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

@Pukkatea
But do they have a mortgage?

@Affor

Hang on, hang on.

The RUMOURS were for either over £500k, £1m or £2m. They were payable over 5 years. And didn't include mortgages. So unless you own £500K of property outright, it doesn't count. And it's not demanded straight away.

Also, it's a rumour.

Hopefully this!

One would hope dh and I could share the assets in which case it would be ok

But I’ll be honest losing 25k would fucking hurt!

@AlwaysCheddar

A house is an asset. So in the north, you can get a bloody mansion for £500k. Thus is the price of a flat in some parts down south. The disparity is too great

The disparity isn’t as huge as you might think. I’m in the north and £500k round here gets you a good sized 5 bed family executive detached home with a decent garden in a nice area. Or perhaps a 3/4 bed do-er upper with a large plot (1 acre maybe). This isn’t even prime N Yorks but W Yorks. Granted it’s a lot more than you get in the S East but the gap isn’t that massive.

All the mansions I’ve seen (on Rightmove, not viewed!) are several million.

Completely up for paying whatever is needed for better public services for all, but £500,000 sounds like a low ceiling when the richest in society have made even more millions and in some cases billions during the pandemic and many (not all) do everything they can to pay the least amount of tax possible.
I’d rather see those people and individuals who have the most, pay a decent share, than a family with a £500,000 house (which in the SE is now the average house price so relatively speaking not an obscene amount) have to pay a one off tax of thousands, regardless of the mechanism of payment.

It’s not just the equity in your house, it’s your pension pot they want to include as well. So anyone with a final salary pension scheme, or a valuable civil service pension will be fucked. Our bill would be about £100k. We simply don’t have it and no way of earning it over a 5 year time scale, especially with DH unemployed and not been able to find anything for over a year. We’d have to sell our home and be forced to stump up stamp duty and all the other fees associated with moving home. We’d be forced out of London as we’d need to move somewhere cheaper, which means I’d lose my job and DC would have to move school.

Thank fuck Rishi has already ruled it out.

@Marinaloves no, but forgive me if I don't think my father with terminal cancer should have to sell his home (and only financial asset) because the government fancies the money from it to hand over to Dido Harding.

Agree that what will happen is even more cuts to services, privatisations, benefits. On the other hand it will go down a treat in the former red wall brexity areas. All those middle class liberal elite type professionals in the London/ Home Counties being hit....

I’d support taxing wealth instead of income. People who have made enormous amounts on the housing market should be taxed more. Council tax is a massively unfair system, best thing would be to reform that and add additional bands and revalue all properties. A lot of people sitting in extremely expensive houses are paying peanuts

@edwinbear are your sure you’ve done the maths correctly. You have £3,000,000 of assets? I have to say a lot of people probably wouldn’t have sympathy with someone with those sorts of sums saying they couldn’t raise 100k over 5 years.

I would probably agree with taxing assets if they excluded the main home, the value of property in the South isn't really an asset unless you are planning on selling and moving to a cheaper area. On paper it read as it we have loads of equity but if we were to move we need all the 'profit' would go straight into buying another house. In reality we won't have any spare cash at any time so while our house has increased, so has every other house in our area.

If we had spare money laying around we would have central heating that worked properly and windows that didn't let the wind through and drive a car that wasn't 14 years old. DH is hoping to take his retirement in 8 years so we don't really want to start taking out a loan now on an asset that is on paper only.

I keep having to explain to the kids we are paper 'rich' but cash poor.

My DSis lives in a lovely house, far nicer than mine but in cheaper area about an hour away so would be under the threshold, even though they have three cars, newer than mine. Dbil lives 3 hours away and his house is worth a lot less but again has a newer car and warm house.

Is it fair that because we live in an expensive area but have less in savings or assets (not including the family home) than other family members that we will have to pay but they won't.

I don't want the debt to be paid back by our children but there must be a fairer as to go about it.

I think residential property should be exempt. In many places £500k only buys a 2 bed flat

Thankfully, despite wealth taxes often reeled out by think tanks, no govt would be crazy enough to actually do it. The whole idea is preposterous. Most people with £500k or a million in "assets" won't have liquidity to pay a few tens of thousands in tax. It'll be tied up in property, investments, businesses or pension funds. There'll be tiny numbers of people with that kind of money in bank accounts or other readily realisable investments. It's also complete unfair - I can almost hear the howls of protests from higher paid public sector workers (such as doctors, dentists, some head teachers etc) who have a state "pension pot" nominally valued at over £1m to fund their £30/£40/£50k pensions.

Far more sensible would be to scrap NIC and increase income tax instead. That could very easily be "marketted" as fairness, so that everyone with the same income pays the same tax. At the moment, someone living on investments (dividends, property, pensions, etc) doesn't pay NIC on it. That's simply not "fair" and the majority working population would almost certainly support those not currently paying NIC to pay it! That's just one "anomaly" that could be easily done. There are plenty of others.

There are no houses cheaper than that where I live.
I dont have 25k, so what should I do?

@Pukkatea
Why would he have to sell his home
That’s just a sort of weird bonkers knee jerk thing to say

Well given the ridiculous way house prices have gone, that's about 95% of the south east due to pay up then. Awful proposal.

You cannot say the house you live in could be counted towards that 500k. People who bought a house (and are still paying mortgage on it) should not then have to plunge themselves further in debt. They are not responsible for 2nd home owners/holiday cottage owners artificially pushing up demand and thus prices in some areas. A 500k house does not equate to wealth, it equates to a potential profit IF and when the house is sold. And that's what stamp duty is for. Until the house is actually sold, it's just made up numbers. Like shares, the value on the bit of paper can go up or down and it's irrelevant until the moment you sell.

Wealth tax should be for those who are actually wealthy once you discount the home they live in and any pension prior to coronavirus (to avoid a sudden massive increase in pension contributions to avoid becoming liable.)

And if that's the way they decide to do it (leaving out home and pension) then the figure should be much lower...say 200k. That leaves first home buyers enough to not be penalised for saving for a home.

@Lancrelady80
But that would make it very easy for people to hide money

Any increase in tax is going to be unpopular with somebody. Given the choice of taxing young people more of their incomes when they have no hope of getting on the housing ladder and taxing those who have large amounts of equity in their house and pension I think the latter is fairer. Even if that means increasing the mortgage etc.

@Lancrelady80, but how many of us in the SE actually have 500k or 1M (for a couple) in “assets”? A large proportion will have sizeable mortgages which will mean they won’t cross the threshold. You’d only pay this if you have equity in your property of over 500k.

I don’t have a spare £35k lying around.
I bought this house with life insurance when my husband died. It’s for my son. paid hefty stamp duty when I bought it.

There’s no fair way to do this with different circumstances and the massive variation in house prices.

@GoldGreen 5% of £2m is £100k. Split between equity in our (London) home (normal 4 bed family house with postage stamp sized garden) and two final salary pension schemes, which we are obviously fortunate to have, but unable to draw down for at least 10 years. I work, but DH has been out of work for 15 months so cash flow is tight. Yes of course we could sell our home, but it’s our home. Chosen to be close to work, family, DC’s school. Why should we be forced out of it? We’ve done absolutely nothing to deserve a punishment like that.

[quote Marinaloves]@Pukkatea
Well he does. He’s got a house with a probably large tax free amount of profit in it.
Only most people don’t ever want to access the profit until they’re old. Or they want to pass it on - they don’t want to use it to pay to help society - does that sound fair[/quote]
And how do you expect them to access that money? Sell the house? Go through the stressful house buying process while very unwell and try to find somewhere cheaper if indeed that's possible.

Or perhaps they can sell and use what's left after paying the tax to rent somewhere. Paying a landlord's mortgage. Then when that money runs out, their landlord's rent can be paid by the government via benefits. Umm not sure much income distribution has happened there really.

Or do you expect them to take out a loan that they can't afford to repay because they have very low or no income.

@BarbaraofSeville
They could increase inheritance tax and make it harder to avoid. It's only paid after people die so doesn't actually affect anyone
Not true, inheritance tax is calculated and paid before the inheritance is received.

I’m a reasonably well paid professional and I couldn’t afford a £500,000 house. Earlier comment about young families scrabbling about to find money for a £650,000 mortgage was ludicrous. How much even are monthly payments for that ? Hardly poverty stricken. People have lost perspective. I think what it does show is the way that wealth is concentrated in the south. Maybe redress that somehow.

I’d support taxing wealth instead of income.

I agree, and I would be hit by it.
We need to reduce the value of assets and increase the value of work. We have loads of people working really, really hard all their lives and ending up with NOTHING meanwhile their landlord and boss became very rich.

@RavingAnnie
Well this is why I said upthread that the government would have to run some kind of equity release
They do it now. Social care came and fitted a bathroom for my mum - grant
Re-wiring - not a grant, the government/council will get paid the amount when he dies or the property is sold
How’s that’s so bad