The time has come to completely scrap tax on savings

Aegis

LesU wrote: »

How about making income from savings being treated the same as Capital Gains. If I buy a painting, keep it and then sell it at a large profit I get £9600 allowance for each year ( with time restrictions) that I kept the painting until I disposed of it.
Why shouldn't the earnings from cash in the bank be treated the same way?

It already is. You have a personal allowance for income each year, below which you pay no income tax. Above that level you pay 20% or 40% depending on the amount in question.

Mikeyorks

Deleted_User wrote: »

Grow up!

For a post #1 ....... with an Exclamation in the heading ...... A Big Grin in the body ....... a Roll Eyes and Eek at the end ......... and a fair dollop of rubbish in between them all ........... I would have a long look in the mirror.

Mikeyorks

LesU wrote: »

Why shouldn't the earnings from cash in the bank be treated the same way?

Because it's Income tax ..... not Capital Gains / IHT / VAT / SDLT etc etc?

Not forgetting that a 10% rate still applies to Interest from Savings ..... if that hits the tax band formed by Personal Allowances + £2320

ed123_2

...There was something in the Torygraph that Darling was planning to increase the personnal allowance for pensioners to help re savings....a bit sneaky seeing that most pesioners do not do a tax return or claim back the tax they already should'nt pay on interest....

LesU

Aegis wrote: »

It already is. You have a personal allowance for income each year, below which you pay no income tax. Above that level you pay 20% or 40% depending on the amount in question.

So people that can claim an allowance against Capital Gains don't have a personal allowance as well?
I buy a painting in 2007 for £10,000 and I sell my painting in 2009 for £25,000 doesn't that make me £15,000 better off. But I can offset that with my over and above personal allowance Annual Exempt Amount. (Currently £9,600)
If it walks like income, talks like income and flys like income.....

BTW Lokolo. I think it will be a long time before my ISA earnings equal £9,600 a year.

masonic

LesU wrote: »

So people that can claim an allowance against Capital Gains don't have a personal allowance as well?
I buy a painting in 2007 for £10,000 and I sell my painting in 2009 for £25,000 doesn't that make me £15,000 better off. But I can offset that with my over and above personal allowance Annual Exempt Amount. (Currently £9,600)
If it walks like income, talks like income and flys like income.....

It's a capital gain, not income. The value of your asset has increased. You haven't been paid for investing in it. You can't offset against an allowance for income.

Aegis

LesU wrote: »

So people that can claim an allowance against Capital Gains don't have a personal allowance as well?
I buy a painting in 2007 for £10,000 and I sell my painting in 2009 for £25,000 doesn't that make me £15,000 better off. But I can offset that with my over and above personal allowance Annual Exempt Amount. (Currently £9,600)
If it walks like income, talks like income and flys like income.....

It's not income though. It isn't paid on a regular basis, it isn't risk free and it comes from buying an asset and selling it on at (hopefully) a higher price. As such, it's taxed differently, and the Capital Gains Tax allowance is in part to persuade people to invest in assets other than cash.

LesU

masonic wrote: »

It's a capital gain, not income. The value of your asset has increased. You haven't been paid for investing in it. You can't offset against an allowance for income.

So my only asset in 2009 for the painting I no longer have wouldn't just be £15,000 more in my bank than I had at the beginning of the year?
It looks and feels like income from an investment.
Remember, if I had sold the painting for £100,000 (I wish), the taxman would be very interested.

posted_2

Savings are eroded by inflation, interest is merely a method of trying to maintain the value of cash, and shouldn't be treated as income. The tax doesn't need to be replaced.

PasturesNew

ISAs are only good for people who consistently have enough spare cash left to be able to save. For poor people who suddenly come into a spot of money it's not much use.

e.g.
A wealthy couple sticking £3k/year into an ISA for 10 years would have £60k untaxed (plus compounded interests)
A single person suddenly winning/inheriting/getting £60k would be taxed on the interest gained on all of it.

And ... ISAs are quite complex. I have one, I'd like a 2nd but I am scared/don't really understand.... and there are too many.