“Tax the wealthy” (RR budget) what does this even mean?

[gggddjkki]

I don’t remember anxiously waiting for budgets like we have the last few years earlier on in my adulthood. But when you read statements like this (as I have seen in the headlines today) what do you interpret it to mean? What does taxing the wealthy look like to you? Taxing higher earners more? From what point? Higher taxes on industry?

As I have said before, if Reeves imposes CGT on main residences, it will compel the banks to re-mark their mortgage books, which in turn, will reduce lending multiples, and broader lending availability. Some homeowners will be forced into technical breach of covenants.

The law of unintended consequences in action.

Ok. My error.

And if they do deduct mortgages from wealth, how many people will then mortgage themselves up to the hilt to minimise their tax exposure and have money to spend. I have friends in Norway where there is a wealth tax and property value is actually the valuation of the equity so they make sure equity is minimised.

any tax they put on ‘the wealthy’ will end up being extended until it hits everyone

Nail on the head. Also don't forget the 20% VAT as well as employers NIC, corporation tax on profits, and a whole raft of ancilliary support services for businesses with head offices in the UK from cleaning to IT supplies to property repairs to office equipment, to security systems etc etc. It makes no sense at all to increase big business taxes that may encourage them to relocate elsewhere or not move into the UK. Ireland have it spot on. Labour havn't a clue.

Exactly, taking out a mortgage is actually one commonly used means of reducing inheritance tax in some circumstances too as it can reduce the "net value" of an asset that has no other exemptions and the funds can be used to invest in an asset that does have exemptions, such as a business asset!

Well, precisely. And the mortgage companies will lap it up as they’ll be making interest on it. Also is it a person-centred tax or asset tax. So, say, my DH and I jointly own our property as tenants in common, is the tax us jointly due on the total lump sum? If, in the above example where we have 800k equity, could we simply change to joint tenants, so we both own 50%, ie only 400k… and would be each be exempt?

All the 2-5m house where I live are unlikely owned by an individual but held in a family trust (something we are considering)… so how would they levy that tax?

I think whichever way she does it, RR will find it doesn’t recoup the money she thinks it will.

Realistically they are already out for at least two future GE's as Reeves/Starmer are so unpopular. If Labour are serious about winning the next GE, they both need sacking now, and they need to find some competent people to replace them.

The rumour is they will be going after home owners whose house is valued over £500k. Basically taxing you to live in your own home! Imagine being a mortgage free retired couple getting slapped with a 2% of your house value 'wealth tax,' you'd be paying £12k a year just to live in your £600k house. I think part of the idea is to force old people into smaller properties to free up homes for families.

I have to say I've never been so concerned about an incoming budget in my life!

DH and I are often talking about where we will move to once the kids are fully independent and our parents are gone.

Yes because the wealthy will just piss off leaving an enormous tax void that will be foot by the middle and working classes.

They always overestimate how much they will raise as they never seem to take into account behavioural change. I don’t think you will see a mass exodus but it’s just not the money spinner they expect

but if they put a tax on houses over £1m they will eventually reduce it so everyone pays - not because those people have left but because they can and they’ve got people used to the idea of this tax

As somebody whose home in the Midlands is worth nowhere near £500k (not that much more than half that), I think that's a horrendously low value to have as the cut-off, if the rumours are correct.

Living in the South-East means that not only do you have to pay a huge amount more to buy a house than the equivalent house would cost you in most of the country, but you're then told you're rich because of that and then taxed even more?!

Really? If that’s not just a rumour they are mad.

Just read in The Times that she expressly ruled out a property based wealth tax at the IMF in Washington, though, so I think everyone here is panicking needlessly. I think she’ll raise tax on the higher rate tax band, currently 45%, but may go up to 47% - maybe going higher still to a straight 50%. People who are tied to the UK will have to suck it up, but a percentage who are not will leave. Some corporations may have to mitigate it with payrises next year to soften the impact and keep employees, so Labour will lose their support too (if they still have it after the NI fiasco).

I do think this may be her last budget. I think she will be gone in due course, in part as a last ditch effort by Starmer to save his position. Not sure that will work, though. I doubt he’ll be standing at the PM at the next GE. I’d be surprised if Labour stay in for the full 5years as at some point Starmer will try to save his skin by timing a GE when he has an uptick in approval or when he knows (I think like Sunak knew) that things were/are only going to get worse before the GE so best bail sooner rather than later and let Reform/Tories deal with the mess.

I'm praying it's a rumour.

Penalised punitively?
Could one be subject to a penalty that is not punitive?
I'd rather think that would be oxymoronic!

Raising the highest rate of tax won’t raise much and it will make the cliff edge even worse

I am hoping that if this does come in, there will be enough time delay for me to be able to retire before it comes in (any time after 2027 will do, but wasn't planning to retire until 2028/9). Because of the amount of tax I pay, the government will lose more from me individually every year earlier that I retire than they will gain from reducing my tax free lump sum.

No that’s a tax on working people, and income tax which they said they wouldn’t touch.

Maybe a couple of US regional banks causing a lower borrowing cost will help out.

No it’s a tax on the people Labour think can afford it - higher rate tax payers. You KNOW labour don’t consider those to be ‘working people’ - nor do half of MN, apparently, as they think anyone earning over 100k is a grifting charlatan (see other recent threads).

i have posted about this before but it is seriously worrying to me. I am in my 50s and am not at all wealthy - live a very ordinary life in London - no car, no investments. For the first time in decades I am earning a decent salary and already pay huge amounts of tax. It would seriously piss me off if I suddenly had to pay a “wealth” tax just because I have put all my life’s earnings into a very small house. I don’t even have much of a pension pot!

Surely owning a property in London counts as owning an investment?
Essentially you are complaining that a property which you purchased has vastly increased in value and that makes you wealthy.
To put it another way you are complaining that you got lucky and had a large windfall.

If you live in the property how is it an investment? Capital growth is meaningless until you sell or die!

Do you own your house? Does that count as an investment because it isn't in London? Why should London or not dictate whether something is an investment. If a home is to be treated as an investment for tax purposes, this will apply to everybody. It may start above a certain value, but will apply across the board PDQ.

Care to comment on the contents of my post?