My predictions on future budgets

summersetsheep

I have been thinking about recent changes in government and the change in direction for years to come.

My predictions are not about particular investments or market movement but about changes to the environment in which we save and invest.

1. NHS dismantlement I believe the NHS will be dismantled. Its replacement will be an insurance or pay-for model. Like Royal Mail and British Rail, more services will become privatised. Logically taxes should go down because of this but I doubt this will be the case. If you have work health insurance, you may not care about this but for everyone else, it might force your hand into saving more for future healthcare.
2. Pension tax relief for higher rate taxpayers I believe that pension relief will be capped to the basic rate - just like BTL. This would save the government a large amount of money because not every higher rate saver will be taxed at the higher rate come pension time. A higher rate taxpayer pays into the pension £100, gets £20 added automatically and claims for the remaining £20 in a tax return. In retirement, they may only be taxed at the basic rate rate so they could cost the treasury £20.
3. Merging of National Insurance and Income tax This will result in an income tax rise which is harder to avoid paying such as through pension contributions.
4. Abolishment of state pension I think the state pension will disappear and be replaced by a compulsory contribution from salaries. This will be an extension of the workplace pension where both employees and employers are forced to contribute larger and larger amounts throughout life.
5. Pension used as health bank accounts I believe that you will be forced to pay via your pension if you cannot afford your healthcare. There will be another % contribution on top of the workplace pension that is designed to be used to pay for healthcare when you need it.
6. Broadcasting taxes rolled into income tax
7. Inheritance tax for houses relaxed but increased for other assets I believe inheritance tax allowances for housing will rise with house prices but taxes on every other asset will increase.
8. A sting for ISAs I believe the ISAs are too good for the government to leave alone. For example, PEPs suffered a similar fate with gradual reduction in benefits. I am not quite sure what the sting will be in the future.
9. Careful reduction in allowances across the board I think the government is trying to pull extra people into the taxable positions by decreasing allowances everywhere. This is to stop a single asset being more attractive than every other. This explains the removal of dividend tax credits, the reduction of the higher rate tax bracket (£31,786 + pa) and buy to let mortgage relief at higher rates.

What do you guys think? I get the feeling that days are limited for certain allowances.


Are any changes afoot that are making you think twice?

redmalc

Your comments look like a Labour Party Manifesto

masonic

redmalc wrote: »

Your comments look like a Labour Party Manifesto

1, 4 and 5 look pretty right-wing to me.

kidmugsy

summersetsheep wrote: »

NHS dismantlement. I believe the NHS will be dismantled. Its replacement will be an insurance or pay-for model.

If the NHS becomes more like the French system, I hope we get French standards out of it.

summersetsheep wrote: »

I believe that pension relief will be capped to the basic rate - just like BTL.

We'll know quite soon: I wouldn't surprised by a compromise rate for everyone, with an annual allowance well below £40k. Steve Webb discussed the "three for the price of two" possibility before he lost his seat. How to deal with DB schemes will be the big problem.

summersetsheep wrote: »

Merging of National Insurance and Income tax

Maybe, but they've just gone to great pains to introduce new style State Pensions that work on the bias of years of NICs.

summersetsheep wrote: »

Abolishment of state pension.

Unlikely, though I could imagine a reduction for high income pensioners - or maybe there are so few that it wouldn't be worth the fuss.

summersetsheep wrote: »

A sting for ISAs.

It's easy to imagine a Lifetime Allowance. Since huge ISAs are an Inheritance Tax trap, the pain may be bearable.


You seem to be assuming an endless govt demand for tax income. Is that because you appreciate the dreadful state of the public finances, or is it just because you are a gloomy so-and-so?

summersetsheep

You seem to be assuming an endless govt demand for tax income. Is that because you appreciate the dreadful state of the public finances, or is it just because you are a gloomy so-and-so?

Both I think. :-) Sorry to be so gloomy! The current government seems to be raising funds by simultaneously removing public services at the same time as raising more taxes by closing loopholes and snagging extra people.

kidmugsy

Well they don't have a lot of choice, do they? Labour left the public finances in terrible trouble and the Coalition took only a few cautious steps to correct the problem. I'd say the new government is also being rather cautious - perhaps too much so. Get it wrong and we could end up in the soup. Not as bad as Greece, because we didn't join the euro, but pretty bad.

Pincher

I wish somebody would come on and tell us how the Middle East works, as nobody pays any taxes as far as I know.


How do you make Bedouins pay taxes, since the tent is gone as soon as you say "I'll be back."


Do Roma gypsies pay taxes?


The way it has always worked with taxes is you grab the wage slaves by the goolies, and squeeze hard.




What we could do is to reward high tax payers by loyalty points. Let's call them Citizen Points. The state would provide Economy (basic, no-non-sense, useless) level service for schools, NHS etc. without CPs. You can pay for Premium upgrade to Grammar (if the brat passes his/her Elevenses) School, or jump the queue for hip replacement, by trading in your CPs. You do have the option of paying real money for private schools and Harley street, if you dodge taxes.


The idea of maintaining living standards for all when you haven't got free oil to pay for it is just not sustainable. Japan was living on a piece of volcanic rock with no natural resources, so all the coal and steel in northern china was just too tempting one hundred years ago. The law about the military can go out and attack says they now realise they have to go out there to grab some again. Pacifism since 1945 was just for show.


If we want low taxes, we need to rally the Christian Nations against Islamic State, establish a Crusade Pact, and run the Middle East and Africa. That will solve the migrant problem.
I would make military service compulsory in Greece, which reduces unemployment, and then we garner their wages to pay back the Greek debt! :rotfl:

bowlhead99

masonic wrote: »

redmalc wrote: »

Your comments look like a Labour Party Manifesto

1, 4 and 5 look pretty right-wing to me.

Claims to be a prediction of what will happen based on recent change of government and change of direction and includes scrapping the NHS and state pensions. There is also a broad claim in the follow-up post that the current government is reducing public services at the same time as raising more money from taxes. So those parts sound like a Labour flyer to generate anti-Tory sentiment.

While other parts like scrapping pension incentives for high earners and potential 'stinging' of ISAs (which were subject to significant increases in allowances and flexibility improvements under the Tory-run coalition) sound like the kind of thing Labour would like to do.

So perhaps it's not a political post at all, just an attempt to scaremonger people of all political persuasions to stimulate discussion.

summersetsheep wrote: »

My predictions are not about particular investments or market movement but about changes to the environment in which we save and invest.

There's a 'debate the economy' discussion board a few boards down. Its existence sometimes stops this one getting dragged into party politics, suggestions that we bring back the Crusades, etc.

summersetsheep wrote: »

Are any changes afoot that are making you think twice?

Think twice about what - continuing to live in this country? Restructuring all my savings and investments and reconsidering how long I'll need to work to keep myself comfortable?

When planning my savings and investments I generally consider political and tax risk, though some can only be guesswork. The 'MSE' way is presumably to aim to save money by taking advantage of whatever allowances are on offer, and I don't think that the 9 'predictions' will change that way of thinking.

I think some of them may happen over the coming decades regardless of what government is in. Obviously the tax increases are less likely under Conservative vs Labour govts, due to their different right-vs-left ethos.

This explains...
the reduction of the higher rate tax bracket (£31,786 + pa)

The width of the lower rate bracket slight reduction by £80 to £31,785 happened at the same time as the personal allowance £600 increase; so the higher rate started at £42,385, which was over 1.2% higher than previous years, not lower. The higher rate threshold will increase again for 2016/17 and 17/18.

summersetsheep wrote: »

Sorry to be so gloomy! The current government seems to be raising funds by simultaneously removing public services at the same time as raising more taxes by closing loopholes and snagging extra people.

If a government is spending more than it brings in, it makes sense to both stop spending so much, and bring more in.

summersetsheep

Excuse me sir; I think you have got ahead of yourself. I am a closet conservative hoping for HPC and rolling back Help to buy and pulling out housing props like housing benefit. But what I am politically and what I believe should not in any way impact the probability of my prediction. Discussion stands apart from the person.

Think twice about what - continuing to live in this country? Restructuring all my savings and investments and reconsidering how long I'll need to work to keep myself comfortable?

All those things. For me, it is about diversifying my silos of money more rather than just plowing into ISAs. (Pensions, tax beneficial investments and unwrapped investments)

Not quite sure where your aggression comes from; if you disagree, then fair enough but there really is no need to act petulantly.

talexuser

Have a look at Money Saver arms forum, more suited to this discussion, more like a chat over a pint.

Savings and Investments here is more for concrete ways to take care of your money based on what we know rather than possible (maybe even fanciful) supposition.

bowlhead99

summersetsheep wrote: »

Excuse me sir; I think you have got ahead of yourself.

Not quite sure where your aggression comes from; if you disagree, then fair enough but there really is no need to act petulantly.

If you characterise my post as petulance and aggression, you're in for a stressful time as a new user of this forum (or perhaps internet forums in general).

talexuser wrote: »

Have a look at Money Saver arms forum, more suited to this discussion, more like a chat over a pint.

Savings and Investments here is more for concrete ways to take care of your money based on what we know rather than possible (maybe even fanciful) supposition.

I agree with that, the Arms is probably a good home for it. I don't go there as I have offline equivalents

Speaking of which, almost time for Sunday lunch...