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

[LamieRobertson]

I'm no fan of Liz Truss, clearly - who is? - but is the "interest rates are high because of Liz Truss" really true? Her budget was a disaster, obviously, but if I compare UK interest rates with elsewhere, many countries experienced similar rate rises at the same time. Doesn't this indicate some sort of broader global factor(s) at play?

(Again I'll reiterate I'm not defending the abysmal Liz Truss, but is she to blame for interest rates rising globally at the same time?)


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Can you stop posting common sense or I’ll have to report you

 

[LamieRobertson]

The published figure is £325,000 but practically for a couple it's £1M. This is a good explanation

Thank you

 

[kevo]

Reeves is expected to make it explicit that she believes her predecessor deliberately did not act to address the looming spending shortfall. “Jeremy Hunt is going to have a lot of explaining to do,” said one source.

Rachel Reeves expected to reveal £20bn shortfall in public finances

Chancellor may raise some taxes in the autumn due to what Labour describes as its ‘shocking inheritance’ from Tories

www.theguardian.com

There's one solution to that - ask Dido Harding to give back some of the £37bn. Michelle Mone could chip in, too. And Matt Hancock's pub landlord.

 

[Nicks]

The problem with the Conservatives is they eventually run out of other people’s money to hand over to their mates

Didnt Gordon Brown sell all the gold at rock bottom price back in the day

 

[Westdene Seagull]

it's not the state's money though either. i think it's the framing of IHT, a tax on death and your inheritance which is something a lot of people spend their live working for (pass on something, give them something they didnt have, etc). most often people dont even qualify but still get annoyed at the concept of that. reframe it to tax the recipient, flat 20-30% rate on monies received. people accept income tax as quite normal, i reckon this would raise way more, more difficult to avoid, and help ease the abomination of probate.

Completely agree with this idea ( although I don't think IHT should even be a thing ). If we have to have IHT then charge it to the people that receive the money and register it as normal income.

A story - both my parents died back in 2021. Probate was a nightmare and thankfully a famous Albion fan came to my rescue. There were significant costs to using his firm's services but in the end paying for the services was worth it just to get it off my plate.

Anyway, my parents estate came to just over the £1m threshold - I had to pay some IHT on the extra. The problem is that the Probate service value property ( and shares ) at what is perceived value at the time of death.

The problem being is that a property is only worth what someone is prepared to pay for it - it takes no account of reductions in price once a potential buyer has had a survey. BUT you can't sell until probate has been issued - in my case the probate service fannied around for nearly two years. By the time I got probate all the properties had fallen in value - a lot to do with the lettuce Prime Minister. Equally not a single property sold for the guessed value - far below it. If the full value of the estate at time of sale was taken into account then there would have been no IHT to pay. To rub salt into the wound, HMRC investigated me for under valuing the properties in the first place !!!! I've never received anything from HMRC to say the investigation has been concluded one way or the other.

So taxing those that inherit money/assets as if it was income would :

> Stop people paying IHT when they shouldn't have
> The TRUE value of the estate is realised for IHT / income tax
> Probably raise more money
> Be fairer ( you shouldn't be taxed on a completely guessed amount )
> Allow for probate staff to be got rid of as probate would no longer be required ( and HMRC staff re-assigned ) thus saving tax payers money and making HMRC more efficient

It's an awful tax and administered in a shambolic way.

 

[Nicks]

Just to divulge a bit.
When my late Dad finally retired he was invited to a Forum in London by the Body shop and he was told "There is no point in saving for a rainy day when it's drizzling all the time now "
So they told me and my brother and sister they were going to sell their house and find somewhere to rent and go off and enjoy the money they had made in their lifetime. ( We all lived on a council estate until I was 18)
So they sold up and had the life of Riley up until he died 15 years later and we didn't begrudge them a bit for doing it.
I would love to do the same but my Mrs won't hear of it 🫣

 

[Milano]

The welfare state has been both a blessing and a problem for the last 80 years.
It's a blessing as it has been at the heart of living standards literally coming out of the gutter for a lot of people, and something I'm 'happy' to pay tax on.
It is a problem because some people abuse it, always have and always will (including that evil **** who sold most of it off in the 80s). I went to school with a girl who has made a career out of benefits. This 'knowledge' is now being passed down to her 6 kids (by 3 dads).
I've worked f***ing hard for 30 years to buy a house, it's still not quite paid off yet but I'll get there. She hasn't. I've paid taxes on everything, when I look at my tax over that time it's eye watering. She hasn't. A % of my taxes has gone towards housing, feeding and clothing her kids.
I have NO PROBLEM with this, that's what it's for. BUT why should my kids have to pay IHT on top of everything else? That I do have a real problem with. The 'argument' that her kids won't inherit so it's 'not fair' is frankly bullshit and only feeds the mindset of being entitled to something because someone else has it too.

You have to reduce the abuse of the welfare system or at some point it will actually collapse and no one wants that.

 

[Westdene Seagull]

Just to divulge a bit.
When my late Dad finally retired he was invited to a Forum in London by the Body shop and he was told "There is no point in saving for a rainy day when it's drizzling all the time now "
So they told me and my brother and sister they were going to sell their house and find somewhere to rent and go off and enjoy the money they had made in their lifetime. ( We all lived on a council estate until I was 18)
So they sold up and had the life of Riley up until he died 15 years later and we didn't begrudge them a bit for doing it.
I would love to do the same but my Mrs won't hear of it 🫣

And there in lies the problem with IHT - it doesn't encourage people to save or invest money. In fact, it does the exact opposite - makes people want to spend their money and assets before they die which in the long run costs the government / tax payer far more than IHT would bring in.

 

[LamieRobertson]

Great to have a thread that includes some politics and a frank exchange of views but remains civilised….i am on the right forum

 

[beorhthelm]

I'm no fan of Liz Truss, clearly - who is? - but is the "interest rates are high because of Liz Truss" really true? Her budget was a disaster, obviously, but if I compare UK interest rates with elsewhere, many countries experienced similar rate rises at the same time. Doesn't this indicate some sort of broader global factor(s) at play?

(Again I'll reiterate I'm not defending the abysmal Liz Truss, but is she to blame for interest rates rising globally at the same time?)


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not responsbile for interest rates, but enough politicans and media have parroted it's become fact. the mini-budget reaction was a a spike in bonds which reversed in about a month, and spooked lenders who were already twitchy.

 

[pb21]

I'm no fan of Liz Truss, clearly - who is? - but is the "interest rates are high because of Liz Truss" really true? Her budget was a disaster, obviously, but if I compare UK interest rates with elsewhere, many countries experienced similar rate rises at the same time. Doesn't this indicate some sort of broader global factor(s) at play?

(Again I'll reiterate I'm not defending the abysmal Liz Truss, but is she to blame for interest rates rising globally at the same time?)


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Around the time of her budget the unfunded tax cuts resutled in the interst rates on UK gilts to increase rapdily. Some people are still payign the price for that. It's true that she didnt directly affcet the BoE base rate.

 

[Machiavelli]

This. Latest government statistics are that 3.73% of estates paid IHT https://www.gov.uk/government/stati...mentary/inheritance-tax-statistics-commentary

As stated above, I'm selling my mum's house to pay for her care home costs. It has appreciated hugely in value because it was bought in 1969! Because she's 'downsized', the Residential Nil Rate Band continues. If there's money left when she does go then I may have to pay IHT and grin and bear it. What pisses me off isthe really rich can set up trust funds to avoid IHT (although this is getting harder to do apparently).

Well, I'm about to pay some IHT, and will find out how much in a few months -- it won't be huge -- but am about to receive a far larger pile of cash, and will no longer be living month-to-month as I have been throughout my working life. My parents grew up in the war, but they benefited from decades of peace thereafter, huge upward mobility and an economy that worked for all until the 1970s, and then house price inflation thereafter. My partner and I have worked far harder for less and less security than my parents did.
I'm hoping Reeves closes loopholes with IHT in her first budget as they're pretty transparent. One is the widely discussed one regarding agricultural land which is being exploited. Another is investing in start-ups which is exempt. And here's another that are being promoted by accountants based in tax havens:

Super-rich being advised how to avoid Labour tax clampdown, undercover investigation suggests

Revealed: Wealthy being pitched offshore products said to shelter fortunes from inheritance tax and capital gains tax

www.theguardian.com

 

[Bodian]

Whether true or not, penalising those who have scrimped and saved to purchase a family home when they pop their clogs is not the way forward.

Quite hard to 'penalise' someone who has died.

Those inheriting probably haven't done the scrimping and saving.

 

[Bodian]

And there in lies the problem with IHT - it doesn't encourage people to save or invest money. In fact, it does the exact opposite - makes people want to spend their money and assets before they die which in the long run costs the government / tax payer far more than IHT would bring in.

Not sure why spending your savings costs the government / tax-payer? Surely spending money instead of sticking it away is exactly what the government want, as it drives the economy and increases the tax-take?

 

[Westdene Seagull]

Not sure why spending your savings costs the government / tax-payer? Surely spending money instead of sticking it away is exactly what the government want, as it drives the economy and increases the tax-take?

Double edged sword - yes, spending helps the economy - more VAT and more income tax from those running the business you buy off. On the other hand, if people piss all their money up the wall before they need help such as social care then it costs the taxpayer money for their care, housing benefit etc.

 

[A1X]

Didnt Gordon Brown sell all the gold at rock bottom price back in the day

No, the UK still has over 310 tonnes of gold stored in the Bank of England

 

[Silverhatch]

You have to reduce the abuse of the welfare system or at some point it will actually collapse and no one wants that.

Absolutely look at that.

But also revolutionise taxation. Taxation hasn’t moved on since feudalism. A ‘tax’ is levied by an owner. It’s seen as a penalty. A better political and economic system must evolve so that your ability to ‘contribute’ to society’s wellbeing is seen as a positive. Until now that has been the domain of Uber-wealthy philanthropists.

 

[Machiavelli]

Double edged sword - yes, spending helps the economy - more VAT and more income tax from those running the business you buy off. On the other hand, if people piss all their money up the wall before they need help such as social care then it costs the taxpayer money for their care, housing benefit etc.

IHT only kicks in after 325k per child with a further c350k if you've got a property, so an estate can be worth £1m before IHT. That's a fair chunk to deal with social care. Incidentally social care has been conveniently avoided for the last 14 years by a party that claims it acts in 'the national interest'.

 

[Bold Seagull]

Not sure why spending your savings costs the government / tax-payer? Surely spending money instead of sticking it away is exactly what the government want, as it drives the economy and increases the tax-take?

I’m also a bit lost on why spending your money into the economy is a bad thing for the public purse?

Typically governments want us to save so that we can still spend when the economy struggles. The most stable economies ride out economic dips because people still have money to spend. Also why it’s crucial to have household incomes that outpace cost of living.

 

[Machiavelli]

Absolutely look at that.

But also revolutionise taxation. Taxation hasn’t moved on since feudalism. A ‘tax’ is levied by an owner. It’s seen as a penalty. A better political and economic system must evolve so that your ability to ‘contribute’ to society’s wellbeing is seen as a positive. Until now that has been the domain of Uber-wealthy philanthropists.

To riff on (the missed) Stat Brother, I didn't come on here for a lecture on revolution.
I have also indicated that the focus of taxation should shift, but not sure about your claim on feudalism so feel free to elaborate. To state my point, taxation went through a substantial shift about a century ago in order to pay debt on 'the Great War' and, subsequently, other state expenditures. This involved a movement towards taxing labour (and also estates), with the kind of graduations that I favour and @Harry Wilson's tackle doesn't.