Labour taxation plans

[theartfullodger]

May I quote the Telegraph. on Sunak's kind gift of the highest tax burden for quite some time....

https://www.telegraph.co.uk/business...tax-burden-70/

[SouthernDave]

(Minor point: I believe the rate will be 1.25%, not 1.5%.)

My understanding is that there will be an equivalent rise in the tax rate for income from dividends, so shareholders will pay (and it will also avoid the tricks people who own their own companies use to masquerade income as dividends). However, it will not apply to capital gains and other income that is not subject to National Insurance (i.e. the stuff mostly paid to rich people).

Another interesting thing is that after a year NI will revert to its current years and a separate 1.25% Health and Social Care Levy will be introduced (that will appear as its own line on your payslip). I assumed this was just a presentational thing but the new levy will also be paid by pensioners who work (whereas the NI increase will not because pensioners do not pay NI).

The limited company system has been abused for too long by people trying to save on tax by claiming they are a company. I know loads of people of set themselves up as limted companies and have now been caught by IR35. They have spoiled it for those of us who have proper companies to rub who used to enjoy the (small) benefits of being directors. Because theres not many benefits to running the system that all employed people enjoy.

[SouthernDave]

Agreed. Peoples care should not be down to those who work hard, to take from their labours. The levy is a joke and im disappointed in the conservatives for doing it.

[jpucng62]

I do think its tough that the cost of the NHS & Social Care is being shovelled onto the young, when those who are closer to needing care may pay nothing at all. The cost is huge and we need to spread it amongst as many people as possible.

On the other hand if the Govt stopped wasting money on its pet green agenda we might not need to raise extra money to pay for it!

[alex1]

She was specifically talking about the 1.5% NI levy for the NHS, which is applied to income from wages but not rent or other investments.

(Minor point: I believe the rate will be 1.25%, not 1.5%.)

My understanding is that there will be an equivalent rise in the tax rate for income from dividends, so shareholders will pay (and it will also avoid the tricks people who own their own companies use to masquerade income as dividends). However, it will not apply to capital gains and other income that is not subject to National Insurance (i.e. the stuff mostly paid to rich people).

Another interesting thing is that after a year NI will revert to its current years and a separate 1.25% Health and Social Care Levy will be introduced (that will appear as its own line on your payslip). I assumed this was just a presentational thing but the new levy will also be paid by pensioners who work (whereas the NI increase will not because pensioners do not pay NI).

[SouthernDave]

The current prevailing form of capitalism, where the inequality between the few super rich people and everyone else is vast and growing is worse than the type of capitalism I grew up with.

For the record, I don't think socialism is a viable way to run anything - but there's got to be a better balanced version of capitalism than this one.

noone has yet figured out how to move money to the bottom of the heirachy without destabilising the system. Money will alway work its way back to the way it is with few having the majority

[Neelix]

I've just read what she said in more detail.

Nurses pay the 1.5% levy and investment bankers don't.

How did you work that out?

I'm fairly certain they will

[Turbine Terry]

Rachel Reeves R4 this am told the interviewer that Labour (when in power) would raise money by taxing those with BTL property much more than at present, she opined it was wrong that “they” were “getting away with it”. No challenge from BBC or fact check as to present tax. You are warned.

The party not in power always makes bold and often hollow claims like this as they want the sound bite/headline and don't need to give any thought to unintended consequences or actually doing as they say. If the RRB (Renters Reform Bill) and EPC changes and more tax increases were all too severe it would simply mean even less landlords remain, and so speed up the already dire societal issues caused by the existing lack of rental accommodation and high rental prices. There is already considerable noise to stop hammering landlords so much and it can be expected to get louder if/as more landlords sell up. Note that the RRB and new EPC regs cans are being kicked down the road and so in no rush to be made law. IMO, and others who are much bettered positioned to offer opinion, any new taxes and regs will be tougher than they are now but not so bad as to cause too much of a BTL sell off as that simply creates more, and likely worse headaches, for the government to ‘fix’. The government tend to be stupid but not that stupid as they generally seek advice from educated advisors.

I am always an optimist and try to look on the bright side and I can generally find a solution to most business problems thrown my way, and I know taxation is an emotive subject, but I am always amazed about the numbers of people who have issues with taxes; taxes are a fact of life and the rates are well publicised and so easy to factor into any business/investment decision. Yes, taxes go up and down, but I cannot recall for decades them having gone up or down by huge amounts at once. Even the recent clamp down on BTL mortgage interest was well publicised and brought in with good warning and stages covering several years, giving us all time to plan. Rents have increased since partly perhaps due to some landlords having sold up, meaning that the tax rise was at least partially offset by higher rents for us LL’s that remain.

I want a well run and well ordered society with good services and so I have no issue with paying a fair and reasonable amount of tax. Lets face it the capital gains/property price increases that us landlords all benefit from are not increases that we have really created ourselves (unless we have upgraded a property extensively) they are ‘free’ increases created by a reasonably well functioning society and economy that past and present government policies have helped create. Don’t get me wrong I don’t want taxes to increase and I am a capitalist. I also think that whatever party is in power, and like most elected officials (don’t get me started on planning committee members) are all, on a good day, a bunch of power seeking, egotistical, lying, cheating, hypocritical, amoral, narcissistic, sociopathic sleaze bags. However, due to the bulk of capital gains/property price increases not normally being a direct consequence of our own hard work I see no issue with paying some back to society in a fair CGT rate at property disposal time. I would much rather have higher CGT and lower income tax (as opposed to vice versa) as I am in BTL’s for life and use them as a cash flow generator with any property value increases seen as a nice bonus at remortgage time, and so I am only really concerned with CGT or IHT just before it is my time to feed the daisies . We can still remortgage without paying any CGT, and we have a favourable NI position (for now!) on rental income as it seen as investment income.

[jpkeates]

The current prevailing form of capitalism, where the inequality between the few super rich people and everyone else is vast and growing is worse than the type of capitalism I grew up with.

For the record, I don't think socialism is a viable way to run anything - but there's got to be a better balanced version of capitalism than this one.

[boletus]

Capitalism is the worst form of economic system, except for all the others.

[jase222]

I think if Labour do get in there will be nothing in the pot and they will have very little scope to do anything anyway.

[jpkeates]

The problem with capitalism is that, eventually, other people run off with your money.

[boletus]

The problem with socialism is that you eventually run out of other peoples' money.

[jpkeates]

Rachel Reeves R4 this am told the interviewer that Labour (when in power) would raise money by taxing those with BTL property much more than at present, she opined it was wrong that “they” were “getting away with it”. No challenge from BBC or fact check as to present tax. You are warned.

I've just read what she said in more detail.
She was specifically talking about the 1.5% NI levy for the NHS, which is applied to income from wages but not rent or other investments.

The labour party have previously said that this is unfair, because it taxes working people more highly than people with other forms of income.
Nurses pay the 1.5% levy and investment bankers don't.

[SouthernDave]

The whole thing is a mess. Global warming etc isnt going anywhere, whatever is coming is coming and we may as well spend the time and money getting ready for whatever they think it might mean