Protecting against political risk to retirement income

[Urbandreamer]

And frankly if the British people vote for that, then I should leave not because of Corbyn but because my fallow citizens are clueless and cannot be trusted.

fallow: synonyms : uncultivated, unploughed, untilled, unplanted, unsown, unseeded, unused, undeveloped, dormant, resting, empty, bare,.....

(like income tax in WW1).

Actually we can't blame either Labour or even WW1 for that. It was introduced by Pitt (Tory) to cover the cost of the Neapolionic wars!

[Raptor]

Moderator Message:
This has moved a long way form the ops post. Please "post in reply" to the original post. Thanks in advance. Raptor.

[anniesdad]

Anyone know what Corbyn would like to do about the tax free status of significant funds built up in ISA's?

[Lootman]

Anyone know what Corbyn would like to do about the tax free status of significant funds built up in ISA's?

Nobody knows although McDonnell did at one point express concern about the sums sheltered by some people within ISAs,

Labour has form for taxing ISAs, at least indirectly. When Gorgon Brown abolished ACT and replaced reclaimable tax withholding with an unreclaimable tax credit, he was effectively taxing ISAs, SIPPs and non-taxpayers through the back door.

There are cries on the left to directly tax wealth, and it would be quite easy to apply, say, a 1% annual wealth tax on the year-end value of your ISA.

[richfool]

Anyone know what Corbyn would like to do about the tax free status of significant funds built up in ISA's?

Nobody knows although McDonnell did at one point express concern about the sums sheltered by some people within ISAs,

Labour has form for taxing ISAs, at least indirectly. When Gorgon Brown abolished ACT and replaced reclaimable tax withholding with an unreclaimable tax credit, he was effectively taxing ISAs, SIPPs and non-taxpayers through the back door.

There are cries on the left to directly tax wealth, and it would be quite easy to apply, say, a 1% annual wealth tax on the year-end value of your ISA.

There are a number of ways that Corbyn/McDonnell could get at ISA's, if they so chose, without doing anything too drastic like doing away them.. They could cut the annual limit (the amount that one can subscribe), put a "lifetime limit" as with pensions, or tinker with tax on company dividends and make it not reclaimable within ISA's.

[Alaric]

tinker with tax on company dividends and make it not reclaimable within ISA's.

It isn't reclaimable now. The differences in taxation between holding shares inside or outside an ISA is that inside there's no CGT and no tax on dividends. Outside realised gains are only free of tax up to the Annual Exempt Amount and dividends only for the first £ 5000 in a year, possibly being reduced to £ 2000.

As a previous poster suggested, a wealth tax could use the logic that if platforms can take a percent of the funds under management, so can the Government. It destroys the tax free savings argument of course, but at the back of its mind a Corbyn government would seek to abolish or at least curtail private wealth.

[Lootman]

tinker with tax on company dividends and make it not reclaimable within ISA's.

It isn't reclaimable now.

True, but there could still be a trend to increase taxes on companies so that their ability to pay dividend is lowered, so individual investors are taxed indirectly. And we already know that Corbyn thinks that corporations do not pay enough tax which, personally, I find to be bizarre since companies are passthrough vehicles who reclaim any higher tax from their employees, customers and shareholders.

Corbyn could also devalue the tax benefits of ISAs by lowering direct taxes and increasing indirect taxes.

Or adopt a US-style alternative minimum tax.

[richfool]

tinker with tax on company dividends and make it not reclaimable within ISA's.

It isn't reclaimable now. The differences in taxation between holding shares inside or outside an ISA is that inside there's no CGT and no tax on dividends. Outside realised gains are only free of tax up to the Annual Exempt Amount and dividends only for the first £ 5000 in a year, possibly being reduced to £ 2000.

As a previous poster suggested, a wealth tax could use the logic that if platforms can take a percent of the funds under management, so can the Government. It destroys the tax free savings argument of course, but at the back of its mind a Corbyn government would seek to abolish or at least curtail private wealth.

Alaric, I hadn't defined "it". I was simply referring to the fact that a future government could change taxation arrangements on dividends, without those taxes (whatever they may be) being reclaimable within ISA's.

[funduffer]

I have read this discussion with interest, but one aspect that has not been mentioned is inter-generational inequality.

When I left university, I had no money, but also no debt. I got a job that paid a decent salary and pension, and could afford to buy a house within 2 years of starting work, at the age of 24.

My children are much less fortunate. They have debt, less secure jobs, poorer pensions and could not buy houses until well into their 30's - and that is in the North, not London/SE.

Us Baby boomers need to recognise that our children generally have the same aspirations as we did but will look at us and see we have the housing, the pension income,the wealth stashed away and yet we have an increased dependency on public services like the NHS.

Surely they will vote for someone who seeks to re-dress the balance, and whichever party they are are likely to get elected as the Baby Boomers start dying off. A few things that back this up:

Labour had a majority of voters under 45 at the last election.

Conservative members average age is....very high (numbers seem to be in dispute!).

Time will tip the balance.

We (us Baby Boomers) should expect increased taxes on our wealth. The best we can hope for is that it is done in a gradual way that does not de-stabilise the country.

Personally, I expect to pay more tax over the next 20 years (if I live that long) in some form or another. I am not unsympathetic to this, as I would like to see things improve for the younger generations in this country.

FD

[Lootman]

Us Baby boomers need to recognise that our children generally have the same aspirations as we did but will look at us and see we have the housing, the pension income,the wealth stashed away and yet we have an increased dependency on public services like the NHS.

Surely they will vote for someone who seeks to re-dress the balance, and whichever party they are are likely to get elected as the Baby Boomers start dying off. A few things that back this up:

Labour had a majority of voters under 45 at the last election.

Conservative members average age is....very high (numbers seem to be in dispute!).

Time will tip the balance.

Well, younger voters have always skewed to the left, and older voters to the right. I was a long-haired socialist at age 20 and now I am somewhere to the right of the Tories. I like to think I gained experience and wisdom along the way, as well as gradually had more to lose, and so changed my allegiance. So the fact that kids vote Labour more and wrinklies vote Tory more does not imply that the Tories are doomed.

The inequality thing gets trotted out a lot by some these days. But isn't that exactly what we voted for when we elected Thatcher and then PM's that promised not to undo Thatcherism? The reality is that the UK of 1975 was far too equal, and it was unhealthy for the nation and the economy as a whole, leading to emigration of the brightest or just a lack of motivation to succeed.

Finally, who do you think will inherit all this wealth that the baby boomers have acquired? Those very same youngsters who complain about generational inequality. And then they may go from loving inheritance tax to hating it, and from mindlessly worshipping Corbyn to detesting him.

[ayshfm1]

I'm pretty sure Labour will introduce a wealth tax aka a property tax. It's the last source of untaxed wealth left and the amounts involved dwarf ISA's.

I imagine it'll work on a rent basis, what would your house cost to rent? Had you rented it that rent would come from post tax income, therefore you effectively saved that tax (and hence now can pay it).

Big houses are going to become a liability in retirement I reckon (and you can see a lot of socialists seeing a lot of merit in forcing old people to move into properties more aligned to their needs and making the houses available for younger people with families)

[Lootman]

I'm pretty sure Labour will introduce a wealth tax aka a property tax. It's the last source of untaxed wealth left and the amounts involved dwarf ISA's.

I imagine it'll work on a rent basis, what would your house cost to rent? Had you rented it that rent would come from post tax income, therefore you effectively saved that tax (and hence now can pay it).

That's how properties used to be taxed locally, i.e. based on what they would rent for, before Thatcher changed it to the "poll tax"

The French do something like that, where homeowners pay tax on the rent they are imputed to save by instead living in a home they own.

Big houses are going to become a liability in retirement I reckon (and you can see a lot of socialists seeing a lot of merit in forcing old people to move into properties more aligned to their needs and making the houses available for younger people with families)

We got a sense of how Corbyn views such things when we had the council tower fire recently, and he suggested that expensive homes be seized by the government to house the fire victims.

It may take a crisis for Corbyn to be that bold, but one way or another I feel certain that he will get his crisis. He will make sure of it.

[tjh290633]

That's how properties used to be taxed locally, i.e. based on what they would rent for, before Thatcher changed it to the "poll tax"

The French do something like that, where homeowners pay tax on the rent they are imputed to save by instead living in a home they own.

Do you remember Schedule A tax? You could offset home improvements like redecorating against it. I can't remember now when it was abolished, but I think it was before 1961 when I bought my first property. I remember my father getting the decorators in, because you could claim it against the tax.

TJH

[Alaric]

Do you remember Schedule A tax? You could offset home improvements like redecorating against it. I can't remember now when it was abolished, but I think it was before 1961 when I bought my first property.

1963 by the Macmillan government. It was part of a general move to encourage private ownership of housing. Once it became the majority position that people owned their own houses and the rental sector had mostly dried up outside of local authority housing, taxing the rent you saved by owning was a nonsense if you didn't have a rental option in the first place.

[Lootman]

Do you remember Schedule A tax? You could offset home improvements like redecorating against it. I can't remember now when it was abolished, but I think it was before 1961 when I bought my first property. I remember my father getting the decorators in, because you could claim it against the tax.

I do not but, at tax rates up to 98%, I can imagine all kinds of things I would fritter money away upon.

[ayshfm1]

To expand upon this anyone with more than one house is going to be eviscerated financially first. Not only do they have money but they are also hogging property. Comrade Corbyn will squeeze their pips as a priority, because it will be 'right' and will raise cash. Holiday home owners can expect a very expensive tax bill.

As for ordinary rental, I know a few landlords who are exiting already because of this Government's actions and they are way less anti landlord than Corbyn will be.

[77ss]

Moderator Message:
attacking the person and not the topic is against TLF's rules. Raptor.

[TUK020]

I have read this discussion with interest, but one aspect that has not been mentioned is inter-generational inequality.

When I left university, I had no money, but also no debt. I got a job that paid a decent salary and pension, and could afford to buy a house within 2 years of starting work, at the age of 24.

My children are much less fortunate. They have debt, less secure jobs, poorer pensions and could not buy houses until well into their 30's - and that is in the North, not London/SE.

Us Baby boomers need to recognise that our children generally have the same aspirations as we did but will look at us and see we have the housing, the pension income,the wealth stashed away and yet we have an increased dependency on public services like the NHS.

Surely they will vote for someone who seeks to re-dress the balance, and whichever party they are are likely to get elected as the Baby Boomers start dying off. A few things that back this up:

Labour had a majority of voters under 45 at the last election.

Conservative members average age is....very high (numbers seem to be in dispute!).

Time will tip the balance.

We (us Baby Boomers) should expect increased taxes on our wealth. The best we can hope for is that it is done in a gradual way that does not de-stabilise the country.

Personally, I expect to pay more tax over the next 20 years (if I live that long) in some form or another. I am not unsympathetic to this, as I would like to see things improve for the younger generations in this country.

FD

Good point Funduffer.
The biggest intergenerational unfairness is the rigging of planning laws to prevent housebuilding, and resulting in artificially boosted houseprices.
This means that younger people spend a disproportionate share of their income getting onto the property ladder, and significantly reduces their standard of living.
All this so that older people 'who have' can feel wealthier, and retain the green belt so that we can subsidise more farmers.
Being the owner of a large family house, I benefit from this. That doesn't stop me realising that this is unfair, economically damaging, and likely to lead to social instability (aka P.M. Corbyn)

[baldchap]

The biggest intergenerational unfairness is the rigging of planning laws to prevent housebuilding, and resulting in artificially boosted houseprices.

Only half of the problem. The biggest unfairness has been to flood the country with cheap labour which has reduced wage levels and increased demand for limited housing.

[TedSwippet]

The biggest intergenerational unfairness is the rigging of planning laws to prevent housebuilding, and resulting in artificially boosted houseprices.

Only half of the problem. The biggest unfairness has been to flood the country with cheap labour which has reduced wage levels and increased demand for limited housing.

Only one third of the problem. Compound both the above with long-term quantitive easing set atop an even longer-term zero interest rate policy.