Single tax rate proposed

[Xenia]

www.google.com/hostednews/ukpress/article/ALeqM5ifFvHAcJMXsx54rwIVBum8nj31Ww?docId=N0212261337479067198A an in the Times p4

2020 Tax commission and IoD propose

one rate of income tax (30%),

abolition of stamp duty and national insurance,

public spending to reduce to a third of national income (been over 40% of last 30 years)

Replacing corporate and capital gains tax with 30% tax on dividends, interest and rent

Scrap air passenger duty

Fule duty cut by 5p a litre

Would mean a £3400 tax cut for a two earn erhousehold on £28,000.

Says would lead to 8.4% increase in GDP after 15 years.

Sounds very good. Might even get Cameron re-elected if he adopts the plan.

xenia - does that mean my mum can give my brother and i as much money as she likes without paying tax? I thought there was a limit on the amount - are you saying thats now old hat? she's in an old people's home. does that make any difference?

dreaming - if your Mum has net assets (ie assets minus debts and expenses) below £325k her estate pays no IHT on death.

If she has net assets greater than £325k she can give the surplus away before death and as long as she lives longer than 7 years her estate pays no IHT.

If she gives away the surplus but lives less than 7 years the IHT would be scaled according to how long she lived after the gift is given.

IHT can be extremely complex though.

morebeta - thanks. is she stopped from giving us money because she's in an old people's home though and she's paying for her care?

This is why they need to think about it soon enough, why I said it is often a voluntary tax on the stupid. If her assets exceed that sum and she gives them away and does not live 7 years then the tax is paid. You are asking a question which is not to do with IHT which is whether if you are in an OAP home - is she paying the costs or does the state pay the costs? If she pays the costs but then gives all the money away she has so she has to ask the state to fund it thenyes she is in trouble. However if she herself pays those costs both before and after the gift to the family or you pay the care home costs then of course she can give her money away now (if she trusts her children with it which of course is always the much bigger question - not always wise to give children a lot although that is why people put it into trust with good trustees who make sure it is availbale for things like allowing the daughter to study medicine or the grandchildren to study law but not to fund breast surgery - in other words to have control over it)

"Josephine, who are these rich public sector workers of whom you speak?

Because I actually know an awful lot of people who work in the public sector and none of them are rich."
Well I seem to know a lot of public sector people that live in very nice houses, and I see a lot of very nice cars in the public sector car-parks. Meanwhile most private sector people I know catch the bus to work.

josephine - i believe people should have lots of money because they have worked hard for it. Inheritance gives people access to things that the general public don't have, eg private education and just re-inforces the class divide (and i say this as a torry voter who will one day hopefully inherit). why should someone who works their guts out, pay extra tax to subsidise someone who has done no work towards inheriting loads of cash?
No-one should pay extra tax, everyone should pay less tax than they currently do. Families should be allowed to work and plan for the future, it is one of the cornerstones of western civilization. The idea of people working hard so that their descendants will have better lives.

dreaming - that is more complicated because I think really you are asking about paying for care costs. There are rules about giving away money to avoid care costs but I don't know them in any detail. I think local authorities can claw back money if people give away money and then go into care paid for by the state.

IHT and care costs are two separate issues although I can see they interact as in the case of your mother.

30% Tax?! .

70% of less than £12k leaves a fuck sight less to LIVE ON, i.e buy food, pay for water, heat and light, and pay for a roof over your head than 70% of £30k, or 70% of £45k etc etc.

Losing the 10% tax bracket broke most families on NMW / less than £20K that I know - increasing it even further is just insanity.

I assume there'd be quite a large personal allowance before the tax kicks in.

Cardy, the flat rate would only work if combined with a large personal allowance. I don't think anyone would dispute that.

So chances are, the person on £12k would probably pay no tax or very little (eg. 30% of £2000 = £600 assuming allowance was £10k.).

thanks xenia/morebeta - i guessed that was probably the case.

josephine - I do take issue with your 7 years comment and people being silly if they don't plan though. my father would have had to give away his house and money at 52 for this to have worked - when he still had a young family to support

Hoever dreaming it is a good point in regards to most people who die in their 70s and 80s so on the whole if you can give it away by then you avoid IHT. Of cours those who think it is a great tax can instead pay it and indeed if they prefer because it suits their politics they can leave 100% of their money to HMRC who I am sure would gratefully receive.

Also you can put your life policies in trust for no cost and do it now, all of us can so then those payments fall out of IHT entirely,. The same goes for pension income in case you die before you draw the pension - you can put the proceeds of that into a trust so that that is outside your IHT too.

If instead you think it better your family and orphaned children have much less money or nothing when you die then of course leave it 100% to the state if that is your moral position.

On the 30% flat tax plan people would be a lot better off.
(The 10% rate was only around for a fairly short period - when I started paying tax the basic rate was 30% plus NI. Labour in those days had top rates up to 99% for some. Even my father paid 66% tax on the top part of his NHS pay in the 70s with another 15% of his building society savings (and he was an NHS worker, not Mick Jagger or a very high earner).