So assuming personal taxes will go sky high...?

amcluesent

Anyone remember the 1970s, when marginal tax on unearned income was 98%?:mad:

Well maybe it won't be that bad, but it's 100% certain that after the election (next June?), taxes will be shooting up to cover Clown's ££££ billions of debt.

Once again, people will HAVE to invest based on the taxation position rather than the quality of underlying investment.

So, while there's a bit of time, what options are available to avoid (not evade!) tax on medium to long-term investments, esp. for hi-rate taxpayers. Assume all the obvious stuff of maxed-out ISA and NS&I index linked.

amcluesent

Well, it's started!

New 45p Tax Rate To Hit The Rich

"Highly controversial, it will delight left-wing Labour MPs and the Government's trade union allies, but business leaders will claim it will penalise entrepreneurs."

Don't think that'll be the end of the TruLabour tax-bombshell. Not by a long way!

neilp

To be fair, the 45p rate is on those earning over £150,000 per year, so will affect a very small proportion of the population (and is more of a headline grabber than anything else). Also, it will not be implemented until after the next election, IF Labour wins.

Good question on investments, though - I look forward to people's thoughts.

dunstonh

To be fair, the 45p rate is on those earning over £150,000 per year, so will affect a very small proportion of the population

You are correct. However, many of that group are the income earners for the country and can afford to change their residence for tax purposes. So, you could end up getting less in revenue.

st

dunstonh wrote: »

You are correct. However, many of that group are the income earners for the country and can afford to change their residence for tax purposes. So, you could end up getting less in revenue.[/quote

indeed also many of these higher earners(not me) are skilled professionals medical consultants etc they will leave -I would

RayWolfe

First time I have ever disagreed with you D. Take your argument to it's logical conclusion, rich people should pay NO tax because they could mitigate it.
And as for being "the income earners for the country" ... is earning income for the country what the big City earners have been doing for the last few years?
Frankly, I'd like them to change their residence, and stay there!

dunstonh

First time I have ever disagreed with you D. Take your argument to it's logical conclusion, rich people should pay NO tax because they could mitigate it.

I'm not saying they shouldnt pay tax. However, the higher rate tax limit is a difficult. Basic rate taxpayers are stuffed as the general populous wont move away regardless of the level. The higher rate tax one is including people who can and will move away. Whole companies will relocated if the tax is too high. You then not only lose personal income tax but corporation as well.

Its a case of finding the balance where you dont get less by taxing too high. e.g. 100 x 40 or 80 x 45.

I'm not saying I know where that level is.

Old_Slaphead

Not sure how many of these high earners willl be able to find higher earning jobs abroad - anyway, they can mitigate the extra tax simply by increasing their pension contributions.

LesU

I'd be interested in knowing just how many people there are in the UK that are earning a taxable £150,000+ a year. You'll probably find the answer is almost no-one. Anyone with that level of earning will have a competent accountant beavering away in the background writing everything off as expenses, EU grants, legitimate offsets, nanny's fees etc etc..........

EdInvestor

dunstonh wrote: »

Basic rate taxpayers are stuffed as the general populous wont move away regardless of the level.

I'd have thought places like the Costas and Dubai are stuffed with people who would be on basic rate if they were back home, albeit with two earners per family.

cheerfulcat

amcluesent wrote: »

So, while there's a bit of time, what options are available to avoid (not evade!) tax on medium to long-term investments, esp. for hi-rate taxpayers. Assume all the obvious stuff of maxed-out ISA and NS&I index linked.

VCTs - they have their attractions ( income tax relief if bought at launch, no tax on dividends and no capital gains tax ) but they are considerably more risky than ordinary investment trusts.

Split caps - allow you to invest for capital gain only.

Investment bonds - I don't like them but you might prefer to give your money to insurance companies rather than to G Brown...