un-mini budget thread

An easy £1250 from every highest rate tax payer (unless they all switch salary contributions into pension or choose to work part-time). No abolition of the 60% rate either. Not increasing headline rates is still in manifesto, no? Moving the boundaries was not a manifesto pledge.

Yeah a bit unexpected and I had to read it more than once to make sure I’d read it right.

Is anyone else finding this quite surreal?

Basically what they’re saying is “

remember that other budget a few weeks ago? We’ll just forget all that. Nothing to do with us at all, that, guv. Never heard of this Liz woman or that Kwasi Watsisname. So we’re now doing the polar opposite of what they did, so if you could kindly just erase what happened a few weeks ago from your memory, that would be great! Thanks! Move along now, nothing to see here”

Not much sign of taxing the wealthy though…

So we’re now doing the polar opposite of what they did, so if you could kindly just erase what happened a few weeks ago from your memory, that would be great! Thanks! Move along now, nothing to see here”

Isn't that what people of all sides were wanting?

Don't think there were any fans of Kwasi's budget.

Not much sign of taxing the wealthy though…

Turkeys don't vote for Christmas.

import tariffs removed on bike frames!

Wait. Did he just say no import costs on bicycle frames?

Import Tariffs removed for Bicycle frames.

You've won me over - where do I put my X ?

Not much sign of taxing the wealthy though…

We don't tax wealth, we tax income and expenditure. About a quarter of pensioner households have wealth in excess of one million pounds.

Isn't the bike frames bit more about business rather than personal?

Kind of my point. If we just treated capital gain as income we’d raise a lot of money and actually be taxing wealth rather than just earnings.

Not much sign of taxing the wealthy though…

Turkeys don’t vote for Christmas.

12 years of Torys in this country would suggest that they do, regularly.

Isn’t the bike frames bit more about business rather than personal?

Well yes but that should hopefully reduce the cost to the consumer too.

Isn’t that what people of all sides were wanting?

Don’t think there were any fans of Kwasi’s budget.

Indeed, but do you not find it quite surreal that they’re talking about it as if the people who carried out the suicidal experiment in simpleton economics were absolutely nothing to do with them? Like they were members of a different party altogether?

Hard to tax capital gains on housing as the assets are not liquid. They could remove capital gains on sales of primary residence. As for gains in pension funds - possible in the private sector, not the public service, where there is no fund to extract from!

energy price cap held but at £3000 for the next 12mo from April. Plus additional subsidies for the lower incomes, disabled, etc.

If this 'not a budget' is costed properly and can be afforded by the increase in taxes, etc., then it's actually sounding pretty good. Big IF......

Also - politics aside, he does come across as credible, which in itself is a massive improvement over the past few months.

Indeed, but do you not find it quite surreal that they’re talking about it as if the people who carried out the suicidal experiment in simpleton economics were absolutely nothing to do with them? Like they were members of a different party altogether?

The last six months have been surreal! 🙂

"Like they were members of a different party altogether?"

Yep - they have left labour nowhere to go. Proper difficult to follow that. Hopefully Rachel Reeves can ask some difficult questions

benefits, pensions and minimum wage all rising in line with inflation as well, its a big shift towards the centre for the tories.

As for gains in pension funds – possible in the private sector, not the public service, where there is no fund to extract from!

Pension income is already taxed so not really much need to do anything there, except perhaps charge NI.

Triple lock saved, that'll be another 4 years of Tory rule then 😭

They could remove capital gains on sales of primary residence.

You mean remove the CGT *exemption*, right? Yes they could and probably should.

Though TBH they should really allow index-linking on capital gains (used to be the case, removed a long time ago). An investment that keeps pace with inflation hasn't really made any money, you shouldn't be taxed on that as if you'd made a genuine gain.

Pah. Treat all capital gain as income and be done with it. I can see no real justification to treat it differently.

Hopefully Rachel Reeves can ask some difficult questions

I wouldn't hold your breath! 🙂

Isn’t that what people of all sides were wanting?

Yes, but it's the tories doing it so racist.

I take it the fuel duty rise is proceeding as it wasn't mentioned?

Labour won't dare mention Brexit, what a complete waste of space they are. Utterly useless spineless cowards the lot of them.

Is that Racheal Reeves speaking now I think she is doing a good job.

I agree with SuperScale20. And Reeves. Where's the long term investment? Where's the tax reforms for small businesses, especially those with a high street presence? Where's the mention of removing trade barriers? Where's the commitment to decarbonising our energy supply? Where's the focus on teaching and training? What about that social care plan promised in 2019? How about clawing back some of the billions lost in fraud and poor value (to put it mildly) contracts given to Tory VIPs under the cover of the pandemic?

Especially as its a response speech and not so rehersed (though obvs some of it is)

How many people in the £125-£150k income bracket will suddenly be increasing their salary sacrifice pension contributions ?

Pension income is already taxed so not really much need to do anything there, except perhaps charge NI.

The point about taxing wealth gains is that you have to be able to draw out the tax regularly. The increase in pension fund is a capital gain (if it grows) and that UNEARNED wealth is a juicy tax source for capital gains tax before you have retired. Can easily be paid by reducing fund size at the end of each tax year. Except for public sector employees who don't have any fund to remove from. Hence the dilemma. Easy source of possible tax grab, but not equitable.

And yes, for primary residence property sales it's exemption removal. Again, capital gains could be paid because there is cash to access at point of sale.

Most people would struggle to pay the capital gains on their house on an annual basis. CGT of 20% on a house of £250k growing at 5% per annum would still be a £2500 extra bill per annum per property.

be grateful we don't live in California where they pay annual property taxes related to property value

Most people would struggle to pay the capital gains on their house on an annual basis. CGT of 20% on a house of £250k growing at 5% per annum would still be a £2500 extra bill per annum per property.

But... income from working your arse off is taxed annually in that way, why not the wealth gained from the capital that's just sitting there (in many cases)? Taxing income only will always favour those sitting on capital rather than those living without much.

be grateful we don’t live in California where they pay annual property taxes related to property value

We "sort of" do. It's how local taxes are calculated. But it's never properly updated, and rolls off at a level being eroded fast by rising house prices. Additional higher bands are needed for council tax if we are to stick with it.

be grateful we don’t live in California where they pay annual property taxes related to property value

Council tax does the same doesn't it. OK, it's banded based on historic bandings, but my council tax bill goes up every year based on band?

But… income from working your arse off is taxed annually in that way, why not the wealth gained from the capital that’s just sitting there (in many cases).

Because people do not have access to their capital if it is tied up in a house. What do they pay it with. Selling their house?

All the more reason to tax it. Get some of that money back into the real economy. There are ways of people freeing up capital to pay a small share of that unearned wealth gain. We happily expect people who don't own property to magically find money for their rapidly rising rent. We reward people for sitting on wealth, while increasing taxes for those with none.

But… income from working your arse off is taxed annually in that way, why not the wealth gained from the capital that’s just sitting there (in many cases).

Yeah but unless you sell your house that capital doesn't exist. The only practical way of taxing capital gains on property is at the point of sale when the gain is realised.

You make it sound like people either own all or none of their property. The proportion of it they actually own changes every year, for most people. If we can gradually buy our homes, then we can either slow that accumulation or even in some cases reverse it. Selling a property is not the only point in which capital is or can be gained or released.

But again, I put the point that we ask people without property to magically find extra money in their budgets for increases in direct and indirect taxes, and ever increasing rent. But we have a "hands off" approach to people sitting on capital. It's an attitude that needs changing.

You make it sound like people either own all or none of their property. The proportion of it they actually own changes every year, for most people.

most people entirely own the house the day they buy it. There just happens to be some debt securitised on its value. That why, if prices drop, you don't get away with paying less mortgauge (and visa versa)

The obvious exception to this is shared ownership.

If you taxed capital gains as you're suggesting, you would end up forcing a granny to sell her one bed flat and move into rented accomodation. A really bad idea all round. taxing it at point of realisation (with a reduced deduction for primary residences) would be sensible

The value of a house is entirely made up, based on supply and demand, and peoples ability and desire to pay for it.
If you had to pay a tax based on its increase in value, then said value would not increase (or not increase as fast).

you would end up forcing a granny to sell her one bed flat and move into rented accomodation

Just like taxes paid on income, you could have thresholds, to protect those with lower value properties. Yes, you could be pushing a granny to sell the family four bed home and downsize.

then said value would not increase (or not increase as fast)

Absolutely. Making it easier for younger people to own their own home.

But this is why the change will never come... the votes of those who own their own homes, or multiple properties, are at risk. Our politics is skewed towards those with capital, and so our economy continues to be as well. Rising property prices have mattered to governments more than rising real term wages for far too long.

or to equity release on it. If it became a policy would mechanisms then be created to do it.

If people don't like a market created solution, maybe you could get a loan from the Gov to pay your annual capital tax, that then gets repaid on death as part of the estate?

What a silly idea.

Ok, house price goes down. Does the government pay you tax back?

I’m half reading this whilst in a meeting, for half a moment I actually thought this might have been a real thing.

I’m waiting until the evening news to find out about the budget in detail and see how badly we are hit

Council Tax is not the same as Californians can pay tens of thousands for family sized properties

IMO a modest annual wealth tax is worth considering but the big win would be removing the exemption from CGT for houses at the point of sale as TiReD suggested. And also taxing inheritances. It's really hard to argue that already rich heirs really need the huge unearned windfall of up to a million pounds completely free of all tax when low wage earners are being squeezed hard. No doubt there will be some smug rich homeowners along to argue the point shortly....

So the old couple who've lived in the same house all their married life that they bought in the 1970s for a few thousand pounds - how do you work the gains out on that? When most of the 'gains' are outside their control.

You're lumping all the cruise-taking, golf playing pensioner types in with the ones who've led modest lives and have assets because they didn't live extravagant lifestyles.

You the also get a country divide - pensioners in north in a 4 bed detached that could be worth 250k -v- the ones in the south east in a similar property but it's worth £750k. How would it be fair that the south east pensioner pays more?

benefits, pensions and minimum wage all rising in line with inflation while public sector workers are going to have to strike to achieve nothing like that, same old same old

There’s a Tory MP, Vicky Ford, on 5 live now defending non doms tax status.

It would raise 3 billion a year but we shouldn’t tax the non doms as they apparently invest in this country so making them pay tax would deter them 🙄

How many people in the £125-£150k income bracket will suddenly be increasing their salary sacrifice pension contributions ?

They are more than likely maxed out already

How would it be fair that the south east pensioner pays more?

Mechanisms of equity release would be made available. Unearned wealth is still wealth and this country does not tax wealth. The generation that bought properties cheaply, retired on final salary pensions before closing them, enjoyed unprecedented state pension growth and voted for Brexit to saddle the UK with a 4% drop in GDP (£50bn tax revenue right there).

benefits, pensions and minimum wage all rising in line with inflation while public sector workers are going to have to strike to achieve nothing like that, same old same old

Not knocking the people receiving it, but yes, it's a bugger. Good for my civil service colleagues struggling on minimum wage though.

HMRC won't be striking though, didn't reach the 50% turnout rule.

Given that those with the most wealth never have to pay CGT anyway its all a bit academic. If you are wealthy your assets are owned by a company, especially property, when you want to sell it you sell the company not the property so no Stamp duty. You register the company in your tax haven of choice so there is no CGT liability from the profit on the sale of the company. For good measure you can take money out of the company based on the asset value rising as a director tax free within limits. Its a very good scheme if your rich enough. This is what the Panama Papers made public

Re: heating oil & energy

The BBC said this "Those using heating oil will receive a payment of £200, rather than £100."

But the £100 2022 assistance hasn't happened yet in England and Wales.  Has anyone had the £100 yet?

In NI the electric supplier is providing the refund as houses can have multiple oil providers, which is a sensible approach. My parents in N Wales haven't got a clue when or if they'll get the £100 this year. It's a mess

this country does not tax wealth

Neither do many, the trend has been to get rid them as they are not very effective - and those countries that do have them generally exempt your main home.

voted for Brexit to saddle the UK with a 4% drop in GDP (£50bn tax revenue right there).

This seems to be widely quoted but this is at best a forecast, which may or may not come to pass.

this is at best a forecast, which may or may not come to pass

As will be the treasury projected tax take. Expect a pensions fund bonanza. Today's OBR forecast is hardly looking like good news. Slide 9

OBR.UK "https://obr.uk/docs/dlm_uploads/November_2022_EFO_Presentation_slides.pdf"

Even by 2018 projection, we're down 5% whilst other countries are coming back to pre-pandemic.

Council tax revaluation should be a priority. The top band is currently taxed three times that of lowest band. There is significant scope to add bands and increase the spread to make it less regressive. I suspect there are also large numbers of extended or improved properties that have a low band.

So the old couple who’ve lived in the same house all their married life that they bought in the 1970s for a few thousand pounds – how do you work the gains out on that? When most of the ‘gains’ are outside their control.

You do it the exact same way you do it for anyone who has a second home. The system is not complicated and already in place, it's just that your main residence is exempt.

ven by 2018 projection, we’re down 5% whilst other countries are coming back to pre-pandemic.

Unlikely, that means we should have grown more than twice as much as France.

Don't mention the Brexit! Nothing to see, move along.

https://twitter.com/mrjamesob/status/1593215607058886656

Unlikely, that means we should have grown more than twice as much as France.

Correct. But we voted against that, so here we are. France, like most European countries, has lots of its own economic troubles right now, but at least we’re here to make them look (relatively) good.

You the also get a country divide – pensioners in north in a 4 bed detached that could be worth 250k -v- the ones in the south east in a similar property but it’s worth £750k. How would it be fair that the south east pensioner pays more?

It's more equitable than the current setup whereby they get a huge windfall when they sell it.

Having CGT when it's sold (and inheritance tax on the remainder) is entirely equitable.

Compare and contrast to energy companies' profits; the point of a windfall tax (or capital gains tax) is it taxes "unearned" profits you didn't expect to make and were not in your control.

CGT would mean that people currently sat on hundreds of thousands of pounds worth of profit, would have to pay 20% in tax to society, which seems unfair if you have to pay it, but if you're in your 20's or 30's and still trying to get on/climb the ladder you're expected to pay 100% of that profit to the person selling?

Best implementation would just be to replace stamp duty with CGT.

If your job changes location, you're currently penalized for moving with it. Encouraging long commutes and associated pollution. Far better to build a system that makes it easy to move where people need to be.

Pretty generous again for individuals. Income tax & NI frozen. Cost of living help extended.
It's increasing dependency on handouts, though. Where's the investment in skills, roads, rail, building schools, training doctors & nurses etc?
Too much hope, not enough long-term planning.

Income tax & NI frozen.

It’s a tax rise, when thresholds are frozen and incomes need to rise 10% to keep up with the cost of living.

Where’s the investment in skills, roads, rail, building schools, training doctors & nurses etc?
Too much hope, not enough long-term planning.

This.

Where’s the investment in skills, roads, rail, building schools, training doctors & nurses etc?

It’s all been sacrificed on the alter of a 120 billion pound white elephant so you can get from Birmingham to London a bit quicker, should the mood take you

The problem isn’t building HS2, the problem is stopping there.

HS2 was always a ridiculous white elephant, but given the present economic climate it’s complete and utter madness

Council Tax is not the same as Californians can pay tens of thousands for family sized properties

It's nigh on impossible to do direct comparisons of one countries tax for a particular thing against another. They may pay more in property taxes, however things like their sales tax at 7.25% is lower than our VAT. In addition, US income taxes are lower than here, particularly at the high salary end of the scale, where these high home tax people are probably earning. Then you've got much lower petrol prices etc.

No, I disagree. HS2 not only make journey's quicker, but increases the number of people who can use the railway. It has suffered from NIMBY-ism (having to build a tunnel through the Chilterns). IMO the UK should do more of this kind of thing, we need the experience!

Investing in rail networks is perfect 'levelling up' It allows poorer people to commute into prosperous areas.

I wonder how much tax Sunak pays on his Californian property.

It’s all been sacrificed on the alter of a 120 billion pound white elephant so you can get from Birmingham to London a bit quicker, should the mood take you

Much as I think hs2 is a colossal waste of cash, at this point, how many billions would it cost to not build it, not have whatever minor benefits it might bring, undo the half done work etc etc etc?

Yes it's a waste of 120 billion but not building it could very easily be a waste of 100.

Investing in rail networks is perfect ‘levelling up’ It allows poorer people to commute into prosperous areas.

Ah yes, level up Birmingham by encouraging everyone to bugger off to London for twelve hours a day and earn more money there, increasing investment in London at the expense of Birmingham and generally doing a great job of making the UK even more London centric. Oh it'll also allow those on better wages in London who can't afford to live in a decent part of the capital to push up house prices in decent parts of Birmingham and the rest of the route to make them even more unaffordable to those working locally on lower wages.

What leveling up needs is the UK to stop acting like London is the only show in town, improved passenger rail into London is quite the opposite of that.

Big raid on renewables in the Green Book…

5.33 Electricity Generator Levy – The government is introducing the Electricity Generator Levy, a temporary 45% tax that will be levied on extraordinary returns from low-carbon UK electricity generation. For the purposes of the tax, extraordinary returns will be defined as the aggregate revenue that generators make in a period from in-scope generation at an average output price above £75/MWh. The tax will be limited to generators whose in-scope generation output exceeds 100GWh across a period and will only then apply to extraordinary returns exceeding £10 million. The tax will apply to extraordinary returns arising from 1 January 2023 and will be legislated for in Spring Finance Bill 2023.

No mention of giving them the tax loophole Shell has used to avoid paying the levy.

No reference to fuel duty levy in Hunt's budget but the OBR have assumed 12p/ltr from April 23 in their calcs.
If that happens - ouch.
If it doesn't, the 'black hole' will deepen.
I'm waiting for more detailed analysis of the whole package to take a better informed view.
Biggest fall in living standards since records began in 1950s; obviously that fall won't be felt equally by everyone.

I just saw that too. 12p a litre! The tabloids are gonna love that - no wonder he 'forgot' to mention it

https://twitter.com/LiamHalligan/status/1593250257672208386

TBF, the original plan was to extend HS rail to Leeds, Manchester and Sheffield.
Again, it's capacity, not just speed; this will take cars and freight off the roads too.
Remember, it's a railway for the masses, not a door2door taxi service.
In theory, it's an excellent idea. In reality, it has been dogged by local opposition and probably a lack of civil engineering skill/experience in the UK.
It might look like a waste of money during construction - the benefits are due much further into the future. High speed rail is still a good idea, especially if you care about 'social mobility'.

Just had a crafty glance at the comments on the Daily Heil story.

Guess what? Everyone's blaming refugees.

5p/litre of the 12p/litre is the end of the temp drop in fuel duty from this year thats ending. I guess they're hoping it'll come out in the wash of pump prices dropping generally (as oil price drops and the pound starts to rebound)