[Finance] Rachel Reeves to reveal £20bn shortfall left by Conservative Government

Greenbag50 · Jul 30, 2024

nicko31 said:
Like VAT and charitable status on private schools its a form of state sponsorship of the British class system.

It ensures inequality is entrenched through the generations, wealthy parents get to pass their wealth down tax free to the kids. They then enter the housing market high on the parents supply, outpricing poorer kids.

Tax the dead, its the living that need a break.

Rubbish….. you’re taking about the high end of earners. The top 5%.
I am not in that bracket, far from it.
Parents (me, my wife) work bloody hard for 40 years to provide for their kids. I want to leave my kids something they can build their life from, from my hard work.
Why is hard work, ambition, hard work, be better than your parents, somehow seen to weathly and the state needs to take more to be penalised??
You should always strive and encourage your kids to better than you were.

Weststander · Jul 30, 2024

Bozza said:
That's a very valid point.

Somewhere in government systems, it should have been easy to identify my mum's pension was very low, so it would have been possible to resolve it proactively.

I suspect because HMG systems don’t look at all 53m adults and have all their income data. Benefits including pension credit are non taxable, HMRC don’t receive that information. In addition, independent taxation in place since 1990 means household income is not recorded. Whereas benefits claims are based on household income, a process started by the claimant.

A new system would be required. With opposition from anti data harvesting entities/types.

peterward · Jul 31, 2024

Greenbag50 said:
Rubbish….. you’re taking about the high end of earners. The top 5%.
I am not in that bracket, far from it.
Parents (me, my wife) work bloody hard for 40 years to provide for their kids. I want to leave my kids something they can build their life from, from my hard work.
Why is hard work, ambition, hard work, be better than your parents, somehow seen to weathly and the state needs to take more to be penalised??
You should always strive and encourage your kids to better than you were.

100% this.

I pay my mortgage from my net pay, and like most people will end up paying 2.5-3x the purchase price in interest.

I'm taxed on PAYE on just about everything else via VAT and my family home where my son is raised should not be a taxable commodity when I die imho.

One day I'm there and my son can live in the only home he's ever known, the next day I die and he can only stay if he pays a massive tax bill else he's forced to sell his home to pay my death tax.

I can live with most taxes but I find inheritance heinous, as so much emotion and memory is in many people's family homes, paid for by taxed net money, that they're then forced to sell to fund others.

It would be far fairer to at least only tax under CGT rules if the child wanted to sell in future.

Not force them too because they can't fund the huge death tax on parent.

timbha · Jul 31, 2024

peterward said:
100% this.

I pay my mortgage from my net pay, and like most people will end up paying 2.5-3x the purchase price in interest.

I'm taxed on PAYE on just about everything else via VAT and my family home where my son is raised should not be a taxable commodity when I die imho.

One day I'm there and my son can live in the only home he's ever known, the next day I die and he can only stay if he pays a massive tax bill else he's forced to sell his home to pay my death tax.

I can live with most taxes but I find inheritance heinous, as so much emotion and memory is in many people's family homes, paid for by taxed net money, that they're then forced to sell to fund others.

It would be far fairer to at least only tax under CGT rules if the child wanted to sell in future.

Not force them too because they can't fund the huge death tax on parent.

Agreed although I’m not sure about your penultimate paragraph. People won’t move if CGT comes into it. Just apply CGT on 2nd + homes.

Mellor 3 Ward 4 · Jul 31, 2024

Weststander said:
It is more complicated than that. These are still fantastic defined benefit pension schemes. From 2015 career average.

Mrs.W’s in the NHS scheme. 9.8% employee contributions, so really just a 7.84% reduction in net pay. Overall 30.48% is contributed, the public purse meeting the 22.6% difference.

But the days of retiring at 60 on 2/3’s final salary are being phased out.

BTW my wife works in the NHS too but do we really think that the country can continue to contribute that figure to 6 million public sector workers?

beorhthelm · Jul 31, 2024

timbha said:
Agreed although I’m not sure about your penultimate paragraph. People won’t move if CGT comes into it. Just apply CGT on 2nd + homes.

it fixes itself. if you have a home and inherit a second, you'd pay CGT. if you live in a home you inherit then no CGT, until sold, or maybe not at all. point is, forcing people to sell up assets just so the government can take a slice on death is a pretty unpleasent way to raise revenue.

drew · Jul 31, 2024

peterward said:
100% this.

I pay my mortgage from my net pay, and like most people will end up paying 2.5-3x the purchase price in interest.

I'm taxed on PAYE on just about everything else via VAT and my family home where my son is raised should not be a taxable commodity when I die imho.

One day I'm there and my son can live in the only home he's ever known, the next day I die and he can only stay if he pays a massive tax bill else he's forced to sell his home to pay my death tax.

I can live with most taxes but I find inheritance heinous, as so much emotion and memory is in many people's family homes, paid for by taxed net money, that they're then forced to sell to fund others.

It would be far fairer to at least only tax under CGT rules if the child wanted to sell in future.

Not force them too because they can't fund the huge death tax on parent.

Couple of things.
1. You assume your son is not going to live anywhere else and hang on until you die so he can only ever live in one house!
2. You assume that's where he wants to live for the rest of his life!!

As for IHT, your son has done nothing to earn that income other than by fate of birth. Why shouldn't he have to pay income on that windfall?

Would you be happier with a wealth tax?

Weststander · Jul 31, 2024

Mellor 3 Ward 4 said:
BTW my wife works in the NHS too but do we really think that the country can continue to contribute that figure to 6 million public sector workers?

Something will have to give one day.

People on fantastic pensions for 25 years plus, based on say 50 years work. The sums don't add up.

All western nations face this ticking time bomb.

Nobby Cybergoat · Jul 31, 2024

peterward said:
100% this.

I pay my mortgage from my net pay, and like most people will end up paying 2.5-3x the purchase price in interest.

I'm taxed on PAYE on just about everything else via VAT and my family home where my son is raised should not be a taxable commodity when I die imho.

One day I'm there and my son can live in the only home he's ever known, the next day I die and he can only stay if he pays a massive tax bill else he's forced to sell his home to pay my death tax.

I can live with most taxes but I find inheritance heinous, as so much emotion and memory is in many people's family homes, paid for by taxed net money, that they're then forced to sell to fund others.

It would be far fairer to at least only tax under CGT rules if the child wanted to sell in future.

Not force them too because they can't fund the huge death tax on parent.

There is a certain unfairness to IHT, but the state taking your money under any circumstances is unfair to a degree.

The fact is that the state needs to gain revenue. It gained £7.5bn last year from IHT. This will likely have to go up in the budget, let's call it £10bn.

I'm totally happy to listen to suggestions that IHT should be abolished, but anyone arguing for it should come up with alternatives from where this revenue should be raised.

Jim in the West · Jul 31, 2024

peterward said:
100% this.

I pay my mortgage from my net pay, and like most people will end up paying 2.5-3x the purchase price in interest.

I'm taxed on PAYE on just about everything else via VAT and my family home where my son is raised should not be a taxable commodity when I die imho.

One day I'm there and my son can live in the only home he's ever known, the next day I die and he can only stay if he pays a massive tax bill else he's forced to sell his home to pay my death tax.

I can live with most taxes but I find inheritance heinous, as so much emotion and memory is in many people's family homes, paid for by taxed net money, that they're then forced to sell to fund others.

It would be far fairer to at least only tax under CGT rules if the child wanted to sell in future.

Not force them too because they can't fund the huge death tax on parent.

The current IHT threshold is £500k If it includes property that's being passed on [or double that for a couple]...that's a decent amount in anyone's books. But if you're worried about your son not being able to pay the IHT bill (eg: because he wants to carry on living in the house) you can simply take out a life insurance policy that pays out £x on your death (where x is the approx amount of IHT that will arise). There are other ways to deal with the risk...I'm not an expert, but went through the various options a few years ago with my financial advisor, as my father was in very poor health. If this issue is really worrying you, I'd encourage you to speak to a financial advisor.....it's pretty straightforward to resolve.

Uh_huh_him · Jul 31, 2024

Nobby Cybergoat said:
There is a certain unfairness to IHT, but the state taking your money under any circumstances is unfair to a degree.

The fact is that the state needs to gain revenue. It gained £7.5bn last year from IHT. This will likely have to go up in the budget, let's call it £10bn.

I'm totally happy to listen to suggestions that IHT should be abolished, but anyone arguing for it should come up with alternatives from where this revenue should be raised.

This.

Practically every tax involves taxing income, that someone has already paid tax on.
That's how an economy works.
IHT is no more or less unfair than any of the other taxes.

Mellor 3 Ward 4 · Jul 31, 2024

Weststander said:
People on fantastic pensions for 25 years plus, based on say 50 years work. The sums don't add up.

Or 40 years pension for 30 years work (police etc.)

Bold Seagull · Jul 31, 2024

beorhthelm said:
it fixes itself. if you have a home and inherit a second, you'd pay CGT. if you live in a home you inherit then no CGT, until sold, or maybe not at all. point is, forcing people to sell up assets just so the government can take a slice on death is a pretty unpleasent way to raise revenue.

Around 4% of deaths result in an estate needing to pay IHT. Most people don't have to experience the unpleasantness of paying tax on an inheritance.

chip · Jul 31, 2024

£500K is a pretty modest house in my neck of the woods and a different proposition from when I lived in North Wales or Sheffield, perhaps it needs some localisation?

I've just received an inheritance on which tax was payable. I expect that I will not have spent this by the time I die so some of my son's inheritance will effectively be taxed twice. I'm not against IHT, it's perhaps less fair when there is more than one person inheriting. Maybe a personal allowance on cash inheritences would be fairer.

As for personal allowances and annual limits on pensionn contributions, not sure how this would work with final salary and/or salary sacrifice schemes if it was a single rate. Aren't our pension contributions meant to help fund this investment for growth we hear a lot about?

drew · Jul 31, 2024

Mellor 3 Ward 4 said:
Or 40 years pension for 30 years work (police etc.)

But you also need to look at how much they contribute to their pension. When I worked in the City, my pension contribution was about 5% of salary. Police contribute 14.25% of their salary to the pension pot.

schmunk · Jul 31, 2024

Uh_huh_him said:
Thanks I didn't know that, so it goes back to 47% after £125?
I suppose that's a slight annoyance, but so is every step up in income tax.
Realising I was going to lose 42% of my bonus was a bit of a pisser, but I'd still love to go back to the days when I used to get one.

Poor me, poor me, boo hoo hoo, etc. but in a recent year I earned a £20,000 bonus but received only £7,600 - all of it taxed at 62%.

Thunder Bolt · Jul 31, 2024

drew said:
But you also need to look at how much they contribute to their pension. When I worked in the City, my pension contribution was about 5% of salary. Police contribute 14.25% of their salary to the pension pot.

Firefighters contribute 11% to their pension pot.

Mellor 3 Ward 4 · Jul 31, 2024

drew said:
But you also need to look at how much they contribute to their pension. When I worked in the City, my pension contribution was about 5% of salary. Police contribute 14.25% of their salary to the pension pot.

Yep - get that.

I do think my point still stands though.

Weststander · Jul 31, 2024

Mellor 3 Ward 4 said:
Or 40 years pension for 30 years work (police etc.)

Aren't those days over for later entrants, dealt with in 2010? Much to the anger of various bodies, but the public purse simply can't afford to bankroll 40 year final salary pensions.

Weststander · Jul 31, 2024

Thunder Bolt said:
Firefighters contribute 11% to their pension pot.

Less tax relief.

Whilst the public purse effectively bankrolls 3x these %ages.

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