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There is a big difference between a set of people who have done very well out of historical pension schemes, large house price rises and ‘earning’ more per month via their pension and then slamming every door possible behind them than people who are working than a set of disabled people.
FTFY
As written here previously. The older generation had a different hand dealt to them. They are products of their environment - just as we are to ours.
That they have generous pensions and were able to buy houses which are now worth lots of money is just the end results of the gamble they took all those years ago.
There were others at that time who lost their pensions in various companys over the years, and there were others who lost their houses when interest rates were crippling during the 1980`s ... I understand envy is one of the 7 deadly sins, but it does not always have to be a race to the bottom.
That they have generous pensions and were able to buy houses which are now worth lots of money is just the end results of the gamble they took all those years ago.
There was no gamble in having a generous pension and no gamble in buying a house when they are cheap. Those hit by housing crash in the 1980's (me!) recovered easily from it by just buying a house when they were at the bottom.
No envy from me, I am sat in the the same fortunate position of having a very good pension and a house with a lot of equity in it. What did I have to do to be in that position - **** all.
From what I have read, home interest rates were between 16-10% during the 80's and early 90's, and nearly 1% of all mortgaged properties were repossessed. From what the older members in my team tell me it caught a lot of people out who initially stretched themselves too thin .. their gamble didn't pay off.
Of course paying into a pension was a gamble back then - that quite a few subsequently collapsed for various reasons proves this; if they'd opted out and just put the money to one side they'd have been better off.
bonuses, share options etc being taxed the same as income and there’s a shed load of extra cash.
Hate to break it to you but they already are, or at least mine are. Both are considered to be income and are taxed (and NI) accordingly.
Surprised nobody has picked up on this. Surely share dividends are ( tax + NI)d less than income? That's why contractors do it, no?
Unulales. It quite worrying the way you're trying to portray that the exceedinly rich and lucky portion of the current generation of oldies got there through some amazingly merititcious method which they thoroughly deserve..
The obvious answer is to just removed the cap on NI - far fairer and more logical
From what I have read, home interest rates were between 16-10% during the 80’s and early 90’s, and nearly 1% of all mortgaged properties were repossessed. From what the older members in my team tell me it caught a lot of people out who initially stretched themselves too thin .. their gamble didn’t pay off.
Of course paying into a pension was a gamble back then – that quite a few subsequently collapsed for various reasons proves this; if they’d opted out and just put the money to one side they’d have been better off.
Nether of those things were a gamble.
Mortgages were actually harder to get than now and much, much harder than in the 2000s. The rates weren't that great even when they were lower so not like going from today's rate to 10% plus. Yes the rates caught people out just as they would now but nobody was gambling the the rates wouldn't go up, wasn't really a consideration.
And relatively speaking such a low number of people have been hit by pension collapses that it is insignificant and nobody who paid into a pension saw it as a gamble in any way whatsoever, it was just a method you used which was assumed safe.
The obvious answer is to just removed the cap on NI – far fairer and more logical
But that would hit the tory voters the most, why would they ever do that?
LOL. As if people will be allowed to retire in 30 years. The retirement age will be going up 2 years every year
This.
People need to ignore the reassuring noises they're being told by the government and start facing up to the cold, harsh reality.
The kind of (triple-locked/final salary) retirement presently being enjoyed by this generation of pensioners is just a totally unsustainable anomaly which has now been rectified. A brief window of luck. Nothing even remotely similar will be on offer to anyone who follows them, other than a tiny well-remunerated minority. What's happening at the moment is just the necessary readjustment
If you haven't already accepted that then you're absolutely delusional. It's simply unaffordable in the long term. It's unaffordable now. Unless younger generations are to be saddled with truly eye-watering levels of taxation to support it.
I'm 50 and have already made my peace with the fact that I will never retire. It's just a pipe dream, so you better accept it as such. I've a few private pensions that I've paid into through my life, but looking at them its obvious they would only ever provide a subsistence level of abject poverty.
The state pension age will be like the amount of missions they have to fly in Catch 22 before they get rotated. With the same results.
It will be raised and raised as people approach it, and each time its raised, less and less people will make it to the new finish line
There you go... a happy thought for you on a Sunday 🙂
and no gamble in buying a house when they are cheap
It was quite hard to buy a house in the 70s. My parents had to wait to borrow money from a Building Society as the BS had to wait for someone to pay off a morgage before they had the money to lend to them. So houses were cheap but mortgages were scarce.
Of course paying into a pension was a gamble back then – that quite a few subsequently collapsed for various reasons proves this; if they’d opted out and just put the money to one side they’d have been better off.
It wasn't a gamble at all, they were extremely generous final salary schemes eg my one only required a 5% employee contribution but after 40 years I would get an index linked pension at 2/3 final salary with 50% widow pension in the event I died first.
A very small number of schemes were the subject of fraud but on the whole they were excellent (my parents are currently enjoying the fruits of their schemes). Mine collapsed when the company liquidated, but I still got an amazing payout from the scheme, best investment I ever made (paid in less than £7k, got £200k out 1520 years later).
Paying in to a pension now is more of a gamble imo. The government of the day may change the rules at any time and the organisation you've trusted your money to might fold leaving you with nothing. See BHS. Also colleagues I have who paid in to a pension scheme with their previous employer that went aot. Not much left from that. It's the only game in town though so what are you going to do?
It was quite hard to buy a house in the 70s. My parents had to wait to borrow money from a Building Society as the BS had to wait for someone to pay off a morgage before they had the money to lend to them. So houses were cheap but mortgages were scarce.
Very true, but still not a gamble. Sounds like unaleles has been talking to some old and entitled workmates who are telling them the they are in a good position housing/pension wise because they gambled and it was down to them and their big risks rather than just being around at the right time and actually doing nothing special at all.
Very true, but still not a gamble. Sounds like unaleles has been talking to some old and entitled workmates who are telling them the they are in a good position housing/pension wise because they gambled and it was down to them and their big risks rather than just being around at the right time and actually doing nothing special at all.
+1
I've a final salary pension from the mid 80's, worked there for 2.5 years and was earning £14k. The pension is currently worth £6k pa (and £4k to my OH if I die) and a minimum of 5% rise per annum, or inflation if higher.
No gamble, you were just 'enrolled' on your first day.
I’ve a final salary pension from the mid 80’s, worked there for 2.5 years and was earning £14k. The pension is currently worth £6k pa (and £4k to my OH if I die) and a minimum of 5% rise per annum, or inflation if higher.
No gamble, you were just ‘enrolled’ on your first day.
Really??
Which scheme was this?
Unulales. It quite worrying the way you’re trying to portray that the exceedinly rich and lucky portion of the current generation of oldies got there through some amazingly merititcious method which they thoroughly deserve..
Not all older people who own their houses and have a pension are exceedingly rich .. some aren't rich at all.
To place all of them in the same group of the very small group who now own million pound property and receive Police/Firemen like pensions is unfair.
No doubt we in our thirties will have some sort of luck/advantage over those in their 30's in 30 years time .. it's how it is.
I don't agree with the whole race to the bottom thinking. We need to stop looking for problems and start looking for solutions.
Paying in to a pension now is more of a gamble imo. The government of the day may change the rules at any time and the organisation you’ve trusted your money to might fold leaving you with nothing. See BHS.
The Pension Protection Fund has only existed since 2005 so it was actually more of a gamble previously.
We need to stop looking for problems and start looking for solutions.
🙄
I’ve a final salary pension from the mid 80’s, worked there for 2.5 years and was earning £14k. The pension is currently worth £6k pa (and £4k to my OH if I die) and a minimum of 5% rise per annum, or inflation if higher.
Thats a fabulous scheme - far better than any public service one
I paid in to the nhs for 18 years. Earning from £22000 to £32000. My pension is under £8000 pa. Still a damn good deal but nothing like that.
What is needed to be understood about public service pensions is its effectively deferred salary and is a part of the reason why many of us went into public service and put up with the low wages in exchange for job security and good pensions
Also that all the schemes have been radically changed to make them much less valuable
I’m 50 and have already made my peace with the fact that I will never retire. It’s just a pipe dream, so you better accept it as such. I’ve a few private pensions that I’ve paid into through my life, but looking at them its obvious they would only ever provide a subsistence level of abject poverty.
Well, there's a lesson for everybody. Perhaps stop relying on the state/politicians to pay for your retirement and invest some self interest in saving for yourself.
Its all very well complaining, but rarely does anything good come from drumming your fingers and expecting someone else to selflessly provide for you.
What is needed to be understood about public service pensions is its effectively deferred salary and is a part of the reason why many of us went into public service and put up with the low wages in exchange for job security and good pensions
Many folk working in the private sector made/make the same decision. It's not exclusive to the public sector. Neither are low wages.
What is needed to be understood about public service pensions is its effectively deferred salary and is a part of the reason why many of us went into public service and put up with the low wages in exchange for job security and good pensions
Pensions are deferred salary whether you're in private or public.
Really??
Which scheme was this?
At the time a FTSE100 supermarket chain. I've other deferred DB pensions, not as generous but still far better than any of my DC pensions. Most older DB schemes had elements of above x% inflation built in, and all mine have widow/widower benefits.
I remember when my Dad passed and I worked out his annual pension from an ex-employer was greater than all his contributions (for 20 years).
I paid in to the nhs for 18 years. Earning from £22000 to £32000. My pension is under £8000 pa. Still a damn good deal but nothing like that.
whilst that might not sound great - that's a £250,000 annuity (possibly more if you retired early). that's pretty much a £10,000 a year saving into a fund - assuming a generous empoloyer might be putting in 10% of your salary, its still the employee putting in £7k a year (~30% of your salary) in the private sector
I remember when my Dad passed and I worked out his annual pension from an ex-employer was greater than all his contributions (for 20 years).
my grandfather died at 98. He had been retired for as many years as he worked, on an 85% final salary (public sector) pension - which due to inflation meant the raw pounds he got during retirement was over double what he got whilst employed. That kinda thing is obviously not terribly sustainable
5lab - its a great deal ( and one no longer available since the tories decided to include public service pensions in their culture wars)- I acknowledge that. But - its a significant part of the reason I went down that road and earned much less than I could have if I had taken a different path.
on an 85% final salary (public sector) pension
What area of work because non of the schemes I know of can you get more than 65% of salary even if you have the maximum allowed contributions
What area of work because non of the schemes I know of can you get more than 65% of salary even if you have the maximum allowed contributions
ex-mod but bare in mind he retired in the late 70s, the rules were a bit different then
Ta
I am struggling with this one.
Speak to my father and I understand his point - he has paid in to both NI and private pensions, worked hard, contributed his lot, now expects the system he bought into to pay back out, and classes himself and other pensioners at the needier end of things. He lives pretty frugally and has given a lot of money and time to charity.
I sit here looking at my father who has used his wealth in retirement (house capital included) to travel the world. He had / still has, a reasonable standard of living, certainly a warm home, food, clothes, car and UK travel. He is still saving and still owns a small property. He benefitted from early retirement with a payout and superannuation payments - and then went back to work as a consultant in the same job, for the same employer.
I look at neighbours, three of the four retired on final salary schemes from local authorities, with 5 bed £500k houses they bought for £20k (which I cannot hope to own) and are open about the fact that they travel the world, give to their children regularly and drive new cars every three years.
It strikes me it isn't 'me vs them' - none of us can sustain the lifestyle and payout in old age we were promised/suckered into. [EDIT] It is based on property wealth as well. [/EDIT] The system is broken, it is too generous and too low in contributions, it costs too much to administer, and still isn't progressive enough for those who really need it.
Matt - public sector pensions are totally affordable - they really are. NHS pension fund generates a surplus every year ( Ie pays out less than it takes in) and has done since day one. Its not our fault the government spent what we paid in rather than investing it. If it had been invested it would have been the largest investment fund in the world.
the issue here is not high public sector pensions - its the pathetic options if you are not public sector and not earning big sums and its our low tax low wage economy
Look to the rest of europe and see how high their pensions are compared to the UK
What we need is proper pensions for all. Not to cut down the few folk left who have decent pension schemes. Puvblic sector schemes have also been massivly cut. My £8000 ish a year under the pre 96 scheme would only be half that under the new scheme
People need to realise that the only way forward is to fight their corner not set the old against the young or rearrange the sofas in Westminster. British pensions are woeful in comparison with eg France, Spain, Germany and people pay high taxes in eg Finland but look at what they get in return.
When I started my job I accepted a low wage for a final salary pension "deferred salary"
They then changed it so a career average scheme with no increase in salary.
Now they are changing it to reduce the benefits and increase contributions. A pay cut.
At no point were the benefits to those receiving their final salary pensions cut. Why do I get a pay cut so they can continue to pay benefits to retired folk without the promise of the same benefits?!!?
I'm leaving to join the private sector on a substantially higher salary and will take my chances with a SIPP.
I look at neighbours, three of the four retired on final salary schemes from local authorities, with 5 bed £500k houses they bought for £20k (which I cannot hope to own) and are open about the fact that they travel the world, give to their children regularly and drive new cars every three years.
The flip side is that they are SPENDING that money. All those people involved in the supply chain of their new cars and the new kitchens they put in get paid. That house value will go towards their care if they need it paying peoples wages. Anything left will go to their children to spend.
I'm sure some of my own pension is invested in car manufacturers and care homes so I get some of it.
So the money doesn't just disappear. It is clawed back in tax revenues and circles around the economy.
However there was a shift to personal wealth that that generation enjoyed; now we are seeing a shift back to "the wealthy" or shareholders form your average worker.
Speak to my father and I understand his point – he has paid in to both NI and private pensions, worked hard, contributed his lot, now expects the system he bought into to pay back out, and classes himself and other pensioners at the needier end of things. He lives pretty frugally and has given a lot of money and time to charity.
I sit here looking at my father who has used his wealth in retirement (house capital included) to travel the world. He had / still has, a reasonable standard of living, certainly a warm home, food, clothes, car and UK travel. He is still saving and still owns a small property.
MOAB - I'm struggling to reconcile the bits in bold.
My own parents are definitely not living a flamboyant lifestyle travelling the world, but as far as I can tell are still bringing in at least as much in pensions as they actually spend. They are sitting on cash they inherited* that they don't really know what to do with. None of the next generation actually need it and we would encourage them to enjoy it because they had a very frugal working life so should enjoy it now, but they are so ingrained to not spend I expect it will still be there when their life is over (be that literally or metaphorically when they go to a care home!). I don't think they would object to increased taxation on wealthy pensioners (e.g. adding NI to pensions - especially if you excluded the state pension from that, plenty would fall into it, but no poor pensioner would), they would actively support a reduction in inheritance tax and tightening of rules for those who want to avoid it.
The greatest inequality in the UK comes from the fortune you have in who your parents are - and we should be doing more to address that.
*we aren't talking anywhere near the Inheritance Tax threshold, but I believe more than the value of their small home.
Not all older people who own their houses and have a pension are exceedingly rich .. some aren’t rich at all.
22% are millionaires (or in a household with over a £1 million in assets to be precise) so no, not all, but there is a big pot of money there that could be taxed a little more.
22% are millionaires (or in a household with over a £1 million in assets to be precise) so no, not all, but there is a big pot of money there that could be taxed a little more.
Wow, is that true? [Edit: just reread it - perhaps some clever headline stats - there do you mean House Value + Pension Posts for both people in a couple + Cash assets for couple + Other assets > £1M. ? That just about seems more feasible?]
If you were to do that same sum for the population as a whole, and taking into account projected house values and pension pots, would the percentage of "millionaire" households be greater or smaller in future? I suspect greater as there would be more working women in each couple.
If you were to do that same sum for the population as a whole, and taking into account projected house values and pension pots, would the percentage of “millionaire”
Talking about “projected” wealth is meaningless. The fact is that on a population level retirees are the wealthiest sector of the population which also pays the lowest rates of tax. (No NI and we don’t really tax asset wealth in this country). We should have a tax system that discriminates based on age. It should be income and wealth only.
some clever headline stats – there do you mean House Value + Pension Posts for both people in a couple + Cash assets for couple + Other assets > £1M. ? That just about seems more feasible?]
That seems a pretty dodgy definition of a millionaire TBH. I imagine a lot more than 22% are in that category.
< edit. Just realised I don't have a clue what that 22% refers so. So I'm clearly talking shite. But that's a rubbish definition of millionaire imho>
Houses are questionable in a definition of 'wealth' since you do not, if you only own one, derive an income from it. Home ownership doesn't make you a landlord it's more of a long-term consumer durable.
@poly - I am with you on it.
It seems there is an expectation to much higher standard of living among many - my father included - than I see as 'necessary'.
But then wouldn't we all aspire to and vote for a higher standard of living in our retirement?
As I said though, without drastic changes to our welfare, health, social and pension provision, and a huge change in how we 'do' tax (mostly unpopular things, so no votes) I just don't think we can afford it ongoing.
That seems a pretty dodgy definition of a millionaire TBH. I imagine a lot more than 22% are in that category
Total value of all assets seems like a pretty good definition to me. What else would you propose?
Houses are questionable in a definition of ‘wealth’ since you do not, if you only own one, derive an income from it
The same lack of income argument could be made about gold or almost any other commodity. It still has value.
Total value of all assets seems like a pretty good definition to me. What else would you propose?
Well, for starters I'd propose that the term apply to an individual rather than a couple.😝
Well that would put my partner and I in the not millionaires category 😉
And also I'd exclude pension funds from it. However I fully accept that I'm probably wrong in this.
To me a couple with a niceish £500k semi in the southern 'burbs of Manchester and £250k in each of their pension pots are not millionaires in any useful definition of the term
That seems a pretty dodgy definition of a millionaire TBH. I imagine a lot more than 22% are in that category
I think it reflects how much wealth many people have - and how many expect their 'asset' of a home to be protected at all costs, if not rise in value constantly....
And also I’d exclude pension funds from it. However I fully accept that I’m probably wrong in this
Why? It’s an asset like any other. In fact the two biggest pots of wealth in the country are property and pension funds.
What other definition of millionaire is there anyway other than “are your total assets worth more than a million pounds”. A quick google shows that in the U.K. if you have assets of more tha £300k then you are above average for the U.K. These people, myself in ncluded, may not feel ric but it doesn’t mean we aren’t.
Total value of all assets seems like a pretty good definition to me. What else would you propose?
It does - except that it's the first time I've ever seen someone judge if you were a "millionaire" based on a household - i.e. in many cases they will be "half-millionaires"! Probably also misplaced to include the value of your home in there, since its not like you can liquidate all of that without causing yourself a bigger issue!
I think that's actually the problem when people talk about "wealth taxes" - its doesn't really make sense to apply a tax which makes people less wealthy so they have less wealth tax to pay the following year! Its far more logical to have a capital gains tax - that taxes the money you make from your wealth, but that should be taxed similarly to income tax. It should also apply to homes (and get rid of stamp duty/land tax). Tories are never going to do that - and I suspect even Labour would be too scared. Personally, I'd massively overhaul inheritance tax too - I don't care if you might have already paid tax on it (that's certainly not always true) - I'd have no objection to getting rid of the lower limit, or making the limit apply per recipient rather than per estate (encouraging it to be shared more widely). And I'd make it apply on any (large?) disposal - so there's no way to give it to your kids early to dodge it.
Its far more logical to have a capital gains tax – that taxes the money you make from your wealth, but that should be taxed similarly to income tax. It should also apply to homes (and get rid of stamp duty/land tax).
I totally agree with you and said much the same thing earlier in the thread.
Its far more logical to have a capital gains tax – that taxes the money you make from your wealth, but that should be taxed similarly to income tax. It should also apply to homes (and get rid of stamp duty/land tax).
Agreed. It will never happen though.
Why? It’s an asset like any other.
Well, it's patently obviously not " like any other". Apart from the fact I can't currently lay my grubby paws on it, even once I'm 55, if I try to lay my grubby paws on it then I'd end up paying so much tax on it that I ( by which I mean our theoretical millionaire) wouldn't be a millionaire any more.
PS, don't get me wrong, being a millionaire by any GBP definition ( apart from the stupid couples definition obvs) is a very lucky place to be.
Okay so there are some rather niche tax rules surrounding pensions but those rulesgenerally act to increase its value rather than reduce it. Beyond that it’s a pot of money nested in the stock market like any other and as such has value.
Bob is 60 and lives alone in his house worth £600k. He has £450k in his ISA and sod all other assets.
Betty is 60 and lives alone in her house worth £600k. She has £450k in her pension pot, from which she draws down an income of £16k each year and sod all other assets.
Brian is 60 and lives alone in his house worth £600k. He gets £20k a year from his luvvly final salary pension, but has sod all assets.
Which of them are millionaires?
Pretty much all of them, initially at least. Not exactly sure what your point is.
Which of them are millionaires?
All three of them have roughly equivalent pensions / savings which could easily be taxed. The fact they're held in different structures doesn't change anything, they all have a pot of money sat behind them (assuming the final salary is funded and not a civil service one).
Which of them are millionaires?
All of them. The pensions are going to be taxed in full, the ISA isn't but then it has been built up out of post-tax income whereas the pension comes out of pre-tax income. To the extent wealth taxes exist in other countries the only one that would be subject to a wealth tax is Bob in respect of his ISA. Wealth taxes are expensive to collect and distort efficient allocation of capital. Seriously dumb policy.
All of them
Bollocks. No way Brian is a millionaire. He's got a £600k house and that's it. The rest is just future income which he may or may not get.
He’s got a £600k house and that’s it
No, he has a £600k house and entitlement to £20k a year for life and probably £10k a year for his wife if she suceeds him.
The actuaries of his pension fund will have a large sum invested to pay that benefit, the value of which is pretty easy to calculate (all heavily regulated). The fact he can't see that large sum in an online account doesn't mean it doesn't exist. If he dies after a couple of years, the fund makes a profit (on him), if he lives to 120, they make a loss, but overall the fund will break even.
So, if you wanted to tax it with a wealth tax, the simplest would be to just tax his annual pension a proportionate amount, or you could make the actuaries pay a % and they would then reduce his £20k a year by a small amount to reflect the fact his allocated investments had been diminished.
Brian is actually probably the best off, an actuarial valuation of his pension is likely to be far greater than £450,000 and I would guess more than the £100,000 more so greater than the tax advantage that the ISA holding has.
Using annuity rates for a 60 year old man, Joint life 50%, 3% escalation, no guarantee (not quite as good as a final salary but close enough) we get £2,287 per £100k, so £20k / 2.287 * £100k = £874,508 lump sum equivalent.
So in terms of wealth, he's actually the best off and should be taxed the most by a wealth tax.
Brian has no access to the capital and most final salary schemes are already in deficit. How is he to pay a wealth tax when earning 20k income. Much better to tax his estate and let him live in peace. We need to start taxing the dead, not the living!
Some thought provoking stuff here.
I do not mind paying more tax to improve public services - I think we in the UK do not pay nearly enough tax.
However I am n the position of being income poor but capital rich which puts me in an odd situation.
So I am not sure what would be the best way to tax someone in my position. I own outright the flat I live in. I own outright a small flat I let out. I have a bunch of capital (low 5 figures)
I will pay some GCT when I sell the small flat. Not a lot - a few hundreds
MY inheritance is below the inheritance tax threshold
My income is low enough that I will not pay any ( or only minimal) income tax ( even including the rental income)
Taxing that reduces the capital assets would soon reduce my income to the point I would need benefits ( as I lose the rental income)
So while its obvious I am rich by the standards of most of the UK in terms of my capital its hard to see how I could pay more tax without either reducing my income to below benefit levels or without eroding my capital which over time would have the same effect
Just wait till when I die? What I have to leave will be above IHT levels
TJ - only above IHT threshold because it’s set where it is. What if either it was treated like income for the recipient (most tax efficient route would be to distribute widely in smaller chunks to lower income people) or was all taxed (if you want to be nice it could be on a sliding scale although I don’t think that’s needed). Special rules required for couples; children under 18; and where someone is still living in a house they inherit (it could just be added as a floating charge on the property though).
Brian has no access to the capital and most final salary schemes are already in deficit. How is he to pay a wealth tax when earning 20k income. Much better to tax his estate and let him live in peace. We need to start taxing the dead, not the living!
Well there are actually ways to access that pot of wealth but you're correct there shouldn't and no one is really proposing a wealth tax on Pension income although I think NI should be charged the same as if he were earing 20k and 50 years old!
However I am n the position of being income poor but capital rich which puts me in an odd situation.
It's a far from uncommon position exacerbated by the large rises in property prices in the last 30 or so years.
I will pay some GCT when I sell the small flat. Not a lot – a few hundreds
TJ whilst I obviously don't know your circumstances, are you sure you've got your figures right? That would mean that you only gained about 15k in the value of your flat. I bought a (one bed) flat in Leith in 2000 and sold it in 2009 for a gain of around 45k!
Betty and Brian both do pay tax on their pensions. I think there is a legitimate question if they should also pay NI (actually at 60 they might until they are 65/67? But should they then?)
Footflaps, mefty, homer. It appears we are arguing/ discussing different. You're going into loads of [ perfectly valid and interesting] detail about wealth and tax etc. All I debating was the strict definition of a millionaire. So I'll leave it there.
Just wait till when I die? What I have to leave will be above IHT levels
Depends on your circumstances. I can't recall if you were married or not? I presume not based on your statement...
(Apols)
Good example TJ. We need more outliers when considering these options. Have you taken into account that all three incomes - NHS Pension, Rental and State Pension (when it comes)?
NHS pension £550 pcm. Income from rental approx £300pcm ( dunno exactly could be more - probate and all the financials not sorted) 7 years until I get state pension
gonfishing - its only been rented a few years so by my understanding its only the increase in value since its been rented which is not a huge amount as prices have been flat here the last decade ( having gone up hugely before that) also complicated by the fact I have put £12000 in cash into the property during the last 4 years thus vastly improving it.
I was not married. My partner died and left everything to me. I have no dependents to leave it all to and if I die tomorrow my entire estate will be 3/4 of a million ish
I am rather financially illiterate so not fully aware of everything here. Its a mighty mess. I suspect that settling Julies affairs may mean that there is going to be a calculation showing taxes are due on her income ( as the rental was owned by her alone)
Its a decent example tho of assett rich and income poor. while I have no issue with paying more tax in general its hard to see how I could here without being badly compromised
I think we in the UK do not pay nearly enough tax
According to a lady from the IFS on this week's more or less the UK is a 'middling' taxed country when comparing taxation vs. GDP. Apparently we're higher taxed than any other country in the oecd.
Del - that is nonsense. gawd knows what definition they are using to come up with that.
We are much lower taxed than most european countries. Thats why we have crap public services.
I heard the same interview as Del. N.B. it is calculated as total tax take (so direct, indirect, corporation taxes etc) as a proportion of GDP.
This is the link to the show.
https://www.bbc.co.uk/programmes/p09vyy6h
Wealth taxes are expensive to collect and distort efficient allocation of capital. Seriously dumb policy.
Not necessarily, depends on how it's implemented and collected. Norway, Spain and Switzerland all operate them (with varying levels of capital gains property taxes and inheritance taxes). Look at the WTC (wealth tax commission) report Nov last year, it's recommendations are pretty level headed and the return on a one off tax is staggering (hundreds of billions of pounds) and pretty popular, I doubt it could be done without reform to capital gains and inheritance though Given that Sunak's room for maneuver is limited, I can see this being an option, although I could understand why many wealthy folk in the S.E. would squeal about it.
Look at the WTC (wealth tax commission) report Nov last year, it’s recommendations are pretty level headed
They don't recommend an annual wealth tax because they don't really work very well, instead they recommended a once off unannounced raid on people's wealth, I think that is the very opposite of level headed.
To me a couple with a niceish £500k semi in the southern ‘burbs of Manchester and £250k in each of their pension pots are not millionaires in any useful definition of the term
Depends whether you see the hike in NI as directly funding social care or, in reality, protecting elderly Tory voters' homes from taxation.
instead they recommended a once off unannounced raid on people’s wealth
They say nothing of the sort. Daft thing to write
instead they recommended a once off unannounced raid on people’s wealth
They say nothing of the sort. Daft thing to write
Really?
Seems to be reported a lot.
https://www.withersworldwide.com/en-gb/insight/uk-wealth-tax-commission-publishes-report
"The self-appointed ‘Wealth Tax Commission’ has published a report recommending a one-off wealth tax on total wealth"
https://home.kpmg/uk/en/home/insights/2020/12/tmd-wealth-tax-commission-final-report-recommends-a-one-off-wealth-tax.html
"The Wealth Tax Commission has published its final report and concludes the UK could benefit from a one-off wealth tax on all assets."
Depends whether you see the hike in NI as directly funding social care or, in reality, protecting elderly Tory voters’ homes from taxation.
That is exactly what it is. Not sure what measurements will be used to evidence improved social care but I will be amazed to see any improvement at all.
People having to use up their assets to fund their own care home bills is not even part of the social care problem.
All I debating was the strict definition of a millionaire.
Its an arbitrary level. Maybe replace "millionaire" with "wealthy". All of those people are wealthy by pretty much any definition so are a reasonable target for a little more tax
on using the house to pay for care.
If you do not do this a large tax increase would be needed.
The only people to benefit from not selling a house to pay for care are the children of middle class parents who still get their inheritance.
Why should my taxes pay for someone else to inherit?
its one of those situations that seems unfair however you look at it
To prevent avoidance through forestalling, the tax must not be pre-announced.
Conclusions and Recommendations Section 6.1
They recommend that it's not pre-announced. ie. don't tell people in 2021 that there's going to be a wealth tax in 2025. As that will encourage avoidance measures by those wealthy enough to implement them. They recommend decision of an assessment date on or before announcement date.
It's not an un-announced raid on people's wealth at all.
I don't think people should need to fund their own care. They are in care because they are ill, i.e. having dementia is an illness and needs caring for just as any other medical conditions does. Should all be within NHS.
Whether wealthier people are taxed more to pay for improved NHS is separate to that but this change seems to be focused on protection of wealthy peoples houses more than anything.
They recommend that it’s not pre-announced. ie. don’t tell people in 2021 that there’s going to be a wealth tax in 2025. As that will encourage avoidance measures by those wealthy enough to implement them. They recommend decision of an assessment date on or before announcement date.
It’s not an un-announced raid on people’s wealth at all.
Eh? Makes no sense.