2016 budget thoughts.....

Thrugelmir

Charge people for entering England from Scotland.

Bluebirdman_of_Alcathays

Thrugelmir wrote: »

Charge people for entering England from Scotland.

We do that in Wales - hasn't helped our economy much!

pjcox2005

I'd increase inheritance tax on individuals - allow you to pass on a smaller amount to dependents e.g. £250k per person, and then tax the rest heavier than they do now.


Much prefer to be taxed on death and benefit from reduced taxes during life. May also help ease social mobility rather than overly benefiting from parents/grandparents before (plus you'll still get £250k so doing OK).


Will never understand why IHT is despised so much as a tax.


2. Probably not a budget statement point but I'd look at charging for elements of the NHS e.g. £10 for an appointment refunded if you turn up. Make people take some ownership over their actions. Potentially exempt those on benefits from any payment.

princeofpounds

Will never understand why IHT is despised so much as a tax.

I agree with you. In many ways it's one of the fairer taxes - it's paid at at a time where it does not deprive you of your living. It doesn't tax employment or wealth-creation. It's possibly the ultimate in non-distortionary taxes - indeed it might remove many of the distortions caused by dynastic succession of wealth.


But there are arguments against it which have some level of validity.


Many people dislike the idea the 'double dip' nature of the tax, as it comes out of accumulated retained earnings. Personally I'm not sure that the notion of 'double jeopardy' when it comes to tax is really that valid, but some people care about it.


Then I think more importantly, people hate the idea that they might not be able to provide for their children, and children hate the idea they might lose their 'family homes' and various other heirlooms. This is an exceptionally powerful - and natural - emotion. And we know that trying to overcome human nature through state-imposed economics is hard, and often gives rise to unforeseen consequences.

michaels

Surely there are only two reasons for holding assets on death:
1) uncertainty over when death will fall
2) A desire to pass on the assets to ones offspring/other beneficiaries

Otherwise what is the point of not spending everything?

If it gets passed on as inheritence presumably it will get taxed when it is then spent so inheritance tax means tax on earning, tax on transfer, tax on spending whereas of course transfers during lifetime are not taxed. Is it not arbitary to say transfers to your kids on death are taxable but those made whilst living are not?

CLAPTON

michaels wrote: »

Surely there are only two reasons for holding assets on death:
1) uncertainty over when death will fall
2) A desire to pass on the assets to ones offspring/other beneficiaries

Otherwise what is the point of not spending everything?

If it gets passed on as inheritence presumably it will get taxed when it is then spent so inheritance tax means tax on earning, tax on transfer, tax on spending whereas of course transfers during lifetime are not taxed. Is it not arbitary to say transfers to your kids on death are taxable but those made whilst living are not?

careful was you say; obsorne may be reading and we may see a gift tax in March and it may be down to you.

pjcox2005

Guess it depends how you look at it, I see tax as an amount needed to be raised to pay for a certain set of services. Ignoring the debate about how much and what services, it therefore means that raising more in IHT reduces the amount required in other areas.


On that basis, I'd always find a tax once dead more amicable than taxes when I'm alive. Agree it's arbitrary on gift/death but then aren't all taxes arbitrary on how they are calculated e.g. the point at which you should give 40% rather than 20% on earnings?

kinger101

The Sunday Times indicated as well a a flat rate relief on pensions (above basic rate but lower than higher), the 25% tax free lump sum might also be axed. Getting rid of that effectively makes things (almost) neutral for basic rate tax payers if flat rate relief is 25%.

Current system: £80 (net) contributed = £100

£25 not taxed
£75 taxed at 20% = £60.

£85 back therefore effective tax rate on pension = 15%

---

Possible new system:

£80 (net) contributed = £106.67 (with 25% credit)

£106.67 taxed at 20% = £85.33

Therefore effective tax rate on pension = 14.67%

If he is making sweeping changes, I hope there's something really in it for basic rate taxpayers. Otherwise, he might just discourage people from providing for their retirement.

chucknorris

kinger101 wrote: »

The Sunday Times indicated as well a a flat rate relief on pensions (above basic rate but lower than higher), the 25% tax free lump sum might also be axed. Getting rid of that effectively makes things (almost) neutral for basic rate tax payers if flat rate relief is 25%.

Current system: £80 (net) contributed = £100

£25 not taxed
£75 taxed at 20% = £60.

£85 back therefore effective tax rate on pension = 15%

---

Possible new system:

£80 (net) contributed = £106.67 (with 25% credit)

£106.67 taxed at 20% = £85.33

Therefore effective tax rate on pension = 14.67%

If he is making sweeping changes, I hope there's something really in it for basic rate taxpayers. Otherwise, he might just discourage people from providing for their retirement.

I'm expecting a flat rate to be introduced, and if so, it would mean a hello for me to the 60% marginal tax rate, that would make me think about retiring.

I'm already having a rethink anyway, my wife visited her (previously in good health) mother on Saturday, found her unconscious, called an ambulance, went to the hospital with her, where she was given a bad prognosis. We got a call at about 2 am Monday morning saying that we had better come quickly (we did, but it was about 90 mins away) as she was unlikely to last more than a few hours, she did, but she passed away early this morning. She was only 72, I am now thinking, is it really worth working until I'm 66, when the financial argument to do so looks weak anyway.

kinger101

chucknorris wrote: »

I'm expecting a flat rate to be introduced, and if so, it would mean a hello for me to the 60% marginal tax rate, that would make me think about retiring.

I'm already having a rethink anyway, my wife visited her (previously in good health) mother on Saturday, found her unconscious, called an ambulance, went to the hospital with her, where she was given a bad prognosis. We got a call at about 2 am Monday morning saying that we had better come quickly (we did, but it was about 90 mins away) as she was unlikely to last more than a few hours, she did, but she passed away early this morning. She was only 72, I am now thinking, is it really worth working until I'm 66, when the financial argument to do so looks weak anyway.

I you can, and you have (not too expensive) hobbies to keep yourself entertained, I think it's the sensible option. Nobody knows how long they have, or how long they'll be active enough to enjoy their retirement.