Reforming UK Tax System

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Discussion

sidicks

25,218 posts

220 months

Friday 28th April 2017
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PurpleMoonlight said:
Doesn't the huge difference in housing cost across the country already do that?
So why make it much worse, particularly when people naturally will need to move House to adjust to changing lifestyles.

CaptainSlow

13,179 posts

211 months

Friday 28th April 2017
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PurpleMoonlight said:
Justayellowbadge said:
You live in a 250k house.

You get offered a job elsewhere in the country.

You want to move to another 250k house in that new location.

When you sell your house you have to give the revenue 30k.

You can now only afford a 220k house.

You don't take the job.
So buy a £220,000 house or increase your mortgage by £30,000.

It might help reduce the cost of housing.
Possibly, it'll also reduce stamp take and kill the economy...estate agents/furniture/home improvements etc etc. Whilst also create an inflexible workforce.

Justayellowbadge

37,057 posts

241 months

Friday 28th April 2017
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PurpleMoonlight said:
So buy a £220,000 house or increase your mortgage by £30,000.

It might help reduce the cost of housing.
Yes, I can see how forcing those filthy property owning rich entitled scum in their ostentatious 2 bed starter homes to borrow 30k to give to the government is a policy that will do so much for the working class of the country.

speedy_thrills

7,760 posts

242 months

Friday 28th April 2017
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romeogolf said:
If you were to "write the rule book" on UK tax, what would you want to see?
Taxation that increases the rate of transactions in the economy. Unfortunately much of the available liquidity in the UKs economy is now allocated in a way that’s of little benefit to society. I’d be looking at taxation as a mechanism to increase transaction velocity (i.e. get money into the pockets of people who would spend it.)

The productivity, growth and inflation situation since the financial crisis has really been very unacceptable in my view.

greygoose

8,224 posts

194 months

Friday 28th April 2017
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The tax system is overly complex due to the tinkering by various chancellors to sneak in tax rises that avoid headlines. To reform the whole system would inevitably mean looking at spending too, with the ageing population and rises in life expectancy some more integration between the NHS and social care would be desirable, perhaps a combination of NHS and private medical insurance like France have be a better option? Some benefits for the elderly such as free bus passes, tv licence etc are not needed by the wealthier pensioners, then again means testing can be more expensive than the savings generated. It is all quite complex really.

Moonhawk

10,730 posts

218 months

Friday 28th April 2017
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PurpleMoonlight said:
As for changes, I don't see why PPR's should be CGT exempt.
I have suggested this in the past. The whole tax system around property is backwards IMO.

You don't pay any CGT on the increase in value - but you pay an arbitrary tax upfront based on the purchase price? Seems a bit silly.

The whole system seems designed to reward those lucky enough to buy low and sell high (e.g. via a house price boom like happened in London) - whilst hindering those people who want to move up the property ladder, or who have to move frequently due to work. Having to find the stamp duty on top of all the other costs associated with moving house can actually make the move unaffordable.

Personally i'd scrap stamp duty and apply CGT to PPRs - albeit at a lower rate than for second properties. Obviously anybody who has already paid stamp duty on a property would either be exempt upon the sale of that property, or would at least get a discount of equivalent value on the CGT - so we don't have a double taxation situation.

Moonhawk

10,730 posts

218 months

Friday 28th April 2017
quotequote all
Justayellowbadge said:
You live in a 250k house.

You get offered a job elsewhere in the country.

You want to move to another 250k house in that new location.

When you sell your house you have to give the revenue 30k.

You can now only afford a 220k house.

You don't take the job.
Why would you have to give the revenue £30k? If you have only seen modest gains in the house value (i.e. at or below your annual CGT threshold) - or are in negative equity, you wouldn't pay any CGT at all.

Even if you had seen reasonable gains above the threshold - the likelihood is that you would pay a less than current stamp duty (on buying a £250k house you would need to find an additional £7.5k in stamp duty).

To pay £30k in CGT on a £250k property - a couple would have had to have seen around £130k increase in it's value (assuming they are in the highest 28% CGT bracket - which many in a property of this value probably wouldn't be anyway).

The illustration above also assumes that if CGT were introduced for PPRs - it would be applied at current CGT rates - personally i'd be in favour of a discounted rate for primary residences to replace stamp duty.


sidicks

25,218 posts

220 months

Friday 28th April 2017
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Moonhawk said:
Why would you have to give the revenue £30k? If you have only seen modest gains in the house value (i.e. at or below your annual CGT threshold) - or are in negative equity, you wouldn't pay any CGT at all.

Even if you had seen reasonable gains above the threshold - the likelihood is that you would pay a less than current stamp duty (on buying a £250k house you would need to find an additional £7.5k in stamp duty).

To pay £30k in CGT on a £250k property - a couple would have had to have seen around £130k increase in it's value (assuming they are in the highest 28% CGT bracket - which many in a property of this value probably wouldn't be anyway).

The illustration above also assumes that if CGT were introduced for PPRs - it would be applied at current CGT rates - personally i'd be in favour of a discounted rate for primary residences to replace stamp duty.
How about we spend less, not tax more?!

Moonhawk

10,730 posts

218 months

Friday 28th April 2017
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sidicks said:
How about we spend less, not tax more?!
How about you read what I was proposing. I was proposing a change to existing tax - not more tax.

sidicks

25,218 posts

220 months

Friday 28th April 2017
quotequote all
Moonhawk said:
sidicks said:
How about we spend less, not tax more?!
How about you read what I was proposing. I was proposing a change to existing tax - not more tax.
Fair enough, but unfortunately that isn't really how governments tend to work.

Out of interest which taxes would you be reducing to compensate, and who would be affected?

Moonhawk

10,730 posts

218 months

Friday 28th April 2017
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sidicks said:
Fair enough, but unfortunately that isn't really how governments tend to work.

Out of interest which taxes would you be reducing to compensate, and who would be affected?
As I already said - I would abolish stamp duty.

sidicks

25,218 posts

220 months

Friday 28th April 2017
quotequote all
Moonhawk said:
As I already said - I would abolish stamp duty.
Apologies, missed that.

Moonhawk

10,730 posts

218 months

Friday 28th April 2017
quotequote all
sidicks said:
Apologies, missed that.
No problem.

I'm all for reducing tax - tax should be at the minimum level it needs to be (I argued exactly this point on the "Labour's corporation tax policy" thread).

PurpleMoonlight

22,362 posts

156 months

Friday 28th April 2017
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sidicks said:
So why make it much worse, particularly when people naturally will need to move House to adjust to changing lifestyles.
Why should they have a tax advantage when doing so?

PurpleMoonlight

22,362 posts

156 months

Friday 28th April 2017
quotequote all
Justayellowbadge said:
Yes, I can see how forcing those filthy property owning rich entitled scum in their ostentatious 2 bed starter homes to borrow 30k to give to the government is a policy that will do so much for the working class of the country.
What profit are you assuming they have made on their 2 bed starter home to arrive at your £30,000?

sidicks

25,218 posts

220 months

Friday 28th April 2017
quotequote all
PurpleMoonlight said:
Why should they have a tax advantage when doing so?
Don't we want to encourage social mobility?

Doesn't it make sense to differentiate between a house as somewhere to live compared to as an investment?!

Justayellowbadge

37,057 posts

241 months

Friday 28th April 2017
quotequote all
PurpleMoonlight said:
Justayellowbadge said:
Yes, I can see how forcing those filthy property owning rich entitled scum in their ostentatious 2 bed starter homes to borrow 30k to give to the government is a policy that will do so much for the working class of the country.
What profit are you assuming they have made on their 2 bed starter home to arrive at your £30,000?
None at all, if all they are doing is moving to the same house somewhere else.

98elise

26,364 posts

160 months

Friday 28th April 2017
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Fittster said:
PurpleMoonlight said:
Fittster said:
When you are retired I'm assuming you don't want to receive any benefits / public services that are generate from the children once they have grown up and are paying tax.
I have paid for that during my working life, and continue to do so as pensions are taxable.
And you received no public services / benefits before your became an adult?
Child thing is always a red herring. All things being equal everyone will

1. Draw from the state as a child
2. Give to the State as a working adult
3. Draw from the state as a pensioner.

Its a zero sum game. You will contribute and take for one person your whole life, it doesn't matter how many kids someone else has, as those kids will take and contribute by the same amount as you.


vonuber

17,868 posts

164 months

Friday 28th April 2017
quotequote all
I'd suggest that the starting pictures is to work out what the annual bill is for the country - i.e benefits, military, health, infrastructure etc - based on what sort of country and society we want, and then working from that figure find the best and most equitable way to fund it.

PurpleMoonlight

22,362 posts

156 months

Friday 28th April 2017
quotequote all
sidicks said:
Don't we want to encourage social mobility?

Doesn't it make sense to differentiate between a house as somewhere to live compared to as an investment?!
I would love it to be deemed just somewhere to live, but everybody buying a home expects to make a profit on it when they come to sell and they will unless something drastic changes. Also, because it's tax free many people invest in their home rather than a pension scheme or other investments.

I suggest part of the housing crisis we have now is because of the favorable tax treatment of PPR's.

Look at the prices of houses in France compared to UK. Do they enjoy the same tax benefit?
(genuine question, I don't know whether they do or don't)