Other areas of the country on the other hand he probably has far more money than he needs

I remember him. He didn’t live in London. I think he was a fantasist.

It's quite normal for people who are well off to describe themselves as hard up.

it's quite normal for people who are well off to deny that the weight of tax should bear most heavily on those with the broadest shoulders.

[quote PigletJohn]@HikeForward "Will the super-rich not use these systems to find legal loopholes, and simply employ multiple lawyers or squirrel their wealth away in off-shore banks to avoid further tax demands? "

No doubt they will try. Nobody has yet told me how they will squirrel away their grouse moor, their castle, their country estate, and their Kensington Palace Gardens mansion, and move them to Switzerland.

Pensions are already taxable if you cash them in.[/quote]
I haven't yet read to the end of this thread, but assume nobody else has given you an answer.

Most of the castles, grouse moors and country estates and London mansions are already either in offshore trusts or owned by foreigners. Taxing foreign landowners is incredibly difficullt.

@PigletJohn yes but you get charged on your wealth ie all income and assetts minus all debts. Property is an asset minus the loan but there is no additional income tax on top of the 0.5 percent (varies by county but not much) so the actual tax rate is quite low

Do you mean devils advocate?
oh no, oh the shame, I was saying it wrong all these years

tee hee hee
I just cant resist a fruity play on words:o

I think I prefer devils avocado actually!

Some posters seem to be rubbing their hands at the thought of people being turfed out of their houses and forced to live somewhere cheaper - lovely! Or having to go for equity release. Thankfully, I can’t see any of that happening, even if a wealth tax were introduced.

@Notgoingouttoday

What is the Annual Tax on Enveloped Dwellings?

Most of the castles, grouse moors and country estates and London mansions are already either in offshore trusts or owned by foreigners. Taxing foreign landowners is incredibly difficullt

That is true.

@user1467048527
I agree. This is not about raising people up for some. It’s about dragging people down. That is why some seem to be quite excited by it. Honestly, if someone is living in a house that has gone up to some ridiculous value in London, do I care ? Swings and roundabouts. It’s not easy to make a life there. Maybe I should get mad that someone is living in a cheap house in a small northern town because they have a garden, a driveway and more disposable income. Surely that’s not fair. Maybe we should measure disposable income after essential housing costs( area average ) are factored in and tax that. Or maybe some of us should stop viewing tax as a punitive measure. It’s not supposed to be that. It’s simply revenue collection and it does need to be balanced with responsible governance. It’s a partnership. We have some way to go on that measure. I have lived in a country with fantastic social provision ( balanced with a sense of individual responsibility to the collective good)a simple taxation system ( without moving goalposts) and a good standard of living. It’s possible.

Wealth is difficult to measure and even harder to fairly tax. In principle taxes on property are not really fair unless you are selling as often there is no liquidity there. Its not like having 500k in an account.
If this tax was going ahead then it would only mean that banks would offer to increase your mortgage and term to release the capital for you to pay your tax bill.
It's highly unlikely to happen anyway, how is the government going to value the nations privately owned housing stock without spending a fortune?
Much easier to raise tax receipts through other methods on liquid assets. Income, NI, VAT, Fuel duty. etc.

It's certainly very much more convenient for the wealthy

I'd rather they target the super rich than the squeezed middle

So if you still have a substantial mortgage left on your property then presumably you won't have to pay this tax, since you don't technically own your house yet?