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Savings and Investments thread
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What really surprised me was the Tories reducing the CGT allowance like they did. Going from £12.5k to £6k to now £3k was quite a shock. As you say, there is the "inflation" element to take into account & so holding shares/funds for a number of years means you'll have to pay some CGT - meaning you might have effectively lost money over that time.Rob7Lee said:
Think you miss the point, there is no consideration of inflation when we consider CGT. You are taxed on the inflationary element as well as any true gain (if indeed there is any).red10 said:If owned outright I still think it's a reasonable investment. Any gain even if taxed is a gain after all and it's good to not have easy access to the money or I would be at the nearest Ferrari dealership !!!
As an example:
2024 buy a few bars of gold for £100k
2034 That gold is now worth £140k. However inflation means your £100k should now be in 2034 terms £160k.
So in reality you have lost £20k, however you'll be taxed on the £40k 'gain' @24% reducing your holding to just over £130k, so you've lost in real terms £30k yet HMRC have had nearly £10k from you to worsen your loss when the reality is no gain has been made.
I'd be all for CGT being at a higher rate but only taxing true gains.
On property specifically, take it from me a a Trustee of a friendly society with over 50 properties it's simply not worth it. The only reason it broadly washes its face for us is Friendly societies don't have to pay most taxes! So all rents received are tax free and no CGT if we sell. However even for us it's got to the point where the returns elsewhere are much better, we will likely sell most over the next few years (may keep some of the more modern one's).3 -
But to play devils advocate I have to pay tax on credit interest already and that can under perform inflation?golfaddick said:
What really surprised me was the Tories reducing the CGT allowance like they did. Going from £12.5k to £6k to now £3k was quite a shock. As you say, there is the "inflation" element to take into account & so holding shares/funds for a number of years means you'll have to pay some CGT - meaning you might have effectively lost money over that time.Rob7Lee said:
Think you miss the point, there is no consideration of inflation when we consider CGT. You are taxed on the inflationary element as well as any true gain (if indeed there is any).red10 said:If owned outright I still think it's a reasonable investment. Any gain even if taxed is a gain after all and it's good to not have easy access to the money or I would be at the nearest Ferrari dealership !!!
As an example:
2024 buy a few bars of gold for £100k
2034 That gold is now worth £140k. However inflation means your £100k should now be in 2034 terms £160k.
So in reality you have lost £20k, however you'll be taxed on the £40k 'gain' @24% reducing your holding to just over £130k, so you've lost in real terms £30k yet HMRC have had nearly £10k from you to worsen your loss when the reality is no gain has been made.
I'd be all for CGT being at a higher rate but only taxing true gains.
On property specifically, take it from me a a Trustee of a friendly society with over 50 properties it's simply not worth it. The only reason it broadly washes its face for us is Friendly societies don't have to pay most taxes! So all rents received are tax free and no CGT if we sell. However even for us it's got to the point where the returns elsewhere are much better, we will likely sell most over the next few years (may keep some of the more modern one's).0 -
Yes equally applies, although in general your original capital is not at risk.valleynick66 said:
But to play devils advocate I have to pay tax on credit interest already and that can under perform inflation?golfaddick said:
What really surprised me was the Tories reducing the CGT allowance like they did. Going from £12.5k to £6k to now £3k was quite a shock. As you say, there is the "inflation" element to take into account & so holding shares/funds for a number of years means you'll have to pay some CGT - meaning you might have effectively lost money over that time.Rob7Lee said:
Think you miss the point, there is no consideration of inflation when we consider CGT. You are taxed on the inflationary element as well as any true gain (if indeed there is any).red10 said:If owned outright I still think it's a reasonable investment. Any gain even if taxed is a gain after all and it's good to not have easy access to the money or I would be at the nearest Ferrari dealership !!!
As an example:
2024 buy a few bars of gold for £100k
2034 That gold is now worth £140k. However inflation means your £100k should now be in 2034 terms £160k.
So in reality you have lost £20k, however you'll be taxed on the £40k 'gain' @24% reducing your holding to just over £130k, so you've lost in real terms £30k yet HMRC have had nearly £10k from you to worsen your loss when the reality is no gain has been made.
I'd be all for CGT being at a higher rate but only taxing true gains.
On property specifically, take it from me a a Trustee of a friendly society with over 50 properties it's simply not worth it. The only reason it broadly washes its face for us is Friendly societies don't have to pay most taxes! So all rents received are tax free and no CGT if we sell. However even for us it's got to the point where the returns elsewhere are much better, we will likely sell most over the next few years (may keep some of the more modern one's).
I'll keep buying my gold sovereigns until they change the tax status of those! (No CGT as classed as legal tender)3 -
They seem to hate anyone showing aspiration. That whole bollocks about working class and working people just wore me out. I'm firmly working class, I get my hands dirty to earn money and to try and get to the next level of life I entrust extra sums of money I can afford to the shiny faced posh boys in the city to invest it wisely and make that money turn into more money. I'm not going to be John Paul Getty or whatever his name is I'd just like to maybe pay my mortgage off a bit earlier or put that money back into the economy by buying a car or building an extension but God forbid that money makes money I get taxed again when I've already been taxed on the money I used to let someone else make a calculated gamble. Pretty much anyone my age who is self employed has had their traditional method of a pension (property) bent over now.
This bends my head, 3k gain is nothing. I thought it was low before but 3k. Whats the point5 -
Thanks Rob7, appreciate the gain is the issue vs inflation but in property terms with rental income we would have pulled in around 300k over the same 10 years and still retain the assets for future sale.Rob7Lee said:
Think you miss the point, there is no consideration of inflation when we consider CGT. You are taxed on the inflationary element as well as any true gain (if indeed there is any).red10 said:If owned outright I still think it's a reasonable investment. Any gain even if taxed is a gain after all and it's good to not have easy access to the money or I would be at the nearest Ferrari dealership !!!
As an example:
2024 buy a few bars of gold for £100k
2034 That gold is now worth £140k. However inflation means your £100k should now be in 2034 terms £160k.
So in reality you have lost £20k, however you'll be taxed on the £40k 'gain' @24% reducing your holding to just over £130k, so you've lost in real terms £30k yet HMRC have had nearly £10k from you to worsen your loss when the reality is no gain has been made.
I'd be all for CGT being at a higher rate but only taxing true gains.
On property specifically, take it from me a a Trustee of a friendly society with over 50 properties it's simply not worth it. The only reason it broadly washes its face for us is Friendly societies don't have to pay most taxes! So all rents received are tax free and no CGT if we sell. However even for us it's got to the point where the returns elsewhere are much better, we will likely sell most over the next few years (may keep some of the more modern one's).
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It will go straight into the pub's pockets and that's the point I think. No one is going to be annoyed about a pub not passing a penny saving on a £5 pint, they're giving all pubs a 0.2% profit boost effectively (assuming average selling price of £5 a pint). It'll help, but not as much as the NI increases today will hurtvalleynick66 said:
Maybe it is that simple. But spending so much time telling us how bad the finances are why deny sone income when the gimmick really won’t work / be noticed after today?golfaddick said:
A gimmick.valleynick66 said:I don’t understand the logic of taking a penny ‘off’ a pint.The government gets less revenue but the ‘saving’ isn’t going to change any drinkers behaviour / volume consumed.Seems counter productive to me.Am I missing something?
Just to show that someone, somewhere is going to be better off.
Most likely the publican as I cant see them reducing a £6 pint down to £5.99. Easier to absorb the cost.
Looks incompetent to me.
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I tend to agree the pub will get the minuscule benefit.Huskaris said:
It will go straight into the pub's pockets and that's the point I think. No one is going to be annoyed about a pub not passing a penny saving on a £5 pint, they're giving all pubs a 0.2% profit boost effectively (assuming average selling price of £5 a pint). It'll help, but not as much as the NI increases today will hurtvalleynick66 said:
Maybe it is that simple. But spending so much time telling us how bad the finances are why deny sone income when the gimmick really won’t work / be noticed after today?golfaddick said:
A gimmick.valleynick66 said:I don’t understand the logic of taking a penny ‘off’ a pint.The government gets less revenue but the ‘saving’ isn’t going to change any drinkers behaviour / volume consumed.Seems counter productive to me.Am I missing something?
Just to show that someone, somewhere is going to be better off.
Most likely the publican as I cant see them reducing a £6 pint down to £5.99. Easier to absorb the cost.
Looks incompetent to me.But why bother when it is so small and frankly more admin to change it etc?1 -
Where elsewhere will you go R7L?Rob7Lee said:
Think you miss the point, there is no consideration of inflation when we consider CGT. You are taxed on the inflationary element as well as any true gain (if indeed there is any).red10 said:If owned outright I still think it's a reasonable investment. Any gain even if taxed is a gain after all and it's good to not have easy access to the money or I would be at the nearest Ferrari dealership !!!
As an example:
2024 buy a few bars of gold for £100k
2034 That gold is now worth £140k. However inflation means your £100k should now be in 2034 terms £160k.
So in reality you have lost £20k, however you'll be taxed on the £40k 'gain' @24% reducing your holding to just over £130k, so you've lost in real terms £30k yet HMRC have had nearly £10k from you to worsen your loss when the reality is no gain has been made.
I'd be all for CGT being at a higher rate but only taxing true gains.
On property specifically, take it from me a a Trustee of a friendly society with over 50 properties it's simply not worth it. The only reason it broadly washes its face for us is Friendly societies don't have to pay most taxes! So all rents received are tax free and no CGT if we sell. However even for us it's got to the point where the returns elsewhere are much better, we will likely sell most over the next few years (may keep some of the more modern one's).0 -
Inflation has been mentioned several times in the thread recently.red10 said:
Thanks Rob7, appreciate the gain is the issue vs inflation but in property terms with rental income we would have pulled in around 300k over the same 10 years and still retain the assets for future sale.Rob7Lee said:
Think you miss the point, there is no consideration of inflation when we consider CGT. You are taxed on the inflationary element as well as any true gain (if indeed there is any).red10 said:If owned outright I still think it's a reasonable investment. Any gain even if taxed is a gain after all and it's good to not have easy access to the money or I would be at the nearest Ferrari dealership !!!
As an example:
2024 buy a few bars of gold for £100k
2034 That gold is now worth £140k. However inflation means your £100k should now be in 2034 terms £160k.
So in reality you have lost £20k, however you'll be taxed on the £40k 'gain' @24% reducing your holding to just over £130k, so you've lost in real terms £30k yet HMRC have had nearly £10k from you to worsen your loss when the reality is no gain has been made.
I'd be all for CGT being at a higher rate but only taxing true gains.
On property specifically, take it from me a a Trustee of a friendly society with over 50 properties it's simply not worth it. The only reason it broadly washes its face for us is Friendly societies don't have to pay most taxes! So all rents received are tax free and no CGT if we sell. However even for us it's got to the point where the returns elsewhere are much better, we will likely sell most over the next few years (may keep some of the more modern one's).
Inflation (Consumer Price Index or Retail Price Index) is quite a blunt measure, and whatever value is published by the Office for National Statistics is unlikely to have that exact percentage impact on your buying power.
E.g. price of bananas in
2014: 0.86 £/Kg
2024: 1.02 £/Kg
18.6% increase
Petrol:
Oct 2014: 1.26 £/Ltr
Oct 2024: 1.34 £/Ltr
6.3% increase
Average house in England:
Jan 2013: £167k
Jan 2023: £285k
70.6% increase
£10 in 2014 would have bought goods and services then, that cost £13.43 in Sep 2024, if we use the CPI measure for inflation:
34.3% increase
The point is that official inflation measures are one of the bits of data you use to estimate how your purchasing power is changing.
It is not the exact percentage change of how much you get for your pound for the things you want to buy.
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I've now had time to read some briefing notes from the Budget. On the Pension pot/ IHT issue it seems that there will now be a 2 month consultation period with industry gurus into how exactly it should he dealt with cone April 2027.
In essence.......on death the beneficiaries get in contact with the Pension Company & they swap info - Pension Company tells beneficiaries how much the pension is worth & beneficiaries say how much the Estate is worth. If total Estate (inc Pension) is over the IHT threshold then calculations are done and Pension Company will deduct IHT from Pension fund before beneficiaries inherit.
Then further tax might be due if over age 75 etc etc.
Thats the gist of it but more details to follow after the consultation period.3 - Sponsored links:
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We are actually quite restricted as to what we can/can't invest in.paulsturgess said:
Where elsewhere will you go R7L?Rob7Lee said:
Think you miss the point, there is no consideration of inflation when we consider CGT. You are taxed on the inflationary element as well as any true gain (if indeed there is any).red10 said:If owned outright I still think it's a reasonable investment. Any gain even if taxed is a gain after all and it's good to not have easy access to the money or I would be at the nearest Ferrari dealership !!!
As an example:
2024 buy a few bars of gold for £100k
2034 That gold is now worth £140k. However inflation means your £100k should now be in 2034 terms £160k.
So in reality you have lost £20k, however you'll be taxed on the £40k 'gain' @24% reducing your holding to just over £130k, so you've lost in real terms £30k yet HMRC have had nearly £10k from you to worsen your loss when the reality is no gain has been made.
I'd be all for CGT being at a higher rate but only taxing true gains.
On property specifically, take it from me a a Trustee of a friendly society with over 50 properties it's simply not worth it. The only reason it broadly washes its face for us is Friendly societies don't have to pay most taxes! So all rents received are tax free and no CGT if we sell. However even for us it's got to the point where the returns elsewhere are much better, we will likely sell most over the next few years (may keep some of the more modern one's).
Of the 50 plus we have about 5 modern (i.e. post 1980) that we may keep, otherwise it'll be predominantly the stock market, a little in cash and some gilts/government bonds.0 -
Who do you use to buy your sovereigns?Rob7Lee said:
Yes equally applies, although in general your original capital is not at risk.valleynick66 said:
But to play devils advocate I have to pay tax on credit interest already and that can under perform inflation?golfaddick said:
What really surprised me was the Tories reducing the CGT allowance like they did. Going from £12.5k to £6k to now £3k was quite a shock. As you say, there is the "inflation" element to take into account & so holding shares/funds for a number of years means you'll have to pay some CGT - meaning you might have effectively lost money over that time.Rob7Lee said:
Think you miss the point, there is no consideration of inflation when we consider CGT. You are taxed on the inflationary element as well as any true gain (if indeed there is any).red10 said:If owned outright I still think it's a reasonable investment. Any gain even if taxed is a gain after all and it's good to not have easy access to the money or I would be at the nearest Ferrari dealership !!!
As an example:
2024 buy a few bars of gold for £100k
2034 That gold is now worth £140k. However inflation means your £100k should now be in 2034 terms £160k.
So in reality you have lost £20k, however you'll be taxed on the £40k 'gain' @24% reducing your holding to just over £130k, so you've lost in real terms £30k yet HMRC have had nearly £10k from you to worsen your loss when the reality is no gain has been made.
I'd be all for CGT being at a higher rate but only taxing true gains.
On property specifically, take it from me a a Trustee of a friendly society with over 50 properties it's simply not worth it. The only reason it broadly washes its face for us is Friendly societies don't have to pay most taxes! So all rents received are tax free and no CGT if we sell. However even for us it's got to the point where the returns elsewhere are much better, we will likely sell most over the next few years (may keep some of the more modern one's).
I'll keep buying my gold sovereigns until they change the tax status of those! (No CGT as classed as legal tender)1 -
Couple of places generallyWishIdStayedinthePub said:
Who do you use to buy your sovereigns?Rob7Lee said:
Yes equally applies, although in general your original capital is not at risk.valleynick66 said:
But to play devils advocate I have to pay tax on credit interest already and that can under perform inflation?golfaddick said:
What really surprised me was the Tories reducing the CGT allowance like they did. Going from £12.5k to £6k to now £3k was quite a shock. As you say, there is the "inflation" element to take into account & so holding shares/funds for a number of years means you'll have to pay some CGT - meaning you might have effectively lost money over that time.Rob7Lee said:
Think you miss the point, there is no consideration of inflation when we consider CGT. You are taxed on the inflationary element as well as any true gain (if indeed there is any).red10 said:If owned outright I still think it's a reasonable investment. Any gain even if taxed is a gain after all and it's good to not have easy access to the money or I would be at the nearest Ferrari dealership !!!
As an example:
2024 buy a few bars of gold for £100k
2034 That gold is now worth £140k. However inflation means your £100k should now be in 2034 terms £160k.
So in reality you have lost £20k, however you'll be taxed on the £40k 'gain' @24% reducing your holding to just over £130k, so you've lost in real terms £30k yet HMRC have had nearly £10k from you to worsen your loss when the reality is no gain has been made.
I'd be all for CGT being at a higher rate but only taxing true gains.
On property specifically, take it from me a a Trustee of a friendly society with over 50 properties it's simply not worth it. The only reason it broadly washes its face for us is Friendly societies don't have to pay most taxes! So all rents received are tax free and no CGT if we sell. However even for us it's got to the point where the returns elsewhere are much better, we will likely sell most over the next few years (may keep some of the more modern one's).
I'll keep buying my gold sovereigns until they change the tax status of those! (No CGT as classed as legal tender)
bullion by post
hatton garden metals, you can go in person rather than post if you prefer.1 -
Hatton are also good if you want a particular year.0
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A few anecdotes of behaviour post hoc te proct (© Derek & Clive).
One friend has put his company up for sale - effectively his life's work of 30 years. He's relieved entrepreneurs relief has not been touched too much (bar the CGT) but has decided that's just really bought him time and he's not going to wait until it's too late. NI increases are going to cost him 20 grand/year (he employs 20-30 people), which will also mean about a loss of about 50-100k after tax to him when he sells his share. He's selling his BTL , as it now costs him money to run (he mortgaged his main house and bought a smaller one when he was having cash flow issues). Selling the company to a trade buyer, which will inevitably mean redundancies of 5-10 people.
A property developer friend is moving abroad and taking his 50m with him. Relieved there's no exit tax but is going to wait until it's too late. Employs about 5 people.
A restauranteur is looking to sell his very successful business. Again, direction of travel sees the smaller CGT changes as buying some time to get the right deal done.
A friend who has a very senior exec job at Google, is moving to Switzerland. You need to be paying $1m in tax per year for that to make sense, and I think he's paying £2m here.
A cyber company is about to go under because it hasn't been run well. I was putting together some investors to bail it out and turn it around but we decided today that the rewards weren't worth the risks. The former have decreased with the CGT changes and, in the turnaround time frame, likely to get worse. The latter have risen with the employment 'protections' being put in place and now rising NI. Barring a miracle, that business will go bust in the next 3-6 months. The owner will lose twenty years of graft, his house and 30 people will need to find work (which I'm sure most will). 25 cyber apprentices will also need to find new trainers. The taxman will lose a few quid, of course and bounce back loans will go unpaid (total about 500k).
Me? Well, instead of buying and running a business or going back to a corporate job, I cashed in my lump sum, paid off the mortgage and am now in the process of signing a contract to supply my services to the government for 3-4 days a week on half my usual rate. That will lose HMRC 80% of what I've paid on average for the last 18 years, without taking into account the jobs I used to create or the fact that I will now reign in my spending. I guess we'll all end up working for the government sooner or later.
Mean time, I'm actively looking to move abroad in the next two years to avoid inheritance tax. Much as I intend to have a good go at spending everything I've got and I've told my daughter to assume I will, you never know what's round the corner and I don't see why the government should take a single penny of anything I've already paid tax on.
Add all that up and it's dozens of job affected directly, hundred more indirectly and the equivalent of many hundreds of people on a median wage being taken out of the tax take. And I'm only scratching the surface of people I know.6 -
It’s called spouse tax!Showmetheway2gohome said:When you divorce is there like inheritance tax on that?1 -
Fascinating insight, thanks for that.WishIdStayedinthePub said:
A few anecdotes of behaviour post hoc te proct (© Derek & Clive).
One friend has put his company up for sale - effectively his life's work of 30 years. He's relieved entrepreneurs relief has not been touched too much (bar the CGT) but has decided that's just really bought him time and he's not going to wait until it's too late. NI increases are going to cost him 20 grand/year (he employs 20-30 people), which will also mean about a loss of about 50-100k after tax to him when he sells his share. He's selling his BTL , as it now costs him money to run (he mortgaged his main house and bought a smaller one when he was having cash flow issues). Selling the company to a trade buyer, which will inevitably mean redundancies of 5-10 people.
A property developer friend is moving abroad and taking his 50m with him. Relieved there's no exit tax but is going to wait until it's too late. Employs about 5 people.
A restauranteur is looking to sell his very successful business. Again, direction of travel sees the smaller CGT changes as buying some time to get the right deal done.
A friend who has a very senior exec job at Google, is moving to Switzerland. You need to be paying $1m in tax per year for that to make sense, and I think he's paying £2m here.
A cyber company is about to go under because it hasn't been run well. I was putting together some investors to bail it out and turn it around but we decided today that the rewards weren't worth the risks. The former have decreased with the CGT changes and, in the turnaround time frame, likely to get worse. The latter have risen with the employment 'protections' being put in place and now rising NI. Barring a miracle, that business will go bust in the next 3-6 months. The owner will lose twenty years of graft, his house and 30 people will need to find work (which I'm sure most will). 25 cyber apprentices will also need to find new trainers. The taxman will lose a few quid, of course and bounce back loans will go unpaid (total about 500k).
Me? Well, instead of buying and running a business or going back to a corporate job, I cashed in my lump sum, paid off the mortgage and am now in the process of signing a contract to supply my services to the government for 3-4 days a week on half my usual rate. That will lose HMRC 80% of what I've paid on average for the last 18 years, without taking into account the jobs I used to create or the fact that I will now reign in my spending. I guess we'll all end up working for the government sooner or later.
Mean time, I'm actively looking to move abroad in the next two years to avoid inheritance tax. Much as I intend to have a good go at spending everything I've got and I've told my daughter to assume I will, you never know what's round the corner and I don't see why the government should take a single penny of anything I've already paid tax on.
Add all that up and it's dozens of job affected directly, hundred more indirectly and the equivalent of many hundreds of people on a median wage being taken out of the tax take. And I'm only scratching the surface of people I know.
They said yesterday that NI taxes would cover £25bn, I just looked and apparently there's 31m people working in the UK.
That's about £800 per worker, and the reduction in NI thresholds from £9k to £5k is around £520 alone, making it the bulk of the increase. If the average worker is on let's say £35k, that's a good couple percent onto the payroll costs for businesses, but it disproportionately impacts low wage employers.
For comparison here's 3 scenarios each with a gross payroll bill of £105k
1 person on £105k, the company loses that £520 (13% or £4k) plus 1.2% of the £100k above £5k =£1.7k extra cost
Take someone that employs 3 people on £35k each. They lose £520 x 3, plus 1.2% on £90k, which is £2.64k extra cost.
Go one further and look at someone who maybe needs a lot of seasonal staff and as such hires 5 people averaging £21k a year which would be close to minimum wage on a 30 something hour working week...
That company would lose £520x5 plus 1.2% on £80k, which is a pretty staggering £3.56k extra
I think I've got that right....1 -
Expect the cost of your Big Mac to rise substantially!!Huskaris said:
Fascinating insight, thanks for that.WishIdStayedinthePub said:
A few anecdotes of behaviour post hoc te proct (© Derek & Clive).
One friend has put his company up for sale - effectively his life's work of 30 years. He's relieved entrepreneurs relief has not been touched too much (bar the CGT) but has decided that's just really bought him time and he's not going to wait until it's too late. NI increases are going to cost him 20 grand/year (he employs 20-30 people), which will also mean about a loss of about 50-100k after tax to him when he sells his share. He's selling his BTL , as it now costs him money to run (he mortgaged his main house and bought a smaller one when he was having cash flow issues). Selling the company to a trade buyer, which will inevitably mean redundancies of 5-10 people.
A property developer friend is moving abroad and taking his 50m with him. Relieved there's no exit tax but is going to wait until it's too late. Employs about 5 people.
A restauranteur is looking to sell his very successful business. Again, direction of travel sees the smaller CGT changes as buying some time to get the right deal done.
A friend who has a very senior exec job at Google, is moving to Switzerland. You need to be paying $1m in tax per year for that to make sense, and I think he's paying £2m here.
A cyber company is about to go under because it hasn't been run well. I was putting together some investors to bail it out and turn it around but we decided today that the rewards weren't worth the risks. The former have decreased with the CGT changes and, in the turnaround time frame, likely to get worse. The latter have risen with the employment 'protections' being put in place and now rising NI. Barring a miracle, that business will go bust in the next 3-6 months. The owner will lose twenty years of graft, his house and 30 people will need to find work (which I'm sure most will). 25 cyber apprentices will also need to find new trainers. The taxman will lose a few quid, of course and bounce back loans will go unpaid (total about 500k).
Me? Well, instead of buying and running a business or going back to a corporate job, I cashed in my lump sum, paid off the mortgage and am now in the process of signing a contract to supply my services to the government for 3-4 days a week on half my usual rate. That will lose HMRC 80% of what I've paid on average for the last 18 years, without taking into account the jobs I used to create or the fact that I will now reign in my spending. I guess we'll all end up working for the government sooner or later.
Mean time, I'm actively looking to move abroad in the next two years to avoid inheritance tax. Much as I intend to have a good go at spending everything I've got and I've told my daughter to assume I will, you never know what's round the corner and I don't see why the government should take a single penny of anything I've already paid tax on.
Add all that up and it's dozens of job affected directly, hundred more indirectly and the equivalent of many hundreds of people on a median wage being taken out of the tax take. And I'm only scratching the surface of people I know.
They said yesterday that NI taxes would cover £25bn, I just looked and apparently there's 31m people working in the UK.
That's about £800 per worker, and the reduction in NI thresholds from £9k to £5k is around £520 alone, making it the bulk of the increase. If the average worker is on let's say £35k, that's a good couple percent onto the payroll costs for businesses, but it disproportionately impacts low wage employers.
For comparison here's 3 scenarios each with a gross payroll bill of £105k
1 person on £105k, the company loses that £520 (13% or £4k) plus 1.2% of the £100k above £5k =£1.7k extra cost
Take someone that employs 3 people on £35k each. They lose £520 x 3, plus 1.2% on £90k, which is £2.64k extra cost.
Go one further and look at someone who maybe needs a lot of seasonal staff and as such hires 5 people averaging £21k a year which would be close to minimum wage on a 30 something hour working week...
That company would lose £520x5 plus 1.2% on £80k, which is a pretty staggering £3.56k extra
I think I've got that right....1 -
Is that like Scouse Tax when you try to park your car going to Anfield or Goodison Park?Rob7Lee said:
It’s called spouse tax!Showmetheway2gohome said:When you divorce is there like inheritance tax on that?3 -
the trouble is, how long will you live. I don't know how old you are, but as your still working your life expectancy is going to be over 20 years. Also the cost of care in old age is only going to get higher as the state won't be able to afford much.Rob7Lee said:
My current thoughts are to limit IHT…… mortgage my main home up to the hilt and gift to children to buy both a property each and cross everything I live 7 years. That way takes the most part property out of my estate (as will be mostly debt).valleynick66 said:
‘e.g.’ I think you mean and not ‘I.e.’ 😉😉😀Rob7Lee said:
As it stood, were you to die before 75, your pension pot (i.e. SIPP, not and DB scheme) passed to your survivors tax free. Now it will simply form part of your estate and be added to the overall estate.meldrew66 said:
Can someone explain what this means/how this actually works please?Covered End said:Pensions falling into IHT from 2027
I.E. if you were single and had a home worth £400k and £100k in the bank your estate would not pay IHT as at the £500k limit. Now if you have to include say a £350k of pension pot on top you are now £350k over the limit and the estate would pay £140k in IHT.
Sorry a pet hate for me when these aren’t used as I understand the grammar should be.But I make you right it’s more logical to spend the pension pot or gift early to your beneficiaries than let it be swallowed in tax.
what could possibly go wrong…..😑0 - Sponsored links:
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I’m nearly 52, who knows how long we’ve got ….. but I did have a pretty tough paper round 😂redman said:
the trouble is, how long will you live. I don't know how old you are, but as your still working your life expectancy is going to be over 20 years. Also the cost of care in old age is only going to get higher as the state won't be able to afford much.Rob7Lee said:
My current thoughts are to limit IHT…… mortgage my main home up to the hilt and gift to children to buy both a property each and cross everything I live 7 years. That way takes the most part property out of my estate (as will be mostly debt).valleynick66 said:
‘e.g.’ I think you mean and not ‘I.e.’ 😉😉😀Rob7Lee said:
As it stood, were you to die before 75, your pension pot (i.e. SIPP, not and DB scheme) passed to your survivors tax free. Now it will simply form part of your estate and be added to the overall estate.meldrew66 said:
Can someone explain what this means/how this actually works please?Covered End said:Pensions falling into IHT from 2027
I.E. if you were single and had a home worth £400k and £100k in the bank your estate would not pay IHT as at the £500k limit. Now if you have to include say a £350k of pension pot on top you are now £350k over the limit and the estate would pay £140k in IHT.
Sorry a pet hate for me when these aren’t used as I understand the grammar should be.But I make you right it’s more logical to spend the pension pot or gift early to your beneficiaries than let it be swallowed in tax.
what could possibly go wrong…..😑
my father had early onset dementia (around 56) and died at 72, my mother died at 65 so 20 years maybe the max!!
jokes aside, whether I live 10/20 or even 40 years I’m unlikely to run out of money if you include all assets etc. but worst case scenario is my wife and I pass young (ish) and in coveredend style the taxman builds a new hospital from my kids IHT payments!
I am conscious this is all first world problems and I’m very fortunate to be in the position to have to think about this.
Ive paid all (and a lot) of taxes through my life and simply want to minimise any future amounts. Selfishly I’d rather my kids had the full benefit of my graft and the more I think about it, the more I think that I deal with that now and then my wife and I blow the rest leaving just enough for funerals and a good p1ss up at Charlton when of course we’ll be premier league champions by then (2064!!)10 -
As I have said IHT in its current form is a piss take. Taxing on already taxed money used to buy assets / have savings is quite frankly criminal imho. Pay 20 to 40 percent on income then pay 40 percent again.
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The biggest issue with IHT in the London area is property prices.
I'm considering investigating putting the property in Trust and hoping we survive 7 years.
There's likely a lot of pros and cons.
Has anyone done this?1 -
I'm no expert, but it seems highly complicated and I've certainly had varying advice from different people. There's exit charges and sometimes 10 yearly charges (think currently 6%). I believe whilst it avoids the IHT rate potentially (after 7 years) there are some taxes such as 20% entry (for values over £325k) and the 6% exit.Covered End said:The biggest issue with IHT in the London area is property prices.
I'm considering investigating putting the property in Trust and hoping we survive 7 years.
There's likely a lot of pros and cons.
Has anyone done this?1 -
Is this your residential property & do you intend to still live in it or have some interest in it ? If so it will most likely to be deemed a Gift with Reservation and will still be included in your Estate.Covered End said:The biggest issue with IHT in the London area is property prices.
I'm considering investigating putting the property in Trust and hoping we survive 7 years.
There's likely a lot of pros and cons.
Has anyone done this?0 -
I’ve also heard that putting property in Trust involves a lot of administration to keep it ticking over.0
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Yes it is, in which case you can't put your residential property in trust for your kids to avoid IHT.golfaddick said:
Is this your residential property & do you intend to still live in it or have some interest in it ? If so it will most likely to be deemed a Gift with Reservation and will still be included in your Estate.Covered End said:The biggest issue with IHT in the London area is property prices.
I'm considering investigating putting the property in Trust and hoping we survive 7 years.
There's likely a lot of pros and cons.
Has anyone done this?0 -
You can gift your property to a trust or directly to your kids BUT you will need to pay a full market rent to continue to live there and (hopefully) avoid gift with reservation rules. This means you will need to have the spare income to pay the rent and to maintain it. Also the rent will be taxable at marginal rates in the hands of the recipient whether that is a trust or your kids. A subsequent sale of the property may also have CGT implications on any gain in value following transfer. Discretionary trust tax rates are best avoided if possible!2
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Nothing for me again this month on premium bonds.
Last year I won £1175 over the year on 22k.
That was a decent return of over 5%.
This year I've won £200 with only one month left which is quite pathetic.
I shall be looking to switch to something else next year
Any suggestions people0 -
Nothing for me this month either0
