Parental income

[glassdarker]

So, context, just seen 10% pension increase.

At same time I've been talking about doing something jointly with my mum and dad. So as a result we talked about income. My parents worked in manual/ administrative roles, neither went to Uni, but worked hard all their lives. Retired ten years ago, own house and car. I appreciate that many pensioners won't be in that position.

They both have small final salary schemes (one less than 10k, one less than 20k). They both get full state pensions. After normal bills their disposable income is a 2k a month. 2k a month ! I am blown away !

But bloody hell we are both higher rate tax payers and we are counting every penny (though we have a lot of extra spend due to a disabled DC). But AIBU to be a bit shocked by the difference in how we are experiencing the cost of living crisis ? I am glad they are doing OK and we don't need money from them but I am still a bit jaw dropped by this... and fantasy spending even 1/4 of that monthly disposable income !

(For example - what is the logic of capital gains and dividend income being taxed less than earnings? Dividends / capital gains derive from wealth, earnings derive from labour - wealth shouldn't be getting an easier ride)

If you ever thought of starting a political party I’d join.

@TomTraubertsBlues agreed

What do you have in mind though? The vast majority of wealth is either pension pots (public and private pension schemes) or private residences. Taxing either would have all kinds of difficulties.

It’s called the Conservative party.

😂😂😂😂😂

Dividend income- the rationale is because the company paid corporation tax. But I agree that they should be the same.

capital gains tax - I also agree but we don’t raise that much from CGT overall anyway. Even if it was the same as income tax it would still be dwarfed by the state pension cost.

For example in 20-21 - cgt raised about £9billion. As I said, state pensions cost over £100 billion every year. And that’s just state pensions- not any other pensioner benefits.

The vast majority of most older people's 'wealth' is in their properties. Any.pensioner with a home in the south east is wealthy on paper, but could have next to nothing in actual cash.

Also considering more than one in five pensioner households are millionaires, wouldn’t simply not “paying them as much as possible” in a universal state pension (that you said you wanted) not just be the easiest and cheapest solution.

We could save £20billion a year even by just stopping pension payments to millionaires.

Tell that to @Kendodd she is going to tell us how to tax wealth so we can afford even more money for universal state pensions that already cost us £100 billion a year

But that's because they've paid more out than you on their mortgage over the years, surely?

The reason CGT raises so little is because the rate’s too low. If it was doubled it would still be at a lower rate than basic rate income tax. The threshold for inheritance tax is so high that only about 5% of estates pay it. Both of those need sorting out.

The obvious saving right now would be to cancel HS2 but that seems to be a Tory sacred cow for some reason.

Particularly the Liz Truss wing that likes to spend vast amounts of money to the wealthy that we don’t have. You must be right at home in there.

If that was addressed to me, I’m a lifelong Labour voter. And intend to stay that way.

Even if cgt was doubled, it would raise at most £18billion. And given if it was doubled the top rate would be over 70%, in reality it wouldn’t actually raise that much at all.

as I said iht does not raise much money nor would it ever be likely to do so. A bit more maybe but certainly not £100billion.

The total cost of HS2 even at the very highest “spiralling out of control” estimate is £98billion. Quite a bit of that has already been spent too so can’t be saved. So the TOTAL cost for HS2 is leas than ONE YEARs state pension payments. At the current rate. @Kendodd wants to increase the cost further.

how on earth, realistically could this be paid for? Why are we spending £20 billion a year giving money to millionaires in the form of a state pension? Might it be because they vote Tory @Kendodd ?

The vast majority of most older people's 'wealth' is in their properties. Any.pensioner with a home in the south east is wealthy on paper, but could have next to nothing in actual cash.

well there is the option of downsizing & multiple property ownership is higher in the older generations. Wealth on paper gives you more options at least than no wealth.

No it was for @Kendodd who wants to increase the state pension further despite 20% of recipients being millionaires and working age people literally starving and freezing and public services being in pieces.

IHT is pretty easy to avoid & the thread hold is 1m for a house anyway.

The IFS article makes a significant point.

"However, it is people with wealthier parents – who are on average wealthier themselves – who are most likely to expect to receive a significant inheritance later in life. This is a source of wealth that those with poorer parents will typically not get to enjoy. This highlights how an interest in inequality across the generations should not make us forget the inequalities that exist within the generations. "

The OP will be just fine, especially when she no longer pays for a nanny and then inherits...

Meanwhile those without rich parents and who won't inherit much are the ones who will be really struggling.

Agree that HS2 should be scrapped now... there's not even a return on the investment cost.

@Kendodd your idea of re-rating council tax on purchase price only works if there's a revaluation of all properties to current values. Otherwise it would benefit me hugely unfairly, because I've lived in the same house for more than 25 years. If based on purchase price alone, it would show my house costing £130k. The current value would be several times that. Again, the advantage would go to older folk, especially the asset-rich -- who can still be income poor.

We are getting to the point that whether or not your parents own a house & can help you onto the ladder/inheritance is more important than the job you do & the salary you earn which is ridiculous imo.

And no, @kopiy I am not planning to downsize! Why do people feel that pensioners should have to live in rabbit hutches operated by Macarthy & Stone?

But everyone needs to live within their means. If a large house is stretching a pensioners budget, then they should downsize rather than expect workers taxes to fund it.

@XingMing I said it was an option. Plenty of older people downsize without having to move into a rabbit hutch. Perhaps it's different in your part of the country.