It would be so much easier for everyone if they just said...."sorry, we really do need to fill this black hole & the simplest & fairest way to do it will be to raise Income tax by 1% on basic rate taxpayers & 2% on high rate tax payers"
Eliviate some of the pain by raising the personal allowance to £13k (or even £13.5k) and increase VAT to 22.5%. Then start reducing theses axes over the last couple of years of Parliament.
Wouldn't 22.5% VAT deter people further from spending, especially on large items.
It would be so much easier for everyone if they just said...."sorry, we really do need to fill this black hole & the simplest & fairest way to do it will be to raise Income tax by 1% on basic rate taxpayers & 2% on high rate tax payers"
Eliviate some of the pain by raising the personal allowance to £13k (or even £13.5k) and increase VAT to 22.5%. Then start reducing theses axes over the last couple of years of Parliament.
Wouldn't 22.5% VAT deter people further from spending, especially on large items.
It didn’t seem to when it went from 15 to 17.5 and then to 20 (with a brief stint back at 15 for a year).
It would be so much easier for everyone if they just said...."sorry, we really do need to fill this black hole & the simplest & fairest way to do it will be to raise Income tax by 1% on basic rate taxpayers & 2% on high rate tax payers"
Eliviate some of the pain by raising the personal allowance to £13k (or even £13.5k) and increase VAT to 22.5%. Then start reducing theses axes over the last couple of years of Parliament.
Wouldn't 22.5% VAT deter people further from spending, especially on large items.
It didn’t seem to when it went from 15 to 17.5 and then to 20 (with a brief stint back at 15 for a year).
Maybe sellers of major products at those times were doing major deals behind the counter as the only way to shift their products.
The point is though Reeves wants or at least has said she wants growth then starts countering it by ridiculous stealth taxes.
I do agree with Golfies stance on income tax. Idiot of politicians have been screwing us all for the last 5 decades with stealth taxes.
I also agree with your point re stamp duty etc. All she will do is kill the hen that lays the golden egg.
The adverts suggesting you hand over your savings to some stranger to ‘invest’ for you on an elaborate promise tell you ‘your capital is at risk’. Surely that alone is a reason to be risk averse?
Yeah I’d be wary of lumping your pensions in any active funds, they don’t tend to outperform the markets and even if they do, they tend to get eaten away by fees. Although, ironically, we might be entering a period where active funds might actually be a decent option.
Groups have to say “your capital is at risk” - it’s a rule by the FCA, because it literally is.
As someone who reviews funds on a daily basis I can categorically say that there are hundreds of funds that outperform tracker/passive funds. And the "fees" for an active fund is usually around 0.8% compared to say 0.1% or 0.2% for a passive one. The extra 0.6% is well worth the difference in growth that you can achieve.
Interesting, any resources where I can see this over the long term? Maybe it’s just the boglehead in me, but I’m suspicious of active funds. The reason being I found that the majority of active funds underperform passive over the long term. Would be interested to see data to the contrary and I can change my opinion (and perhaps investing habits).
Trustnet.
You bring up all the funds & categorise them under their respective sectors. Then you can then list them in % order over YTD, I year, 3 years etc.
The adverts suggesting you hand over your savings to some stranger to ‘invest’ for you on an elaborate promise tell you ‘your capital is at risk’. Surely that alone is a reason to be risk averse?
Yeah I’d be wary of lumping your pensions in any active funds, they don’t tend to outperform the markets and even if they do, they tend to get eaten away by fees. Although, ironically, we might be entering a period where active funds might actually be a decent option.
Groups have to say “your capital is at risk” - it’s a rule by the FCA, because it literally is.
As someone who reviews funds on a daily basis I can categorically say that there are hundreds of funds that outperform tracker/passive funds. And the "fees" for an active fund is usually around 0.8% compared to say 0.1% or 0.2% for a passive one. The extra 0.6% is well worth the difference in growth that you can achieve.
The difficulty though is for the average person who doesn’t employ an FA and maybe just puts a few hundred a month into an ISA or pension…… they are likely better in a tracker than trying to pick the right managed fund.
Yes maybe. But that's why there are IFA's. If you don't want to pay one then do it yourself. It has been shown that using an IFA to advise on where to put your money gives you a greater return over the long run than doing it yourself.
You pays your money.....
Edit.
Just realised I didnt really read your reply properly. Yes, the average Joe who just wants to save a few hundred a month into an ISA might be better off with a tracker than going for a managed fund. As they say, a tracker fund does what it says on the tin. However.....what tracker do you go fo ?? I often see on other forums people advocating the S&P500, which is obviously all US equities. MSCI World wouldn't be a bad shout but I'd prefer a better mix & more diversity.
I see there is once again an article on the front of the Telegraph saying that the tax free element from pensions could be lowered. However does then seem to say unlikely! Still may not want to take chances.
It is currently £268,275. Last year is was mooted that they were looking to lower it to £100k. I probably wouldnt have a problem with it being lowered to £200k.....£150k absolute minimum.
Most people it affects are those on Defined Benefit (final salary) schemes. I was speaking to a GP who retired in 2013. LTA then was £1.5m. He increased his lump sum to £375k and had a reduced pension of £56k pa. Was still 105% of the LTA and had to pay an excess tax charge.
Currently dealing with a Hospital Consultant who is looking to take his pension a year early at age 59. Advised him to take the max lump sum & reduced pension. This will give him £54k pa plus £268k TFC.
Why do you think that most people it affects are on DB schemes? Affects those in DC schemes as well. In fact I would have thought that on retirement, most people in DB schemes would take their tax free at that point, whereas those in DC schemes often leave in there.
I see there is once again an article on the front of the Telegraph saying that the tax free element from pensions could be lowered. However does then seem to say unlikely! Still may not want to take chances.
It is currently £268,275. Last year is was mooted that they were looking to lower it to £100k. I probably wouldnt have a problem with it being lowered to £200k.....£150k absolute minimum.
Most people it affects are those on Defined Benefit (final salary) schemes. I was speaking to a GP who retired in 2013. LTA then was £1.5m. He increased his lump sum to £375k and had a reduced pension of £56k pa. Was still 105% of the LTA and had to pay an excess tax charge.
Currently dealing with a Hospital Consultant who is looking to take his pension a year early at age 59. Advised him to take the max lump sum & reduced pension. This will give him £54k pa plus £268k TFC.
Why do you think that most people it affects are on DB schemes? Affects those in DC schemes as well. In fact I would have thought that on retirement, most people in DB schemes would take their tax free at that point, whereas those in DC schemes often leave in there.
I and pretty much all the colleagues I know left our tax free element alone and left it invested. I moved my DB (24 years) and DC (12 years) to a SIPP and now draw an income which minimises my tax, by dripping the tax free element in until the next tax event (age 75).
I’m now “taking home” the same monthly amount I did whilst I was working, but paying about £45k a year less tax.
I see there is once again an article on the front of the Telegraph saying that the tax free element from pensions could be lowered. However does then seem to say unlikely! Still may not want to take chances.
It is currently £268,275. Last year is was mooted that they were looking to lower it to £100k. I probably wouldnt have a problem with it being lowered to £200k.....£150k absolute minimum.
Most people it affects are those on Defined Benefit (final salary) schemes. I was speaking to a GP who retired in 2013. LTA then was £1.5m. He increased his lump sum to £375k and had a reduced pension of £56k pa. Was still 105% of the LTA and had to pay an excess tax charge.
Currently dealing with a Hospital Consultant who is looking to take his pension a year early at age 59. Advised him to take the max lump sum & reduced pension. This will give him £54k pa plus £268k TFC.
Why do you think that most people it affects are on DB schemes? Affects those in DC schemes as well. In fact I would have thought that on retirement, most people in DB schemes would take their tax free at that point, whereas those in DC schemes often leave in there.
Mainly because those in DB schemes have (within reason) no choice as to how much they take & when.
The advantage of Flexible Drawdown is just that......flexible. And I echo @TelMc32.
It would be so much easier for everyone if they just said...."sorry, we really do need to fill this black hole & the simplest & fairest way to do it will be to raise Income tax by 1% on basic rate taxpayers & 2% on high rate tax payers"
Eliviate some of the pain by raising the personal allowance to £13k (or even £13.5k) and increase VAT to 22.5%. Then start reducing theses axes over the last couple of years of Parliament.
Couldn't agree more with this.
I would also level CGT with income tax. CGT being lower than income tax is a key propagator of inequality.
what is the rationale behind capital gains tax being identical to income tax when they’re two very different things?
Isn’t the point with capitals gains that it’s a tax on a capital investment, something that by definition requires risk, often cash invested but not always - but always risk, risk of both depreciation or failure as well as potential for growth. I’m not sure why tax on that needs to be anything to do the tax set on “normal” income as they’re quite different things?
If you de-incentivise people taking risks, investing in things, starting businesses, such that in many scenarios they’re actually better off just maintaining a steady secure PAYE job, aren’t you then at risk of creating a stagnant economy with little incentive for innovation, investment, growth?
The fact that CGT is effectively a charge on what is generated through wealth is fundamentally unfair.
If I have £1m in assets and can generate £50k a year in returns, whilst you go out and earn £50k, why on earth should I pay less tax?
Any losses you make on those "risks" can be offset against future gains.
I'm no left winger and really resent so many of the economics of the left, many of which we are seeing suggested now, but people netting more money from wealth than work propagates inequality and is unjust.
Whats the problem with money from wealth when you have already paid tax and spent and saved wisely to put yourself in a decent position.
I've already paid tax on my income, why should I pay VAT as well?
The natural conclusion of wealth being hoarded and growing is that more and more money ends up in the hands of fewer and fewer people, which has been the case since the dawn of time but particularly the past 200 years.
There's no problem with money from wealth at all, none. The problem of it being taxed at a lower rate than people who work suggests that wealth is more virtuous than work. It is not.
The adverts suggesting you hand over your savings to some stranger to ‘invest’ for you on an elaborate promise tell you ‘your capital is at risk’. Surely that alone is a reason to be risk averse?
Yeah I’d be wary of lumping your pensions in any active funds, they don’t tend to outperform the markets and even if they do, they tend to get eaten away by fees. Although, ironically, we might be entering a period where active funds might actually be a decent option.
Groups have to say “your capital is at risk” - it’s a rule by the FCA, because it literally is.
As someone who reviews funds on a daily basis I can categorically say that there are hundreds of funds that outperform tracker/passive funds. And the "fees" for an active fund is usually around 0.8% compared to say 0.1% or 0.2% for a passive one. The extra 0.6% is well worth the difference in growth that you can achieve.
Interesting, any resources where I can see this over the long term? Maybe it’s just the boglehead in me, but I’m suspicious of active funds. The reason being I found that the majority of active funds underperform passive over the long term. Would be interested to see data to the contrary and I can change my opinion (and perhaps investing habits).
I would strongly recommend against actively managed funds. After fees, very few of them as a proportion outperform a benchmark like the S&P500. Some of them will, most of them won't.
It would be so much easier for everyone if they just said...."sorry, we really do need to fill this black hole & the simplest & fairest way to do it will be to raise Income tax by 1% on basic rate taxpayers & 2% on high rate tax payers"
Eliviate some of the pain by raising the personal allowance to £13k (or even £13.5k) and increase VAT to 22.5%. Then start reducing theses axes over the last couple of years of Parliament.
Couldn't agree more with this.
I would also level CGT with income tax. CGT being lower than income tax is a key propagator of inequality.
what is the rationale behind capital gains tax being identical to income tax when they’re two very different things?
Isn’t the point with capitals gains that it’s a tax on a capital investment, something that by definition requires risk, often cash invested but not always - but always risk, risk of both depreciation or failure as well as potential for growth. I’m not sure why tax on that needs to be anything to do the tax set on “normal” income as they’re quite different things?
If you de-incentivise people taking risks, investing in things, starting businesses, such that in many scenarios they’re actually better off just maintaining a steady secure PAYE job, aren’t you then at risk of creating a stagnant economy with little incentive for innovation, investment, growth?
The fact that CGT is effectively a charge on what is generated through wealth is fundamentally unfair.
If I have £1m in assets and can generate £50k a year in returns, whilst you go out and earn £50k, why on earth should I pay less tax?
Any losses you make on those "risks" can be offset against future gains.
I'm no left winger and really resent so many of the economics of the left, many of which we are seeing suggested now, but people netting more money from wealth than work propagates inequality and is unjust.
Take your point on this which is why I think there should be some tax on capital gains rather than nil as somebody speculated above. However:
1 - it is not effectively a charge on what is generated through wealth, as many Capital investments/gains are made heavily through finance/risk, and/or businesses / start-ups. Obviously everyone will have their own takes on this, but from my perspective I'm involved in a small growing business. I could earn a significantly higher salary elsewhere but instead focus on growing a business, including investing in employing people, and trying to pay good salaries. With the long-term outlook that the growth in the business including the potential capital gains (and once upon a time, favourable dividend rates) could potentially mitigate / offset the "lost" potential salary income.
With starting and growing business comes with significant risk and liabilities - very turbulent last 5 years for many businesses! Employee rights, maternity, economic turbulence, IT / property overheads etc etc. This scenario exists across many many sectors.
If the gains just end up aligning with income tax then it de-incentivises people from doing this, de-incentivises competition and overall economic activity. Easier, safer and less stressful to just take the safe option but to the detriment of economy.
2 - as you say in many cases capital gains are generated through wealth - but the example you refer to IS likely taxed at income rates already. If you have £1m in assets and generate £50k a year in returns, that's likely simple bank savings interest or maybe rental income. Both of which are income taxable.
But for a buoyant economy capital investment is essential so if you de-incentivise investment from those with wealth you are cutting off your nose to spite your face. Very simplistically but consider the Anchor and Hope pub in Charlton. A vacant derelict building now. It takes somebody with capital to invest to buy and develop this business if you want this to trade as a pub again (or even be put to a productive use of any kind - Antigallican is flats now I think?). Why would anybody bother doing this if the investment, and all of the risks around it, is just charged at the same tax rate they would pay from having it sat in a savings account at 5% interest as you suggest?
If I bought a pub, turned it into flats, I might make a 15-20% return on my investment, if I put it into the savings account, I would make 5%.
If the tax rates are the same, I know which investment I'd pick.
I have been on a long journey on this, a couple years back I'd have definitely agreed with you by the way.
The adverts suggesting you hand over your savings to some stranger to ‘invest’ for you on an elaborate promise tell you ‘your capital is at risk’. Surely that alone is a reason to be risk averse?
Yeah I’d be wary of lumping your pensions in any active funds, they don’t tend to outperform the markets and even if they do, they tend to get eaten away by fees. Although, ironically, we might be entering a period where active funds might actually be a decent option.
Groups have to say “your capital is at risk” - it’s a rule by the FCA, because it literally is.
As someone who reviews funds on a daily basis I can categorically say that there are hundreds of funds that outperform tracker/passive funds. And the "fees" for an active fund is usually around 0.8% compared to say 0.1% or 0.2% for a passive one. The extra 0.6% is well worth the difference in growth that you can achieve.
Interesting, any resources where I can see this over the long term? Maybe it’s just the boglehead in me, but I’m suspicious of active funds. The reason being I found that the majority of active funds underperform passive over the long term. Would be interested to see data to the contrary and I can change my opinion (and perhaps investing habits).
I would strongly recommend against actively managed funds. After fees, very few of them as a proportion outperform a benchmark like the S&P500. Some of them will, most of them won't.
Some will & some wont. The trick is to invest in those that have outperformed their benchmark.
My SIPP has outperformed differing benchmarks over the past number of years whether that's an active managed fund, a passive fund, a tracker or an index. I regularly move funds in & out and although I'm not saying I'm Warren Buffett, Michael Burry or Neil Woodford I think I do a pretty good job of selecting a balanced portfolio of top performing funds.
The adverts suggesting you hand over your savings to some stranger to ‘invest’ for you on an elaborate promise tell you ‘your capital is at risk’. Surely that alone is a reason to be risk averse?
Yeah I’d be wary of lumping your pensions in any active funds, they don’t tend to outperform the markets and even if they do, they tend to get eaten away by fees. Although, ironically, we might be entering a period where active funds might actually be a decent option.
Groups have to say “your capital is at risk” - it’s a rule by the FCA, because it literally is.
As someone who reviews funds on a daily basis I can categorically say that there are hundreds of funds that outperform tracker/passive funds. And the "fees" for an active fund is usually around 0.8% compared to say 0.1% or 0.2% for a passive one. The extra 0.6% is well worth the difference in growth that you can achieve.
Interesting, any resources where I can see this over the long term? Maybe it’s just the boglehead in me, but I’m suspicious of active funds. The reason being I found that the majority of active funds underperform passive over the long term. Would be interested to see data to the contrary and I can change my opinion (and perhaps investing habits).
I would strongly recommend against actively managed funds. After fees, very few of them as a proportion outperform a benchmark like the S&P500. Some of them will, most of them won't.
Some will & some wont. The trick is to invest in those that have outperformed their benchmark.
My SIPP has outperformed differing benchmarks over the past number of years whether that's an active managed fund, a passive fund, a tracker or an index. I regularly move funds in & out and although I'm not saying I'm Warren Buffett, Michael Burry or Neil Woodford I think I do a pretty good job of selecting a balanced portfolio of top performing funds.
Same, my portfolio over the last year: 15.32%, S&P 500, 13.66%.
I must confess, some of the ETFs I invest in would loosely be described as "active" but they are more what I would call "thematics" ie I want exposure to renewables as an example.
The adverts suggesting you hand over your savings to some stranger to ‘invest’ for you on an elaborate promise tell you ‘your capital is at risk’. Surely that alone is a reason to be risk averse?
Yeah I’d be wary of lumping your pensions in any active funds, they don’t tend to outperform the markets and even if they do, they tend to get eaten away by fees. Although, ironically, we might be entering a period where active funds might actually be a decent option.
Groups have to say “your capital is at risk” - it’s a rule by the FCA, because it literally is.
As someone who reviews funds on a daily basis I can categorically say that there are hundreds of funds that outperform tracker/passive funds. And the "fees" for an active fund is usually around 0.8% compared to say 0.1% or 0.2% for a passive one. The extra 0.6% is well worth the difference in growth that you can achieve.
Interesting, any resources where I can see this over the long term? Maybe it’s just the boglehead in me, but I’m suspicious of active funds. The reason being I found that the majority of active funds underperform passive over the long term. Would be interested to see data to the contrary and I can change my opinion (and perhaps investing habits).
I would strongly recommend against actively managed funds. After fees, very few of them as a proportion outperform a benchmark like the S&P500. Some of them will, most of them won't.
Some will & some wont. The trick is to invest in those that have outperformed their benchmark.
My SIPP has outperformed differing benchmarks over the past number of years whether that's an active managed fund, a passive fund, a tracker or an index. I regularly move funds in & out and although I'm not saying I'm Warren Buffett, Michael Burry or Neil Woodford I think I do a pretty good job of selecting a balanced portfolio of top performing funds.
Same, my portfolio over the last year: 15.32%, S&P 500, 13.66%.
I must confess, some of the ETFs I invest in would loosely be described as "active" but they are more what I would call "thematics" ie I want exposure to renewables as an example.
My total fees across my portfolio are 0.14%.
From 15/08/2024 to 15/08/25 my SIPP is up (after all charges) 15.6%. AMC of around 0.8% and platform charge of 0.2%. So really it's up 16.6%. Rough split of 80% equities & 20% Bonds & Property.
Changing the theme ever so slightly. And this is geared towards the investing portfolio vets. AI investing, I don't mean buying AI amd tech stocks I'm talking about an AI interface that actively plays the trading floor/FX desk for you. I've thought for years the human element in investing is under more threat than a lot of jobs and don't know if its a case of ranks closing, understandably, an aversion to using AI mainly because of all the sleight of hand and insider shit that clearly goes on and requires humans to maintain that status quo or what?
I'd be interested to hear thoughts but also if anyone has experience if using an AI platform to manage a portfolio and to what extent that has been a success or failure
Changing the theme ever so slightly. And this is geared towards the investing portfolio vets. AI investing, I don't mean buying AI amd tech stocks I'm talking about an AI interface that actively plays the trading floor/FX desk for you. I've thought for years the human element in investing is under more threat than a lot of jobs and don't know if its a case of ranks closing, understandably, an aversion to using AI mainly because of all the sleight of hand and insider shit that clearly goes on and requires humans to maintain that status quo or what?
I'd be interested to hear thoughts but also if anyone has experience if using an AI platform to manage a portfolio and to what extent that has been a success or failure
Can I just check if you mean AI for long term investment or AI for day trading?
Comments
The point is though Reeves wants or at least has said she wants growth then starts countering it by ridiculous stealth taxes.
I do agree with Golfies stance on income tax. Idiot of politicians have been screwing us all for the last 5 decades with stealth taxes.
I also agree with your point re stamp duty etc. All she will do is kill the hen that lays the golden egg.
You bring up all the funds & categorise them under their respective sectors. Then you can then list them in % order over YTD, I year, 3 years etc.
You pays your money.....
Edit.
Just realised I didnt really read your reply properly. Yes, the average Joe who just wants to save a few hundred a month into an ISA might be better off with a tracker than going for a managed fund. As they say, a tracker fund does what it says on the tin. However.....what tracker do you go fo ?? I often see on other forums people advocating the S&P500, which is obviously all US equities. MSCI World wouldn't be a bad shout but I'd prefer a better mix & more diversity.
The advantage of Flexible Drawdown is just that......flexible. And I echo @TelMc32.
The natural conclusion of wealth being hoarded and growing is that more and more money ends up in the hands of fewer and fewer people, which has been the case since the dawn of time but particularly the past 200 years.
There's no problem with money from wealth at all, none. The problem of it being taxed at a lower rate than people who work suggests that wealth is more virtuous than work. It is not.
If the tax rates are the same, I know which investment I'd pick.
I have been on a long journey on this, a couple years back I'd have definitely agreed with you by the way.
I won a free lucky dip on the lottery last night
My SIPP has outperformed differing benchmarks over the past number of years whether that's an active managed fund, a passive fund, a tracker or an index. I regularly move funds in & out and although I'm not saying I'm Warren Buffett, Michael Burry or Neil Woodford I think I do a pretty good job of selecting a balanced portfolio of top performing funds.
I must confess, some of the ETFs I invest in would loosely be described as "active" but they are more what I would call "thematics" ie I want exposure to renewables as an example.
My total fees across my portfolio are 0.14%.
I'd be interested to hear thoughts but also if anyone has experience if using an AI platform to manage a portfolio and to what extent that has been a success or failure