Reforming UK Tax System
Discussion
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.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.
It might help reduce the cost of housing.
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. It might help reduce the cost of housing.
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.
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.
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.
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. 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.
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.
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?!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.
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.Out of interest which taxes would you be reducing to compensate, and who would be affected?
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?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?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.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.
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.Doesn't it make sense to differentiate between a house as somewhere to live compared to as an investment?!
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)
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