AIBU that working people should be rewarded in the Budget?

[DistingusedSocialCommentator]

As above by way of increasing the tax threshold which has been on ice for a while.

The lower paid will benefit the most as those earning about 125k I think it is dont get any tax reliefe. 2 of the 3 children of ours pay 40% or more in tax plus NI. Therefore, the lower paid will benefit the most

We left worl in our early 50's and yet to reach state pension age.

I've read that many pensioners will soon be paying taxes as many are also being paid a few quid in private pensions they contributed to

so rather than a penny or two cut, raise the threshold of income tax

The gov must also do away with IHT but that is a different subject.

So if you agree with me, then it is I am being reasonable

Sorry, that was a really bad brain fart, you are correct, it should be billion not million. £4.2bn is still nowhere near enough to change the economy, pull the U.K. out of a recession, fully fund all public services. It would not even offset the 2p NI cut in the spring budget which is unaffordable and will have to be reversed. The issue too is, the jobs being created are more like £13k on a zero hour contract type jobs. Many will earn too little to even pay more than a few quid in income tax. Yes most of the 1.2m unemployed do receive benefits, but the average length of unemployment is around 18 weeks and they are paid only JSA at £80 or so per week, so more like £1,440 per year instead of £1k per month. The 1.2m are not the same people being unemployed long term, the vast majority are workers who have been made redundant and are temporarily between jobs. The amount of benefits paid to top up low wages on workers is far more than what is spent on unemployed jobseekers.

The economically inactive are inactive for good reason. You can’t bring even a few of them into work without significant sacrifice- students, unpaid carers are over half of these. You take students out of A levels and Universities and that collapses our further and higher education sector, it also bars local British citizens from accessing higher paid, high skilled jobs so they ultimately earn less and pay less tax over their lifetime. You push unpaid carers (parents of disabled or very young children, carers of their own elder parents) and you create a massive trillion £ cost of a new public services to pay full time workers to provide this care in place of their unpaid carer relatives who are doing it now.

A good chunk are also long term sick or fully disabled. The long term sick you might get back into work, but to have any hope of that you’d have to sink an extra £50bn into the NHS and wait years for that to break even and then start to pay back on your investment. This is not likely to happen given how broke we are.

Most who are economically inactive ARE contributing, it’s just that the GDP calculations exclude their contribution. On the tax revenue side, you still pay income tax on income from private pensions, investments, interest and VAT on all your purchases. So whatever private pension pot the OP is using to pay their living expenses from, they are still contributing the same amount of income tax that a worker pays.

In addition, economically inactive people make up almost all our unpaid volunteering and carer workforce which prop up our economy by filling in gaps where paid workers are unaffordable. Imagine how ineffective our biggest charities would be if they actually had to pay all their volunteers the NMW? So many in need would end up in worse destitution. The same for unpaid carers- the social care bill as a public service would be magnitudes larger than it is now if we had to hire carers to care for 100% of elderly and disabled.

You are not telling the full story here, and being deliberately contrary.

You are going on about people getting back into work, yet you say that's not aimed at YOUR sort of person. You must have an income if you're paying tax, even though you don't work. None of us know if that's because you're independently wealthy, or if you're claiming benefits. Benefits, in this category, which include a state pension.

Very, very, many people work hard, 6 or 7 days a week; try to save well; don't take credit for purchases; yet have no likelihood of being able to retire early, in their early 50s. That's 5 years off for me. I've worked full time (plus, in many jobs), studied alongside this, and have 3, soon to be 4, degrees (an MA(Hons), an MSc and a PhD - with an MBA almost finished). My mortgage is almost paid off, and I have nothing on HP, credit, etc., because I've earned a decent - not high - salary for the past few years. I am single and childless. Yet, there is no chance of me being able to rehire in 5 years. My pension won;;t pay out until I'm 67.5 (that's the current estimate, anyway.)

I really think you have to realise how fortunate you are, and that you are out of touch with people, who are working hard, and doing their best. Mortgage and rents are significantly higher than 10 - 15 years ago; childcare bills are huge; energy costs keep rising. Really, I'm glad you're comfortable, but it's not as simple as you are making out.

@HollaHolla
OP is below state pension age and I think most likely to be on a private pension pot as their children are all highest tax rate payers. She is also most concerned about IHT, so is likely in the top 4% of wealthy that will have to pay it on her death from her estate.

I agree she is in a very fortunate position and her comments that the lowest paid benefit the most from this, I do not agree with at all.

The comments are crass. Making yourself out to be a better person than others because of years grafted or not taking a day off, like a rent a line from the Daily Mail. The kind of thing said by those who enjoy reminding others at the cost of any manners. Best kept at dinner parties with people who share these self congratulatory attitudes. OP is fortunate. But she is not exceptional except in the way she discusses other people.

Your assumptions about Labour voters are rank. Your assumptions that people who are not well of just haven't worked hard or have managed their money badly are rank. You seem unable to acknowledge that you are privileged and that when you started your working life, things were very different.

There's nothing distinguished about anything you say.

Interesting comments on IHT - I actually think it is the fairest tax and I'd like to see it increased while income tax and VAT should be decreased.

Allowing people to hold on to inherited wealth without taxing it only makes social mobility more difficult. I'd like to see working pay more via lower taxes but unearned income pay less - it's much better for society to get people motivated to get out and build their own wealth.

As I have mentioned previously, you do not necessarily have to be wealthy to have to pay IHT on your estate. A single unmarried parent will only have £500k before IHT is payable, which in the south is likely to be less than the value of a property. Also, from what I understand, if you don’t have children your estate only has a tax free allowance of £325k. I don’t know why everyone thinks it’s only the wealthy that have to pay unless I have the wrong information.

"We spent prudently and invested rather than smoking, drinking, using cabs, eating out every week or hols for many years, nor did throw away our money on HP"

So you did nothing in terms of putting money into your local area and job creation via spending? We need people spending, not hoarding money.

The spending cuts to services are estimated to be around at least £20bn. I hope your prudence has allowed for what you'll need to do to protect you from the state the UK will descend into.

For clarification on the 500k home owner as it is widely misunderstood:

This is because you will then have two tax-free allowances:

£325,000 – this is the basic inheritance tax allowance that everyone gets, which still applies.

£175,000 – since 2017, everyone has also been able to take advantage of something called the 'residence nil-rate band', commonly known as the 'main residence' band. This is an additional allowance you'll receive ON TOP of the existing £325,000 inheritance tax allowance if you pass on your main residence to your children (including adopted, foster and stepchildren) or grandchildren.
This means inheritance tax might not be due on the first £500,000 of your estate (£325,000 + £175,000), depending on who you leave your home to.

Only 4pc of estates paid IHT last year so it really doesn't catch most people
Bear in mind that assuming you are old when you die, you will have spent quite a lot of money anyway so your estate won't be as big as you think.
Many people also optimize and give money away before death.
Sell the expensive house, downsize and give your kids the max available tax free amount every year for example

It isn't really optimal to die with a large estate. Give it away to your kids earlier if you are worried about that.

Ok, thank you, that explains why only a small amount of people pay it as most have given it away before passing or it goes on care fees. If I am in the situation I am now, my estate would be liable for some IHT. I just wanted to make people aware that it’s not only rich people that could end up liable for IHT, I am far from rich but I am single, own a home in the south that will prob be just above the threshold.

IHT is only payable on the bit above 500k/1M, so even on estates that are larger the tax is not actually that much. If your estate is £1.2 Million the recipient would pay £80k tax, which sounds like a lot, but they'd have £1.12 Million left after paying it.

That’s assuming 1M threshold, if it was a single parent’s estate that would not be £80k but £280k. So a married couple’s children would pay £80k IHT and a single parent’s children would pay £280k. There is quite a disparity. It also somehow seems more on smaller estates eg property is worth £525k would be £10,000, £550k would be £20,000 or £600k would be £40,000. In all of these cases married couple’s children would have no IHT liability. I suppose I am looking at it from a different perspective as if something happened to me now, I would like my kids to be able to stay in the house (1 disabled dc) but I am not sure how the IHT would be paid for that to happen.

@singleparentloseagain you should take professional advice.

But one thing to consider is taking out life insurance if your major worry is dying soon/suddenly while your children are still young/young-ish.

It's relatively straightforward to structure life insurance so that any payout would not be subject to IHT by writing into a trust.
Whole of life insurance payout could cover any IHT liability on the house, allowing your children to stay in it if that was their preferred outcome.

https://www.comparethemarket.com/life-insurance/content/tax-and-life-insurance/

Yes, children of unmarried parents can be worse off regarding inheritance tax liability. That is true even if the parents are still together but unmarried as well as divorced parents.
Inheritance is always "unfair" though - some people inherit a lot, some people inherit nothing. It's just an accident of birth.

Thank you @MojoMoon , life insurance would not be an option for me. It does seem like single parents lose out, my partner passed in his 30’s and we weren’t married. I do wonder if this will ever change as at least the bereavement allowances have and now you can claim if cohabiting.

So would we all. But raising taxes isn’t the way to do it. Millions are wasted every year while the NHS and other public services provide a far from optimum service. The way to get better services is to create a buoyant economy so that lower taxes yield more revenue. We can’t expect the private sector to create the wealth we need for a fully functioning country if we tax it to the hilt.

The way to get better services is a combination of investment and reform.

Zombie thread!