Labours first budget and likely outcomes
Discussion
Rufus Stone said:
RemarkLima said:
Why doesn't anyone mention that corporation tax has gone up from 19% to 25% (with tapered relief between 50k and 250k profit)?
Introduced by the business loving Tories, and will be a massive windfall for the treasury. I doubt Labour will be dropping that back, so it's a massive hike they'll happily inherit.
Because many appear to have the mentality that only Labour increases taxes. And they don't care about CT as they think it doesn't affect them.Introduced by the business loving Tories, and will be a massive windfall for the treasury. I doubt Labour will be dropping that back, so it's a massive hike they'll happily inherit.
If I wanted some tax income, and keep to that no increases to the income tax or VAT *rates* then my choices would be -
1. Council Tax - the vast majority of people don't understand it, think that the issue is bands and the 1991 valuation, and don't have a clue what it pays for. Get rid of it altogether and create a new property tax paid to central government which is distributed to local authorities based on their economic need - yep, those in wealthy areas would pay a great deal more and those in average areas would pay the same and those in poorer areas less.
2. Capital Gains Tax - most Labour voters don't have investments, second homes, or buy to let - so increase the rate (you can't reduce the allowance much further because it is virtually nothing after the Conservatives changed that).
3. Inheritance Tax - Change the rules for pensions, and then longer term look at all the other areas where it can be avoided, farmland, etc.
4. Pension changes - reduce the tax relief to the basic rate, but leave the Annual Allowance and Lifetime Allowance alone - lots of cash now, particularly with the fiscal drag of more people being drawn into the higher rates, and less ability to moan from the NHS staff hitting the limits.
5. Income tax & National Insurance - get rid of the ability salary sacrifice for anything other than for child care, so lots more IT and NI when people decide that expensive cars are now expensive and take the money and pay the tax, and lots more NI when people can't salary sacrifice into pensions.
6. VAT - look at all the other areas other than private school fees where you could remove the exemption or zero rating, plus follow the lead from most of Europe by massively reducing the turnover threshold, down to say £1,000 the same as that for self-employed income tax.
All that would stick with the manifesto, bring in lots of tax now and in the future, and would mean damn all for most Labour voters.
1. Council Tax - the vast majority of people don't understand it, think that the issue is bands and the 1991 valuation, and don't have a clue what it pays for. Get rid of it altogether and create a new property tax paid to central government which is distributed to local authorities based on their economic need - yep, those in wealthy areas would pay a great deal more and those in average areas would pay the same and those in poorer areas less.
2. Capital Gains Tax - most Labour voters don't have investments, second homes, or buy to let - so increase the rate (you can't reduce the allowance much further because it is virtually nothing after the Conservatives changed that).
3. Inheritance Tax - Change the rules for pensions, and then longer term look at all the other areas where it can be avoided, farmland, etc.
4. Pension changes - reduce the tax relief to the basic rate, but leave the Annual Allowance and Lifetime Allowance alone - lots of cash now, particularly with the fiscal drag of more people being drawn into the higher rates, and less ability to moan from the NHS staff hitting the limits.
5. Income tax & National Insurance - get rid of the ability salary sacrifice for anything other than for child care, so lots more IT and NI when people decide that expensive cars are now expensive and take the money and pay the tax, and lots more NI when people can't salary sacrifice into pensions.
6. VAT - look at all the other areas other than private school fees where you could remove the exemption or zero rating, plus follow the lead from most of Europe by massively reducing the turnover threshold, down to say £1,000 the same as that for self-employed income tax.
All that would stick with the manifesto, bring in lots of tax now and in the future, and would mean damn all for most Labour voters.
Panamax said:
They say they want to "attract investment" and "go for growth". Anyone got any ideas how they're going to achieve that?
A stable government could attract investment. For example, the UK looks more stable than France nowadays, which could benefit UK investment.Regards growth, governments usually catalyse GPD improvement via investing in infrastructure and skills.
Panamax said:
They say they want to "attract investment" and "go for growth". Anyone got any ideas how they're going to achieve that?
If wanted to be a grower one of the first things I'd look at are the dole and tax setups that deter people either from taking more hours or pay rises that enter tax bands that make getting ahead seem barely worth bothering with. And state top ups mean that someone on a lower salary may well ultimately be similarly or better off than someone with a much higher headline figure.
If the whole way working life operates incentivises people to not advance or be more useful then it's no surprise when the country isn't as productive as it could be.
markh1973 said:
And what relevance do gold coins have to anything?
If they are legal tender such as sov’s etc they are cgt exempt https://www.royalmint.com/invest/discover/invest-i...
eliot said:
If they are legal tender such as sov’s etc they are cgt exempt
https://www.royalmint.com/invest/discover/invest-i...
At the moment they are legal tender, would it be impossible to change that...https://www.royalmint.com/invest/discover/invest-i...
eliot said:
markh1973 said:
And what relevance do gold coins have to anything?
If they are legal tender such as sov’s etc they are cgt exempt https://www.royalmint.com/invest/discover/invest-i...
Salted_Peanut said:
A stable government could attract investment. For example, the UK looks more stable than France nowadays, which could benefit UK investment.
Regards growth, governments usually catalyse GPD improvement via investing in infrastructure and skills.
Its not "could", its a given.Regards growth, governments usually catalyse GPD improvement via investing in infrastructure and skills.
Otherwise, I'd think you've nailed it..
Too many people want to "hate on" the UK, we've been through near a decade of lunacy where investors have been looking at the UK thinking "WTF?".
Within the last month we've just seen our sibling (France) shoot itself in the face and the US is unfortunately giving cause for concern. They are now getting the WTF treatment, as PHers we might not like Labour much, but they don't look like nutters.
UK GDP performance is beating expectation, nothing the new Govt has said looks to threaten that. Might some taxes go up? likely, but that's a demographic issue. Some people like to post in here with a humorous understanding of economics or thinking its their family WhatsApp group, but the post are always whining about self NOT what's actually good for the UK.
The SWF proposed looks a bit weedy, but its a start. They can liberate more money from accounting wheezes. The risk of Labour isn't the past spend then tax, but financial diligence - that is the outstanding question (and anyone who thinks the Tories were diligent needs a earflick - Trussterf**K, Rishi bounceback loans the list goes on).
Salted_Peanut said:
Panamax said:
They say they want to "attract investment" and "go for growth". Anyone got any ideas how they're going to achieve that?
A stable government could attract investment. For example, the UK looks more stable than France nowadays, which could benefit UK investment.Regards growth, governments usually catalyse GPD improvement via investing in infrastructure and skills.
There isnt going to be any significant growth. Nor the tax revenues that would come with it. Its just pie in the sky.
Rufus Stone said:
RemarkLima said:
Why doesn't anyone mention that corporation tax has gone up from 19% to 25% (with tapered relief between 50k and 250k profit)?
Introduced by the business loving Tories, and will be a massive windfall for the treasury. I doubt Labour will be dropping that back, so it's a massive hike they'll happily inherit.
Because many appear to have the mentality that only Labour increases taxes. And they don't care about CT as they think it doesn't affect them.Introduced by the business loving Tories, and will be a massive windfall for the treasury. I doubt Labour will be dropping that back, so it's a massive hike they'll happily inherit.
Panamax said:
Snip - and hopefully not taking it too far out of context:
If you want "the rich to pay for the poor" you'd scrap Council Tax altogether and just hike Income Tax/CGT/IHT again.
I know of a couple of households where they pay £15 and £17 per month respectively for Council Tax. So, arguably, even the not particularly well off are already paying for the 'poor' even though both those households go on at least 3 foreign holidays a year. If you want "the rich to pay for the poor" you'd scrap Council Tax altogether and just hike Income Tax/CGT/IHT again.
BAMoFo said:
I know of a couple of households where they pay £15 and £17 per month respectively for Council Tax. So, arguably, even the not particularly well off are already paying for the 'poor' even though both those households go on at least 3 foreign holidays a year.
That's less than £200/yr. How do they manage that?PoorCarCollector said:
LeighW said:
It's looking likely that the small profits rate will be removed and a flat rate of 25% will be applied. Great.
Source ?!? Or more guesswork? isleofthorns said:
It's not like council tax doesn't go up every year anyway...
how would this work? up for everyone, or a few new super bands?
Hoping for several new bands at the top, or even better, a reformed system where you pay a flat percentage of value per annum based on current prices.how would this work? up for everyone, or a few new super bands?
PoorCarCollector said:
LeighW said:
The source was a lecturer on a tax update webinar I listened to this morning who is on various advisory boards at HMRC, she believes it's highly likely.
Ah, more guesswork then2Btoo said:
That's less than £200/yr. How do they manage that?
I have no idea but nobody in either household works. One of the households is a single lady that has custody of her grandson because her daughter couldn't have custody of her due to having various issues. The other household is an unmarried couple that have 4 children. I only found out because we bumped into the lady from the first household whilst we were on holiday in December 2022 and she was complaining about not yet being able to buy her council house and about having to pay Council Tax. At the time I had just set up a direct debit for £185 per month for a house that I had let out and the tenant had left trashed. I wouldn't normally have asked her how much she was paying for Council Tax, but as if was a sore point with me at the time, I did and was gobsmacked at how little she was paying. Then, when we returned from holiday, I asked the couple that my missus is friendly with the same question to see if the £15 per month was just a one-off. They said they were paying £17 so it would appear that it isn't unusual. Both households are in different local authority areas (Lancashire and Greater Manchester) so that isn't the reason they pay such ridiculously low amounts.Edited by BAMoFo on Monday 15th July 14:37
Olivera said:
or even better, a reformed system where you pay a flat percentage of value per annum based on current prices.
I struggle to see how that might practically be implemented. If it applied to "normal houses" all the way up, then you could quite easily see a nurse and a teacher in the south east paying significantly more than a nurse and a teacher in the north east. This feels like some horrible unintended consequences might happen.
Who decides what the value is - what if you have had building work done, what if you devalue your house etc. Do we end up with knocking down walls being a tax avoidance strategy.....
What happens to rental properties? We've got people bailing out of the landlord space as it is.
I would have thought that while the envy led approach of an LVT levied via some proxy of house prices might seem like a good idea in opposition, it might prove to be too hard to practically implement inside of government. (at least that's what I'm hoping)
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