I have a bone to pick with our tax system

chesky369

I don't quite understand the various maths here. You say you have maxed out your ISAs and discuss other kinds of investment/savings. You talk about a possible £50k bonus and you earn £41.5k.

Then you say you can't afford a one-bedroom flat in a good area. Now, I know prices are bad in London but you can raise an easy mortgage of £143,500, without even thinking about the 'extras' mentioned above. You must have been able to save massively - unless you've only been earning this amount for a year.

bored_of_debt

liitleblackcat wrote: »

The real questions are "Is income tax the fairest way to pay for everything we expect from the state" and "Is there a fairer way to raise money for the NHS, old age pensions, defence, etc, etc".

I suspect most people would prefer income tax - with better paid people paying relatively more - than any other form of taxation (perhaps apart from VAT?). Nobody seems to like Council Tax, Fuel Duty or Inheritance Tax.

I think it's a little unfair for somebody who earns (being the key word) say £45K to have to pay more tax to cover things such as the NHS than somebody who earns say £20K when both receive exactly the same benefit from the NHS...

I know that some people have it easy and land well paid jobs with little effort but otherwise I see it as a little unfair...

I'm not looking to open a can of worms and I can appreciate that it's probably not as black and white as I probably think but it does annoy me.

rant over lol

john_kane_2

purch, ouch at 60%! that is ridiculous! i need to look into the whole pension aspect, i have a work pension but currently they pay 8% and i pay nothing, i need to start contributing a little. but i dont like the way you can only get your hands on it so much later in life. i feel i have the financial sense not to simply get to retirement age and think 'uh oh, how am i going to buy food now!?!'

If inflation is at 3% and you earn interest at 6% then you are "winning" by 3% and I don't see the problem with being taxed (at 40% if that's your bracket) on the 3% that you are up by.

maybe, does make some sense. but i still just disagree with the fact that i have had to spend countless hours studying to get into a very dull job but pays well, and im handing money over to someone who has never bothered doing anything. great for him, i guess you cant blame them, but you can those who decide this is an appropriate system to govern our country.

I don't quite understand the various maths here. You say you have maxed out your ISAs and discuss other kinds of investment/savings. You talk about a possible £50k bonus and you earn £41.5k.

Then you say you can't afford a one-bedroom flat in a good area. Now, I know prices are bad in London but you can raise an easy mortgage of £143,500, without even thinking about the 'extras' mentioned above. You must have been able to save massively - unless you've only been earning this amount for a year.

my exact situation is:
£130k in bank from poker which i barely have time to play anymore. of this £9k in a cash ISA and around £12.5k in equity ISA. the rest is mainly in savings with £15k in spreadbetting and bits and bobs elsewhere.

salary of £26.5k, but i also make passively about £10k per year from affiliate work (though this could easily drop at any time, just got to hope players keep playing on the sites ive signed them up to). i only mentioned £41.5k as it is roughly = higher band (£36k) + personal income allowance (£5.5k)

anyways, regarding my OP, my problem summarised is:

i can put a little aside every month. if i put it into savings, this will be paying 40% tax (becuase of salary+other taxable income), so i'd get at best 4% return.

should i instead put this into equity+commodity funds because then i wont be paying any tax on gains due to my capital gains allowance of £9k or so, which i currently don't use up.

the idea would be say i make £7k profit this year from investing in equities and commodities, i could then cash that out, put it into next year's equity ISA.

thanks for your thoughts and further replies much appreciated.

chesky369

So, in actuall fact, your situation is very different from that which you stated at the beginning - you don't even pay higher band tax yet, except possibly on your 'Saturday' job. You say you can't even get a one-bedroom house in a decent area. Well, if you hang around a few months more, you should be able to get something for 250,000 - try Property Snake uk to see bargains. I wouldn't bother yet about your pension if your company is putting in 8% on your behalf - wait until after you've bought yourself somewhere to live.

If I were you, I'd be more worried long term about spending my time in a job which depresses me.

john_kane_2

So, in actuall fact, your situation is very different from that which you stated at the beginning - you don't even pay higher band tax yet, except possibly on your 'Saturday' job.

its a similar scenario. my problem is that if i have £100k in bonds earning around 6.7% on average then that £6.7k, in addition with £26.5k salary and £10k affiliate work will push me into higher band i.e. with money i can save from my monthly income, i may not actually want to put it in savings account now, i may want to put it in investments where i do not pay 40% tax as instead i use my cg allowance.

Well, if you hang around a few months more, you should be able to get something for 250,000 - try Property Snake uk to see bargains. I wouldn't bother yet about your pension if your company is putting in 8% on your behalf - wait until after you've bought yourself somewhere to live.

i may stay living at home till i can (hopefully) qualify as an accountant and then mortgage payments will be a lot easier. the aim is £100k deposit, £200k mortgage from a ~£55k salary.

job isnt fun, but its not too bad except for when exam time comes. and heck, most jobs arent fun, thats why we get paid. and so long as there is something id rather be doing than being at the workplace doing my job, id rather not be doing it. unless i was a professional golfer, then every job would suck relatively.

all imo and thanks for your thoughts. ill check out property snake now for interest.

baby_boomer

John - as you know you will soon be joined by millions of students who will be far more indebted that ever before.

Your voice for tax relief for those in the lower echelons of the system, directed at governments of all political persuasions, will not be a lone one.

MrSafeGaz

john_kane wrote: »

£130k in bank from poker

If you are consistent enough at poker to make this kind of money then I am a little confused as to why you aren't continuing this as more of a priority. Obviously it is not as secure as a job but £130k is alot to gain (tax free) unless you got lucky on a big tournament or two?

chesky369

re your post 16 - sweetie, you're doing too much accountancy - get out and get a life, it's more important than the sums you're doing.

john_kane_2

this may sound a bit crazy, but ive met far more people and had more of a life (varied one at least) in the last 6 months since i started my job than i would have playing poker. im in audit for a big company, so every few weeks im meeting new people my age and generally of similar mindsets. sure there are aspects i really dislike (getting up in the mornings, cramming for exams) but ive spent very many days as a student playing during the day then getting hammered during the evenings. i could do this still and make a decent amount, but meh, i fancy a change. sure i may regret it, but i want to give something else a shot. both lifestyles could work out really well depending on how i put on mind to them. and like everything, they both have some great times and both have some terrible times.

mrsafegaz, its been grinding at cashgames, mainly 2-4nl, biggest tourney win is only a couple thousand unfortunately, i never really play them though.

do you know:

i can put a little aside every month. if i put it into savings, this will be paying 40% tax (becuase of salary+other taxable income), so i'd get at best 4% return.

should i instead put this into equity+commodity funds because then i wont be paying any tax on gains due to my capital gains allowance of £9k or so, which i currently don't use up.


(put in bold for anyone new to thread wondering what ive been rambling about)

many thanks for your replies

jiggy2

hi,

just some food for thought..

the new CGT rate for 2008/09 onwards is 18% so you would not be paying 40% tax on the stocks and shares investment that you would pay on interest.

that means the shares/ unit trusts etc would need to earn less than the 4% net figure you have quoted to be comparable after tax i.e. say £1000 interest net is £600 (after £400 tax) but you would need stocks and shares to show capital gains of about £731 to earn the net return of £600 (assuming no annual exemption). based on the new rules therefore better to make capital gains rather than income..

over the long term the target of over 4% net would be met easily....but if u intend to buy a house in a year u would not be guaranteed of that return....

Jig

P.S. 8% pension contribution by employer...sounds really good...does their cont increase if u put anything in? or even via salary sacrifice?