Labour and tax

[Iwishicouldflyhigh]

Is anyone else concerned about all the talk about Labour getting in and then increasing lots of taxes - capital gains, CT, tax on pensions etc. I'm accepting that they are going to get in, but i am genuinely concerned that they are going to clobber the middle classes.

I don't think that KS is a bad person (actually - with a few exceptions - i think that most politicians at least START in politics with the correct intentions), but i 'm worried that his genuine ideals are far more left then he is making out. The rich will be all right (they always are), but the middle classes (of which i am one) - i'm genuinely worried. He supported JC for God's sake!!

I think that people are genuinely so pissed off (rightfully) with the Tories, that they are voting in Labour with the idea that they can't be any worse. But i'm concerned that they might be (for different reasons).

Can any party really fix the issues in this country?

Please talk me down, someone!

I think CGT on housing is a poor plan. Much better to scrap stamp Duty and council tax and charge a % of a house’s value as an annual local tax instead. This incentivises people to move house by taking away the barrier (stamp duty) and encouraging people to live in a house that isn’t too big by making it expensive to do so.

It would get more money out of the rich and reduce demand (and prices) for larger family homes.

I'm middle class and in the "comfortable but not rich" category too. I am clinging to the hope that Starmer might turn out to be more left wing than he is currently presenting as, because people like me absolutely need to be taxed more in order to help the many people who are really struggling and to invest in improving our public services. Sadly, I am not very optimistic right now but would be delighted if proved wrong.

There simply isn't enough money coming in right now to pay for what we need as a society, so something needs to change. It makes sense for those who are better off to contribute more, but we don't have many politicians at the moment who are brave enough to say so.

LSE. “most people never receive any capital gains, with less than 3% of adults paying capital gains tax over a ten-year period”.

https://www.lse.ac.uk/News/Latest-news-from-LSE/2024/b-February-2024/More-capital-gains-are-received-in-one-neighbourhood#:~:text=Total%20capital%20gains%20have%20almost,over%20a%20ten%2Dyear%20period.

What if you’ve got shares in a small business that you set up with someone? You’ve taken a risk with your capital with a start-up to generate economic activity, employment and PAYE, NI, VAT and corporation tax income for HMRC. But it’s not a traded company so you can’t put those shares in an ISA. So the growth and dividends from the are subject to tax. There maybe entrepreneurs relief on the shares, but maybe not.

If the proposal is to equalise dividends/CGT with PAYE rates then it is disincentivising the setting up of new businesses, since it’s more risk, but with no increased return via lower tax to recognise the risk taken. As I’ve posted somewhere else on this thread, 60% of people employed in the private sector are employed by SMEs. They generate 25% of GDP, but most will not be publicly traded therefore there shares not eligible for inclusion in an ISA . But most politicians, especially those on the left, think private sector employment means working for a big blue chip company.

That's actually a huge concern. He might be in his own little wealthy bubble and buy into that stereotype, and ignore that London has the second highest poverty rate in the UK.

And when it comes to pensioners, if that's who he wants to go after, for example with council tax, London pensioner poverty is the highest in the UK.

Even outside London, pensioner (and nearly pensioner) poverty is increasing. Stats show the age group in the highest poverty is aged 60-64.

Rubbish.

Isn't Kensington (London, not the Liverpool Kensington) where there's loads of second home super rich with homes around the world. Unlikely to have that as their main residence, and they most certainly will have tax avoidance and reduction schemes. So it won't affect them.

I don't think it's a good example of the general situation for people in this country. Or even a good example for that part of London. I understand it's an area of extreme inequality, with some super rich but also some very high levels of deprivation.
ETA it's the Grenfell borough.

She doesn't seem keen to tell us that.

It always makes me wonder who all these people are who will leave the country if the government increases tax by a few percent.

If they've been prepared to stay in a country where taxes have already gone through the roof, where billions have been poured into failed HS2/Rwanda/PPE projects, where the roads are full of pot holes, hospitals are falling down, the rivers are being filled with sewage. Where the ruling party have lied, cheated and partied whilst people were locked down and dying.......well they're not going to suddenly pack a case because they pay a few quid more and everything around them improves.

Was their own money all that ever mattered to them?
Did they not care about every other aspect of the world around them?
How greedy do you have to be to not notice and/or care about the deterioration in the country over the last 15 years?

@Churchview great post

Tax on my earnings, not additional voluntary tax.

What's wrong with paying CGT? It's mostly through 'unearned' income and the threshold is pretty high before it even kicks in so any beneficiaries still inherit.

When us three sisters were sorting out our DMs estate (all joint executors) my siblings were aghast that any CGT might be paid and thought it best to lie to HMRC and connive. They made no connection between how the money to pay DM's Teacher wages nor even their own respective Civil Servant and Nurse wages came about.

Thankfully we did have a solicitor as a conduit to ensure the settlement (the poor man) and I'm sure my sisters still don't know that I spent 2 weeks of my life putting 7 years of DMs transactions into a spreadsheet to not only ensure we didn't defraud HMRC but also to save on what would have been quite significant legal fees if the long-suffering solicitor did it.

That's not CGT, you're talking about inheritance tax

Yes - sorry you're right @TeenagersAngst . I don't see anything wrong with CGT either.

Just curious, do they still have SIPPs? I recall that it was a way to invest in property (second homes) in a very tax efficient way. The rarely used second home next to me couldn't possibly attract CGT as the owners have thrown so much money at it. It's a nondescript terrace in the cheapest area in the District. They hardly come and it would be hard to impress anyone with their 'wendy house' but they don't strike me as being stupid people, just ignorant.

It’s normal in some countries, but in some cases (in particular Spain) any money spent on the property that has contributed to the increase in value is disregarded as that’s too complicated. So full cgt is due even if hundreds of thousands of euros have been spent on the property. I wouldn’t be too confident that that wouldn’t also apply here.

The man of the people Sir Keir Starmer told LBC on Tuesday that it meant: “People who earn their living, rely on our [public] services and don't really have the ability to write a cheque when they get into trouble."

That's really scary, I missed this interview.
I guess it's reasonable - this demographics are natural Labour voters so they strategy is to move majority of electorate there.

The current situation very much reminds me of election 2019. People were too scared of Corbyn and voted Tory out fear, not love. It was clear then that Labour wouldn't get majority, but there was a change of very small Tory majority or even another hang parliament. In this case with new faces we could have had a better quality discussion about Brexit and possibly not such a harsh deal. But fear led to Tory having carte blanche.

Right now very significant proportion of electorate will vote for Labour not for love but out of hate of Tory. This will decimate opposition, Labour will have carte blanche this time, modify election rules, make a lot of us "working people with no savings" to stay in power for longer.

It's seriously dead scary but I'm thinking that Farage is right - 2029 will be his year.

Your idea would significantly unfairly harm the many poorer people in areas where housing has been allowed to become too expensive. Mostly London and the SE.

It could see a relatively financially secure family who own a decent 3 bedroom house in a cheaper part of the country pay a lot less, than a family or individual on minimum wage (or pensioner in poverty) renting a shitty flat in the south.

Pensioners for example. London, where house prices are most extreme (to the detriment of people from there) has the highest pensioner poverty rate in the UK.

The answer isn't btw to have mass displacement of millions of low waged, disabled, and pensioners, from London and the SE. Doubt too that everywhere else would welcome loads of 'blow-ins' blowing in.

There would need to be a fairer way to do any council tax changes. It would have to take into account the household's financial circumstances, as well as or instead of region.

@nearlylovemyusername Definitely regardless of whichever political party people want (or hate the least) democracy needs a healthy opposition.

Also scary or at least highly depressing is things have got to the stage where the choices are so uninspiring that lots of people are voting Against rather than voting For. Not good at all. Not for individual people, not for society, and not for democracy.

The article itself isn’t really relevant, but I was asked to show where I’d got the 3% figure from.

I’m not being kept awake at night worrying about having to pay a bit more tax on the profit when I flog my next Picasso. My original point is that many middle class people lose their minds at potential tax rises that will not affect them. Even the majority of middle class people don’t have a house going spare, and I doubt they’re making tens of thousands a year in share dividends. Why is everyone so terrified of tax rises that will only affect the rich, when they’re not rich themselves?

Such an eloquent and reasoned reply 🙄

As predicted, any suggestion of paying more tax is met by utter derision and threats from the hysterical daily mail reading classes.

The country is a shell of what it once was, because of 14 years of ideological austerity. We have lower corporation tax, lower CGT, lower IHT, no wealth taxes and lower top rates of progressive tax than many other countries.

We have lower pensions, levels of basic benefits, spend less on health, education and infrastructure. We have the highest wealth inequality of any major European nation and the lowest level of social mobility. We did have a larger level of children living in poverty, till the Tories changed the definition of it. We have the highest level of things like foodbank use in Western Europe at least and other countries in central and Eastern Europe are predicted to go beyond our living standards in the next decade.

We have a generation which is shorter than previous generations, average height amongst 5 year olds falling every year from 2013, the most expensive university education in Europe, we have life expectancy lowering. The list is fucking endless.

Something has to change, and we should be ashamed as a nation that those who have benefitted the most from this society view their achievements as separate and we should be mortified that they make threats about what they we do if we do ask them to contribute more.

You expected adoration and for people to genuflect to your munificence for being "net contributors" , yet this is a very basic calculation, and when run over a lifetime, only about 3% of people die in net benefit. Change a few things in the calculation ( like adding in indirect societal benefits) and its about 0.5%, and the number of net contributors falls dramatically. Most, including you, will die in net tax deficit. You are not the masters of the universe, and will not be treated as such.

I see the usual threats are out there about leaving.

You won't. You are less globally mobile than you think. You can make up whatever story you want to try to justify it on here, but you know deep down you aren't really moving.

Reduce your hours. Great, someone else is going to benefit from them. If you think no one else can do your job, you are almost 99% wrong. There may be one or two of you, but far too many of you who threaten spend far too long on MN every day ( and night) to be quite as important and indispensable as you claim.

If your kids are an in private school and you can't afford the fee increase? You most likely made a bad financial decision there anyway and you were over stretched. Sorry. Most parents will just swallow the increase by making minor changes to spending.

Your parents are going to have to pay for their own social care with the wealth they amassed, this is only right and fair, YOU did not earn the inheritance that you thought you were getting, and they benefitted from untaxed property gains for generations.

IHT will go up, and it is fair, you didn't earn it, and your parents got tax breaks on it. They aren't being taxed, they are dead.

Council taxes need to change, people in newer build houses ( and there are a lot since 1992) are paying higher rates than people in much more valuable houses. Most people will again just be paying a bit more.

The changes will effect EVERYONE, but the future has got to get better. We can't run the country for the benefit of the rich, privileged and highly paid any longer.

The only new housing we need is more social housing, loads of them in all the places already landbanked by private developers. Just like the post-war periods after both World Wars. No pissing around tinkering with this and that just do it. Any new estates are social housing estates and any small developments comprising completely unaffordable 'executive homes' now becomes twice as many local social homes, with gardens too.

Keir Starmer is named after Keir Hardie, the first Labour MP, who propelled the post-WW1 Scottish Social Housing program throughout the UK. Hope the current Keir, whilst lacking in charisma and decisiveness, will take the mantle he'll be given and live up to his namesake's levelling-up and extraordinary progress for the lower income people who prop up wider society.

EilonwyWithRedGoldHair · Today 13:09

We're probably a lot poorer than you, but I'm not against paying more tax/NI - I objected to the current government reducing NI despite obviously benefiting from it. What I want is a functioning country with functioning services and I'm willing to pay more for that even though it would not be great for us financially.

Well, quite; most people want the Health Service working properly, more Police, potholes repaired etc, but many don't want to pay more tax, which is what will pay for it. It would be nice to see the Covid billions wasted on conmen, who were chums with Government ministers recovered, but I don't think that'll happen soon and in any case, would it really be enough to make a difference?

@Anonym00se that's fair enough. If it really will just be people who are genuinely wealthy.

I think the bigger concern for many is whether any tax changes will instead affect the "just about managing" groups. People not much above benefits thresholds.

Also will any CGT changes indirectly affect the worst off? Will it spook small landlords, those with just one rental, and encourage more to sell up? Some may say 'who cares' but it would leave the poorest tenants without housing.

Fine, if Labour plan to help the economy by reducing NHS and benefits bill with a massive council home build. But will they? Obviously they should. For moral reasons as well to help the economy and reduce the tax burden.

The other big concern, I imagine, is the possible impact on the poorest in the south (who can't all just move on mass somewhere else). Any council tax changes, would need to be done fairly and take into account household financial circumstances.

Bear in mind there's loads of people on minimum wage and low income pensioners in the south (for example, London has the highest pensioner poverty rate in the UK). And full council tax exemption for those on the lowest incomes is not a given. It varies depending on individual councils. If a council tax change was done fairly and in a considered way it might work. Question is will it?