[Finance] Do you charge your kids rent ?

[Tim Over Whelmed]

Son working FT (aged 19), pays us around £300 a month, at College lad (17) doesn't yet although he has a McJob outside of college which means he pays for more of his own things now

 

[KZNSeagull]

Economically/fiscally I’ve never been a socialist, hard to pin down, but probably centre right and wanting a decent safety net for the vulnerable etc.

But surprising myself, I minded that something needs to change. The UK is increasingly haves and have-nots. The haves go way beyond a few landowning Tory supporters. Southern England has imho many 100,000’s of folk in £1m plus homes, with a couple of buy to lets with very significant equity, and the best part of £1m in SIPP’s/ISA’s. Able to get their kids onto the property market when young, able to set up lucrative SIPP’s running for 18 year olds in the family.

Whilst the rest are destined to work to 70, unable to get on the property market and so bound to high rents for good.

Something’s got to give. I’d wager that Starmer won’t do anything significant about the above. Taking 0.5% a year in wealth tax from toffs will barely touch the sides.

I’d be interested to know what @1066familyman, @Machiavelli and @Harry Wilson's tackle think.

A thought that occurred to me this morning, probably a load of crap but will state it anyway:
One thing the pandemic showed is that this country is rubbish at means testing. The government were giving away money to people who didn't need it and still are with the energy price cap. If they sorted means testing out properly, they could means test everything from benefits including child benefit, council tax and, shock horror, the NHS. It could be tapered much like income tax and student loans (ie you only pay x% of income over a certain level) so there isn't a massive cliff edge. Loads of talk this morning about the NHS, let these rich buggers with loads of spare cash contribute more towards their health care at the point of use. Wealth taxes will be circumvented, this couldn't be.

 

[Thunder Bolt]

A thought that occurred to me this morning, probably a load of crap but will state it anyway:
One thing the pandemic showed is that this country is rubbish at means testing. The government were giving away money to people who didn't need it and still are with the energy price cap. If they sorted means testing out properly, they could means test everything from benefits including child benefit, council tax and, shock horror, the NHS. It could be tapered much like income tax and student loans (ie you only pay x% of income over a certain level) so there isn't a massive cliff edge. Loads of talk this morning about the NHS, let these rich buggers with loads of spare cash contribute more towards their health care at the point of use. Wealth taxes will be circumvented, this couldn't be.

The problem with means testing is that it takes a vast number of staff to do it, which costs money in wages etc, and many more civil servants.

 

[KZNSeagull]

The problem with means testing is that it takes a vast number of staff to do it, which costs money in wages etc, and many more civil servants.

It shouldn't do really if their IT was half decent with data shared from HMRC to the relevant departments using NI numbers. Which it almost certainly doesn't do now and is part of what I mean by doing means testing properly. Other countries manage it, I am sure we can (unless they outsource it to Capita of course)

 

[Machiavelli]

A thought that occurred to me this morning, probably a load of crap but will state it anyway:
One thing the pandemic showed is that this country is rubbish at means testing. The government were giving away money to people who didn't need it and still are with the energy price cap. If they sorted means testing out properly, they could means test everything from benefits including child benefit, council tax and, shock horror, the NHS. It could be tapered much like income tax and student loans (ie you only pay x% of income over a certain level) so there isn't a massive cliff edge. Loads of talk this morning about the NHS, let these rich buggers with loads of spare cash contribute more towards their health care at the point of use. Wealth taxes will be circumvented, this couldn't be.

Neither income tax nor student loans are tapered (unless I'm completely misunderstanding your point).

 

[Thunder Bolt]

It shouldn't do really if their IT was half decent with data shared from HMRC to the relevant departments using NI numbers. Which it almost certainly doesn't do now and is part of what I mean by doing means testing properly. Other countries manage it, I am sure we can (unless they outsource it to Capita of course)

Therein lies a huge problem. As a retired Civil Servant, I can tell you, IT servers were rubbish, and I also know an IT person working within the NHS who would agree.

 

[KZNSeagull]

Neither income tax nor student loans are tapered (unless I'm completely misunderstanding your point).

Tapered is probably the wrong word. Thresholds is probably what I mean. You only pay x% on the amount over each threshold as per income tax.

 

[KZNSeagull]

Therein lies a huge problem. As a retired Civil Servant, I can tell you, IT servers were rubbish, and I also know an IT person working within the NHS who would agree.

Yes I know, but it needs sorting. The amount of info required out of HMRC would be minimal - Name, address, NI Number and indicators as to what level of rich bugger you are, or not.

 

[Machiavelli]

Tapered is probably the wrong word. Thresholds is probably what I mean. You only pay x% on the amount over each threshold as per income tax.

Income tax increases over certain thresholds (all of which have been frozen for a while). Not sure this is what you're trying to convey. Maybe you're thinking of national insurance, which you stop paying over a certain amount.

 

[KZNSeagull]

Income tax increases over certain thresholds (all of which have been frozen for a while). Not sure this is what you're trying to convey. Maybe you're thinking of national insurance, which you stop paying over a certain amount.

No, you only start paying income tax over £12700 or whatever it is and you only pay tax at 20% on money earnt over that. That's what I mean. So the means testing would only kick in at a certain threshold, and you would only pay the additional x% on income over that threshold(s). Or in the case of benefits, your benefits would be reduced by x% where your income is over that threshold(s). So it is not a cliff-edge - all or nothing, but graduated. Maybe that is the correct word.

 

[Weststander]

Neither income tax nor student loans are tapered (unless I'm completely misunderstanding your point).

Coincidentally, I was explaining the injustice of the student loan system to my parents earlier. We know a family sitting on £2.5m of properties, the parents on fantastic pensions for life (one final salary). Completely legitimately they've been able to tailor their household income to less than £50,779 per annum, for the 4 years their kids in total are at uni. Resulting in 100% SLC maintenance loans for the 4 years, for each kid.

Whereas people sitting on little wealth but earning say £71k gross, easily done with a couple on £45k and £26k. get zero help with uni maintenance.

I wonder if these inequities are just a mistake/not thought through, or to aid the rich who can arrange their affairs differently whilst the offspring are at uni?

 

[KZNSeagull]

Coincidentally, I was explaining the injustice of the student loan system to my parents earlier. We know a family sitting on £2.5m of properties, the parents on fantastic pensions for life (one final salary). Completely legitimately they've been able to tailor their household income to less than £50,779 per annum, for the 4 years their kids in total are at uni. Resulting in 100% SLC maintenance loans for the 4 years, for each kid.

Whereas people sitting on little wealth but earning say £71k gross, easily done with a couple on £45k and £26k. get zero help with uni maintenance.

I wonder if these inequities are just a mistake/not thought through, or to aid the rich who can arrange their affairs differently whilst the offspring are at uni?

They shouldn't be allowed to get away with arranging their affairs to minimise their income. Ridiculous. That's the sort of thing that needs stopping.
I wouldn't be surprised if it is a mistake though - I remember when Tax Credits first came in when a husband and wife could earn £49,999pa each and both get tax credits, but a single income family earning £50,001 didn't get them.

 

[Machiavelli]

Coincidentally, I was explaining the injustice of the student loan system to my parents earlier. We know a family sitting on £2.5m of properties, the parents on fantastic pensions for life (one final salary). Completely legitimately they've been able to tailor their household income to less than £50,779 per annum, for the 4 years their kids in total are at uni. Resulting in 100% SLC maintenance loans for the 4 years, for each kid.

Whereas people sitting on little wealth but earning say £71k gross, easily done with a couple on £45k and £26k. get zero help with uni maintenance.

I wonder if these inequities are just a mistake/not thought through, or to aid the rich who can arrange their affairs differently whilst the offspring are at uni?

I might have to look at maintenance loans and their details in a few years time. In terms of universities financing, the model is falling apart at the seams. There will be disruption in the sector for a while ahead. The current government aren't interested in addressing the issue, and the next one will (rightly, in my view) consider that there are more pressing priorities to tackle first.

 

[Live by the sea]

Well the middle classes could stop the practice of taking pretend housekeeping money from their kids then giving it back again for starters.

Jokes aside, something really does need to be done. Perhaps increasing inheritance tax, closing tax loopholes, and then ring fencing that money to plough back into more social housing?

It's of course likely that if the figures were done on the above then even that would barely touch the sides either. However, any UK Government that is actually serious about 'levelling up' needs to realise that carrying on as we are is only ever going to continue to increase the alarming gap between the haves and have nots. That isn't healthy for any society.

Don’t agree with raiding inheritance tax . There has to be an incentive for people to work hard and do well in life and for many people that includes making sure their children are well looked after . There’s always going to be a gap between wealthy people and the less well off but that’s the same in most societies unless they are communist and even there everyone is not the same .

I think we should concentrate more on our schools so that kids achieve their potential as much as possible , however some people being cleverer , more business minded or just plain lucky with timing etc in certain decision making is always going to be there , you can’t really level that up .

 

[serendipity]

I come from an age when it was fairly standard to pay housekeeping. I went to work in 1974 and paid £5 per week out of my £16 wage. We were working class. By my own sterling efforts we had climbed to the great heights of lower middle class, by the time we had kids. Neither of the kids have ever paid a penny and I am still financing them when they are married with their own kids. I can blame no-one but myself.

 

[B-right-on]

My eldest, now 33, paid £100 a week when she was working full time from 18-20. At 20 she moved out for a couple of years to live with a feller. That split up and she moved back.

I agreed with her not to pay any rent as long as she saved £500 a month which is what she was paying rent and bills (half) in her flat, as long as she saved it towards a property deposit.

After 18 months she had £13k saved so we took a slice out of the home equity and got her onto the property ladder around 8 years ago now in a small 2 bed flat in Lancing (since moved to a 3 bed semi).

Interesting out of about 6 of her mates all got new lease cars, new clothes, out all the time etc . and she drove an old banger, would only go out 1x a week where her friends went out a lot more so she'd save the money and was the only one at the age of 25 who had their own place.

 

[Weststander]

Don’t agree with raiding inheritance tax . There has to be an incentive for people to work hard and do well in life and for many people that includes making sure their children are well looked after . There’s always going to be a gap between wealthy people and the less well off but that’s the same in most societies unless they are communist and even there everyone is not the same .

I think we should concentrate more on our schools so that kids achieve their potential as much as possible , however some people being cleverer , more business minded or just plain lucky with timing etc in certain decision making is always going to be there , you can’t really level that up .

I used to think the same as you, but the gap imho’s become obscene. Money has always made money, but it’s taken off exponentially. A couple with a valuable house and say an flat or two they retained before a couple, can easily be sitting on £2.5m of assets. Purely through the luck in asset values accelerating away 1995 to date. This is then exacerbated by £120k deposits for the kids to get on the property market. The grandparents pile dosh into the SIPP’s of their next two generations. I see these scenarios, this is really happening. The virtuous cycle continues.

This isn’t through people working their way through tortuous professional exams or putting everything on the line with a business idea.

Something’s got to give. Millions are homeless, many more bound to rents eating up much of their salaries.