How likely will Capital Gains Tax double in the new budget? Will it kill investing?

Thrugelmir

MaxiRobriguez said:

I welcome increases to CGTs, dividend taxes and carefully crafted taxes on unearned wealth.

This country is an absolute shower when it comes to fairly distributing wealth. Too many people are sitting on 7 or 8 figure wealth that they've inherited or been in the right place at the right time in regards to house price inflation for example. Too many people who put 50 hour weeks in are struggling to get by despite being sensible when it comes to budgeting and spending.

The tax system needs to adapt to reflect that asset pricing is determining cost/quality of living more than income from employment.

If the well off don't like giving a bit more from the wealth they're fortunate to have, then tough.

Disclaimer: I expect to be part of the 7 figure brigade in my lifetime, so such changes would impact me. 

Controlling property prices doesn't require CGT to rise . Normalising interest rates would see to that. 

silvercue

MaxiRobriguez said:

I welcome increases to CGTs, dividend taxes and carefully crafted taxes on unearned wealth.
...
The tax system needs to adapt to reflect that asset pricing is determining cost/quality of living more than income from employment.

It is not just the very wealthy that could be impacted.   I have a normal job, but I am trying to make money from Stocks and Cryptos.  I started with £100 and added what I could afford as I went along and through extensive research and taking of risks whilst trying to be shrewd - I have started to see some real gains.   But I have a 16 year plan, to help me when I retire, so cashing out the limit every year is not really helpful, in fact the opposite is true.   Paying 28% tax if I try to make something will be quite crippling.   Paying 40%+ would make the time, effort and risk I am putting in seem far too much and I would rethink whether it is all worth it.

MaxiRobriguez

Thrugelmir said:

MaxiRobriguez said:

I welcome increases to CGTs, dividend taxes and carefully crafted taxes on unearned wealth.

This country is an absolute shower when it comes to fairly distributing wealth. Too many people are sitting on 7 or 8 figure wealth that they've inherited or been in the right place at the right time in regards to house price inflation for example. Too many people who put 50 hour weeks in are struggling to get by despite being sensible when it comes to budgeting and spending.

The tax system needs to adapt to reflect that asset pricing is determining cost/quality of living more than income from employment.

If the well off don't like giving a bit more from the wealth they're fortunate to have, then tough.

Disclaimer: I expect to be part of the 7 figure brigade in my lifetime, so such changes would impact me. 

Controlling property prices doesn't require CGT to rise . Normalising interest rates would see to that. 

Indeed and I would welcome that too (despite wanting to move up the ladder myself).

MaxiRobriguez

silvercue said:

MaxiRobriguez said:

I welcome increases to CGTs, dividend taxes and carefully crafted taxes on unearned wealth.
...
The tax system needs to adapt to reflect that asset pricing is determining cost/quality of living more than income from employment.

It is not just the very wealthy that could be impacted.   I have a normal job, but I am trying to make money from Stocks and Cryptos.  I started with £100 and added what I could afford as I went along and through extensive research and taking of risks whilst trying to be shrewd - I have started to see some real gains.   But I have a 16 year plan, to help me when I retire, so cashing out the limit every year is not really helpful, in fact the opposite is true.   Paying 28% tax if I try to make something will be quite crippling.   Paying 40%+ would make the time, effort and risk I am putting in seem far too much and I would rethink whether it is all worth it.

The other option is better worker remuneration, to ensure people who work a full time week can afford to live. That would have its own impacts, not least to reduce onshore corporate profit which would limit your gains and have a similar result to you having to pay additional tax in later years if you've minted yourself off the back of others.

Sooner or later there's going to have to be a change in wealth distribution. If it's not through taxation it'll have to be something else. The greater the disparity and the more the lower/middle classes are squeezed then the bigger the chance that an extreme government is elected to power to do something about it, along with the associated impact on the free market. Brexit was a sign of things to come if things don't change: people are willing to vote for "the unknown" because the status quo isn't working for a majority now.

dunstonh

pp556677 said:

I have bee reading articles about the OTS report that recommended aligning income tax and CGT.

Surely this would make investing outside of ISA / SIPP extremely unattractive.

What are your thoughts?

It will just go back to how it used to be before the drops in CGT.   The life assurance tax wrapper will come back into play again.  
However, you can run a portfolio of several hundreds of thousands of pounds unwrapped without suffering CGT 

N1AK

pp556677 said:

Surely this would make investing outside of ISA / SIPP extremely unattractive.
What are your thoughts?

That this is a largely false premise. Most people will find the ISA / SIPP allowances more than sufficient for their investments.

For people where those allowances aren't sufficient to judge attractiveness you have to look at alternatives. Consider a practical example: Someone has £600k (in addition to their home, pension, ISAs, and emergency saving needs) available for savings or investments. They are a higher rate tax payer. What option that is more attractive could they avail themselves of instead?

Thrugelmir

silvercue said:

MaxiRobriguez said:

I welcome increases to CGTs, dividend taxes and carefully crafted taxes on unearned wealth.
...
The tax system needs to adapt to reflect that asset pricing is determining cost/quality of living more than income from employment.

It is not just the very wealthy that could be impacted.   I have a normal job, but I am trying to make money from Stocks and Cryptos.  I started with £100 and added what I could afford as I went along and through extensive research and taking of risks whilst trying to be shrewd - I have started to see some real gains.  

Ask yourself what you know that the bigger market doesn't. Without an edge you are unlikely to excel. 

ChilliBob

dunstonh said:

pp556677 said:

I have bee reading articles about the OTS report that recommended aligning income tax and CGT.

Surely this would make investing outside of ISA / SIPP extremely unattractive.

What are your thoughts?

It will just go back to how it used to be before the drops in CGT.   The life assurance tax wrapper will come back into play again.  
However, you can run a portfolio of several hundreds of thousands of pounds unwrapped without suffering CGT 

Is this the offshore bond via a life insurance provider? This has been mentioned to me a few times. It seems if you're not a higher income tax payer you benefit the most (which would be my case) when you factor in the tax to bring funds back or out eventually, after say 10 years.

It seems a complex, but attractive option, but aside from tax savings one needs to factor in what slice is taken in fees from an ifa setting it up and managing it. I like the idea but I don't like the fw t I don't fully have control and understanding of it! 

Apodemus

Old_Lifer said:

I can remember then CGT was first introduced.  Even standard rate  taxpayers were charged  41.25% tax on all gains made within 12 months . 

Not quite! You are possibly forgetting that we had indexation back then, which (coupled with high rates of inflation) greatly reduced the CGT actually payable.

Old_Lifer

I have been investing for over 50 years and was around when   CGT was first introduced in the  mid 1960's.

Gains made within one year were taxed as income which for a standard rater taxpayer was 8s 3d in the £  (i.e.  41.25%)

There was no indexation then,  that came much later.

Inflation only started to take-off towards the mid-1970,s  following the 1973 Oil Crisis.