Reeves plan to tax houses over 500k PART TWO

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I am not the OP from the OP!

Rachel Reeves plans to tax high-value homes to plug fiscal hole

https://www.thetimes.com/article/a20b5f80-5dba-4d06-b4f7-163d91263aea?shareToken=7aae7e68c04e88f3220968a7c7160de7

In addition, there is this in the Times today. A wealth tax coming our way….

I hate it when people say ‘well it can’t get much worse’ and it always bloody does.

It definitely going to get worse unfortunately regardless of which gov is in power. the chickens are coming home to roost

It’s also the attitude to benefits - you see it on here all the time - what am I entitled to, what can I do to maximise a claim

my parents and grandparents felt shame if they had to claim and did whatever they could to not be claiming but now they’ve been put in to subsidise poor wages you can’t even pull yourself out with a full time job

(not talking about pip)

Double post

@Kitte321 thanks for the link, I've been saying on here for ages that any gov are going to have to come after all that wealth tied up in housing in some type of way. They have exhausted PAYE.

Cynically is this a way to crash the market to enable Blackrock to swoop in?

Yep, lots of people bang on about tax avoidance but not many people mention the other side of the coin which is benefit maximisation. Working just enough hours to retain maximum benefits, spending savings to keep below the £16k threshold etc. For some reason people think this is ethically acceptable but jump on someone earning £100k plus putting more in their pension to avoid a tax cliff edge.

my parents and grandparents felt shame if they had to claim and did whatever they could to not be claiming

I don't see this at all, all my older relatives were outraged about potentially losing WFH. They all have expensive homes and holiday homes. A few get AA & many of the women didn't even work that much.

I think it’s the other way round. Maximising benefit entitlement by limiting working hours is castigated while avoiding tax by doing so is applauded. It’s interesting that you too see it as the two sides of the same coin because I got my arse handed to me when I said exactly the same thing.

Is it two sides of the same coin?
Person A - contributing vast swathes of tax, pays already for themselves and others and chooses to pay into a pension to avoid a punitive cliff edge.
Person B - takes positive action to avoid work to collect benefits (at tax payer expense) when they could work towards becoming a contributor.
I think person B should be compelled to work.

I don't think it's two sides of the same coin, from an economic standpoint one is contributing a lot more. The cliff edges are ridiculous & I think child benefit should be universal (the equivalent was in the past for my parents).

Because the people you are referencing avoiding tax have been net contributers previously but now feel targeted by Labour and so feel there is no benefit to working hard, being fiscally prudent if they are just going continually be bled dry. They have already paid in a lot of tax etc.

The other people you mention have never contributed to tax. They have only ever taken.

You are comparing apples Vs cucumbers.

This is well worth a listen (starting from 1:05) for an explanation of how this works. I have seen a lot of misinformation on this thread. People getting upset about things that are not proposed. For example this tax will not apply to people who paid stamp duty when they bought the house.

https://www.bbc.co.uk/sounds/play/m002h13y?partner=uk.co.bbc&origin=share-mobile

For reference the only area in the country where the average house price is over £500k is London. So for the vast majority of people they would only be paying if they live in a more expensive than average house for where they live.

I do see tax avoidance and benefit maximisation as two sides of the same coin broadly. I think I chose some bad examples as the tax cliff edges are widely recognised as being morally ridiculous so most people would agree with people seeking to avoid them but what about the use of trusts to avoid IHT etc. All within the rules and perfectly legal but people would think it's the rich avoiding tax and therefore morally worse than someone maximising their benefit entitlement through manipulating the system slightly. I actually think benefit maximisation is so widely accepted that most people don't even recognise when it's happening whereas tax avoidance is far less common.

I was recently on a benefit fraud thread and many people completely disagreed with reporting fraud. They were however up in arms about tax evasion. Again, I see these as two sides of the same coin and when either side of the coin and suspicion of either of these things will encourage the other side to commit fraud or evade tax. For example, if you think your taxes are being wasted on people that are committing fraud and you spot an opportunity to evade some tax and think you won't get caught then you probably won't feel much moral imperative to pay the tax.

But doesn’t everybody pay stamp duty when they buy a house?

Not first time buyers up to £300k.

I don't watch Jeremy Vine.

For reference the only area in the country where the average house price is over £500k is London. So for the vast majority of people they would only be paying if they live in a more expensive than average house for where they live.

So how is it going to work for London then? for mere 9m of its population? they will have to suck it up and fund the rest of the country? on the top of already paying extortionate housing costs?

Oh I agree completely, the economic and even moral implications of tax avoidance Vs benefit maximisation are different but I do think they are two sides of the same coin i.e. People working within the rules to either reduce their tax burden or maximise their entitlement.

I would obviously tackle benefit maximisation first because I think it's economically more damaging, happening at a much wider scale and is morally more reprehensible.

So do I! I’m starting to think why did I scrimp and save for a deposit for a house, when I could have just got a housing association house and work 18 hours a week? It’s an absolute joke - do any other countries allow people to do this??

Not just people in London but people in many parts of the South East that need a family home with sufficient space to raise children. This is clearly going to penalise families that can't downsize so easily and have children that would obviously benefit from things like having a garden and their own room (a family with 2 adults and a boy and girl will need 3 bedrooms for example when the kids hit the teen years).

It's mainly people on benefits who defend fraud.

The difference is between trying to keep more of what's yours, what you or your family earned, vs trying to take most of other people's money.

You realise that you will not be immune from further tax raids on the rest of us, dont you?

So do I! I’m starting to think why did I scrimp and save for a deposit for a house, when I could have just got a housing association house and work 18 hours a week? It’s an absolute joke - do any other countries allow people to do this??

I would have died before being top of the list for a HA house.

Other countries have property taxes as a % of house value, CGT on main property, etc

What I would really like is why can't we get those 20 yr fixed mortgages that other countries have where you can renegotiate if rates come down?

The poor sucker who's saving into pension will save about 20% tax is lucky (maybe 40% on some limited amount over 100k) - their current tax rate is 40-45% and on withdrawal it's going to be 20% if not 40%.

Whatever is left unspent will be taxed at 40% with IHT and then their kids will pay their marginal tax rate in withdrawal, so 60-85%.

Vs benefits when it's pure take from taxpayer.

I also believe that at some stage state pensions will become means tested so those who're saving into pensions now will be royally f..ed.