Budget - raise more revenue?

Thrugelmir

cells wrote: »

No one has £1.3m in a cash isa not even close.

I was reading about a guy a few weeks that has over a £1 million in his S&S ISA. Though he did start originally with PEPS. Invested the maximum every year and traded successfully managing individual stocks and shares. So paid a minimal amount in fees. Can be done.

Fella

Wild_Rover wrote: »

I am well aware of the need to encourage saving, and rewarding thrift, but (apologies for the link source!) according to this article -

http://www.telegraph.co.uk/finance/personalfinance/investing/isas/9958635/How-to-save-a-million-pound-Isa.html

there are large sums of money being earned under what is effectively a "tax avoidance scheme".

Someone who earns 25K a year working pays tax on everyting over £9440. Someone who earns more than that in interest/dividend from ISAs pays no tax at all.

In real terms people with money in cash ISAs have been losing money for years, they certainly haven't been earning any.

And of course, most of them will have already paid income tax on that money when they earnt it, so an ISA isn't allowing them to "pay no tax at all", it's allowing them to avoid double taxation on one portion of their income.

The ISA allowance was effectively reduced for years under Gordon Brown courtesy of the stealthy fiscal drag methods he enjoyed so much. The limits should be raised (more than they are under the current method) & the entire scheme overhauled & simplified. Getting rid of the silly distinction between cash ISAs & Share ISAs is long overdue.

chewmylegoff

Thrugelmir wrote: »

I was reading about a guy a few weeks that has over a £1 million in his S&S ISA. Though he did start originally with PEPS. Invested the maximum every year and traded successfully managing individual stocks and shares. So paid a minimal amount in fees. Can be done.

£1 million is fairly conservative. I have seen the statements for one with over £4 million in it. Unfortunately it wasn't mine....

mayonnaise

chewmylegoff wrote: »

I have seen the statements for one with over £4 million in it. Unfortunately it wasn't mine....

You were supposed to keep that confidential.
I don't like my finances laid out in such way on an internet forum.

Generali

mayonnaise wrote: »

You were supposed to keep that confidential.
I don't like my finances laid out in such way on an internet forum.

I thought chewy was using my statements until I re-read. Then I saw the word million.

I was surprised I was only worth 4. I thought I was worth at least a fiver.

[Deleted User]

BillJones wrote: »

No, you seem to want to call for higher taxation on people who already pay a vast amount of tax under the current system, and to ignore all the little loopholes, benefits, and tricks that lower earners use to drop their tax even further.

You are also assuming that the "unfiarness" at the moment is unfairness towards lower earners. The top 1% of earners earn 14% of all wages, and pay 30% of all income taxes. The bottom 30% of earners, I believe, pay next to nothing in income tax, and certainly less than they receive in benefits.

I understand that people might believe that it should be even more heavily skewed, but the idea that "the rich" aren't paying much tax is not right.

No, not really - please re-read what I am getting at. You can have a situation where two people have the same annual income - one employed pays tax on their income above the personal allowance. His neighbour could have the same or even greater annual income from a completely tax free source. That is the point I was making.

As I said I am as keen as anyone else to encourage saving - but if at the moment the country is so broke, can we afford this? If the answer is "yes", well, fine, but I can't help thinking that the government might look at this, and at least "be seen" to even temporarily reduce a tax break to the better off. It seems odd to me that the chip shop worker earning minimum wage for a 40 hour/week, 48 week year pays income tax and NI, but someone who has tens of thousands in income from a shares portfolio in an ISA pays zip.

When so many areas of public expenditure are under scrutiny, to have, effectively, a taxpayer subsidy to those with such substantial assets seems a tad "generous".

WR

CLAPTON

Wild_Rover wrote: »

When so many areas of public expenditure are under scrutiny, to have, effectively, a taxpayer subsidy to those with such substantial assets seems a tad "generous".

WR

In what way is the government taking less of some-one's own money, a taxpayer subsidy?

Do you refer to your take home wages, as a taxpayer subsidy?
and are you truely grateful you are allowed a little to live on?

Seabee42

How about stopping the offset of mortgage interest on buy to lets?

grizzly1911

Wild_Rover wrote: »

No, not really - please re-read what I am getting at. You can have a situation where two people have the same annual income - one employed pays tax on their income above the personal allowance. His neighbour could have the same or even greater annual income from a completely tax free source. That is the point I was making.

As I said I am as keen as anyone else to encourage saving - but if at the moment the country is so broke, can we afford this? If the answer is "yes", well, fine, but I can't help thinking that the government might look at this, and at least "be seen" to even temporarily reduce a tax break to the better off. It seems odd to me that the chip shop worker earning minimum wage for a 40 hour/week, 48 week year pays income tax and NI, but someone who has tens of thousands in income from a shares portfolio in an ISA pays zip.

When so many areas of public expenditure are under scrutiny, to have, effectively, a taxpayer subsidy to those with such substantial assets seems a tad "generous".

WR

The chances are that anyone having the sort of income you are suggesting, from ISAs, has saved hard and long. PEPs/ISAs have annual contribution limits. As such most will tend to be older and providing for the old age. In many cases they may not have a meaningful pension, whereas those with pensions will have benefited from tax relief on their contributions, at their highest rate, for decades.

In the majority of cases those individuals will have paid tax on their earned income in the first place.

They haven't stashed the family silver in one go and even if they had they would probably have had a more effective way of sheltering the income from tax man.

Your example of the chip shop worker and someone, having worked and saved for perhaps 20/30 years, aren't really a suitable comparison. You could compare NMW earners to Investment Bankers and ask why should one earn humongously more than the other, arguably they both work as hard with differing effects.

The fact that savers are also suffering for the sake of borrowers, at present, is something else that needs to be born in mind. Article on ITV news suggested this had been to the tune of £66bn since the crisis (IIRC). Think of the lost tax revenue on non ISA savings unearned income.


Removal of higher rate tax relief on pension contribution and disallowing interest relief, against tax, for non social landlords would also be useful contributions to the pot.

[Deleted User]

CLAPTON wrote: »

In what way is the government taking less of some-one's own money, a taxpayer subsidy?

Do you refer to your take home wages, as a taxpayer subsidy?
and are you truely grateful you are allowed a little to live on?

It is a fair question, and I am not avoiding it. Taxes should, in my view be levied on income as that is a fairly equitable measure of ability to pay. Not perfect, but a fair "stab" at it. Once you arrive at a figure for how much tax needs to be raised, the next thing you need to do is decide where to raise it. My point is about the unequal treatment of income.

Wages are Taxed. Spending on VAT-able goods is taxed. Beer, wine and ciggies are taxed. If the nation's coffers were full to bursting, all well and good. However the coffers are far from full.

I don't have wages, I have an occupational pension, so I still pay income tax. I regard tax not as a "penalty" I regard it as an obligation to fund public services.

We are told that we cannot afford so many things, yet in my view we are still as a matter of tax policy allowing the already asset rich to create more assets tax free. I have no problem with the creation of assets. I just don't see why assets should create yet more assets without any tax liabilty.

I have said on a number of occasions that I have no problem whatsoever with effort and savings being rewarded - the more you work, the more you invest, the more benefit you will (generally!) receive. To me it makes no more sense in troubled times to say that returns from "certain types of investments" should be tax free forever than it would be to say "if you work for a company whose postcode adds up to 9 you will pay no income tax".

The government always bangs on about fairness to hard working families while at the same time actively encouraging a situation where a hard working family on the minimum wage pays more tax on their household income than someone who lives off the dividends of a million plus portfolio.

Workers, largely in the public sector thought they had provisions for their future that were in writing and safe. As soon as the financial crisis hits, their pay is frozen, their pensions are altered, firemen are told they'll still be carrying grannies down ladders for years longer than they had thought - but the same or greater income from considerable assets is absolutely untouchable? It just doesn't seem equitable to me.

If the country's finances were exactly balanced between income and expenditure, the present arrangements would mean that Mr A who works for 50k a year pays sunstantial income tax, but Mr B who has a large ISA does not.

I fully accept that my view is a minority one, but I object when the wealthy preach resraint and sacrifice to some prople when refusing to accept it for themselves!

My "case" is now rested for the evening as I am going out!

Night all, and thanks to those who have contributed to the discussion:)

WR