Donate to Remove ads

Got a credit card? use our Credit Card & Finance Calculators

Thanks to johnstevens77,Bhoddhisatva,scotia,Anonymous,Cornytiv34, for Donating to support the site

Budget

including Budgets
1nvest
Lemon Quarter
Posts: 4323
Joined: May 31st, 2019, 7:55 pm
Has thanked: 680 times
Been thanked: 1316 times

Re: Budget

#390577

Postby 1nvest » February 27th, 2021, 12:46 pm

Nimrod103 wrote:We have been and remain in tax competition with countries like the RoI, which have succeeded in stealing companies from the UK. We should be lowering CT not raising it.

For Luxembourg and Ireland much of their GDP is a function of being a low tax EU region that enables the large Techie stocks low cost (tax) access to the rest of the EU. Sooner or later the EU will look to 'more fairly tax' (a.k.a more highly tax) those techies such as Amazon etc. perhaps via some kind of transactions taxation.

Services are less constrained by geographic boundaries, legal advice or accounts preparation can flow via emails for instance that traverse geographic boundaries freely. If a tax report preparer in Ireland is £20 cheaper than one in the UK then I'm more inclined to go with the lower cost choice ... or if the other way around. For goods however more likely when a EU based delivery it would be cheaper to utilise a entity within the EU than outside of the EU. NI however is still in the EU for goods and as such could offer great opportunities for it to steal business from Ireland, especially as for services it may have lower costs such as provided by the rest of the UK. Imagine a manufacturer that buys a plot of land that spans both NI and Ireland. That would be strongly placed to source and supply either side using the lower cost choices from/to either side, a distinct advantage compared to a entity purely located in one or the other region alone. Firms will naturally exploit cost/tax efficiencies. For instance multi-national fund managers may 'lend' stock to others internally where those others can receive dividends more tax efficiently. Similarly I see great potential for Dublin based business being transitioned more to/across the NI/Ireland borderline. A gateway spanning both the UK and EU single markets.

The EU is inefficient. Interest rate policies etc. set across 27 different conflicts of interests, that fit none well (other than Germany who predominately dictate the policies). UK policies are much more refined/advantageous and along with the NI/Ireland UK/EU gateway the UK is very well placed. Whether UK CT should be raised or lowered is for the experts to determine/set and that's not just a straight comparison measure.

1nvest
Lemon Quarter
Posts: 4323
Joined: May 31st, 2019, 7:55 pm
Has thanked: 680 times
Been thanked: 1316 times

Re: Budget

#390583

Postby 1nvest » February 27th, 2021, 1:00 pm

UK minimum wage for a age 25+ pretty much is the same as in Ireland (at around recent 1.16 Euro's per Pound currency rate). Cost of living is far far better in the UK than in Ireland however. Ball park guess is that you pay around twice as much for a grocery shopping basket full of goods in Ireland. The natural tendency from that is for more UK workers being employed (NI residents) than EU (Ireland), with the tax take that adds to HMRC and GDP expansion that favours the UK. And there's 320 miles of land border region between NI and Ireland, much of which is relatively low cost to purchase/rent.

SteMiS
Lemon Quarter
Posts: 2311
Joined: November 5th, 2016, 9:41 pm
Has thanked: 207 times
Been thanked: 592 times

Re: Budget

#390694

Postby SteMiS » February 27th, 2021, 7:00 pm

1nvest wrote:The EU is inefficient. Interest rate policies etc. set across 27 different conflicts of interests, that fit none well (other than Germany who predominately dictate the policies).

You are confusing the 'EU' with the Eurozone (which has 19 members) and of which the UK was never part.

1nvest wrote:UK policies are much more refined/advantageous and along with the NI/Ireland UK/EU gateway the UK is very well placed.

I'm guessing you don't live in the North then...

ursaminortaur
Lemon Half
Posts: 6944
Joined: November 4th, 2016, 3:26 pm
Has thanked: 447 times
Been thanked: 1717 times

Re: Budget

#390882

Postby ursaminortaur » February 28th, 2021, 12:21 pm

1nvest wrote:The collapse of the 1970's saw great returns across the 1980's/1990's which to a large extent has resulted in the likes of 4% safe withdrawal rate rules-of-thumb. Outside of that era and it was common for investors to invest in bonds, return-of rather than return-on money, cash-is-king type mindsets. Where -1% year cost is seen as acceptable compared to a rapid -33% or -50% (or more) risk factor.


The research by Bengen which led to the 4% rule was on a 50% equities 50% bonds portfolio (though he also looked at other mixes) and was based on historical data from 1926 to 1976.


https://www.lifetimeincome.co.nz/retirement-life/retirement-news/2017/april/the-4-rule/

The 4% rule was first devised by William Bengen in 1994 using historical returns from 1926-1976. Bengen found that if an investor had followed the above 4% rule over this time, their money would have lasted for at least 30 years.

ursaminortaur
Lemon Half
Posts: 6944
Joined: November 4th, 2016, 3:26 pm
Has thanked: 447 times
Been thanked: 1717 times

Re: Budget

#390885

Postby ursaminortaur » February 28th, 2021, 12:34 pm

It looks like the government is going to be propping up house prices with an announcement for a new mortgage guarantee scheme in the budget.


https://www.ft.com/content/6dc4f20e-378e-41b9-8964-b0208871bea7

UK to launch mortgage guarantee scheme
.
.
.
Ministers are set to announce a new mortgage guarantee scheme to help buyers on to the housing ladder, an intervention that experts have said is likely to push up house prices.

The scheme, which will be announced as part of Wednesday’s Budget, will allow buyers in England to obtain a mortgage with only 5 per cent of the property’s value to put down as a deposit.

The Treasury will guarantee a portion of the loans on homes worth up to £600,000, encouraging banks and building societies to begin providing riskier, higher loan-to-value mortgages again.

dealtn
Lemon Half
Posts: 6072
Joined: November 21st, 2016, 4:26 pm
Has thanked: 441 times
Been thanked: 2324 times

Re: Budget

#390886

Postby dealtn » February 28th, 2021, 12:50 pm

ursaminortaur wrote:It looks like the government is going to be propping up house prices with an announcement for a new mortgage guarantee scheme in the budget.




There are 2 ways to improve affordability of houses, particularly for the younger in our society.

The first is to make house prices cheaper. Deposits go further and more mortgage products are available.

Unfortunately this has the side effects of reducing the "wealth" of existing owners (and voters), and also increasing the number of houses in negative equity which hurts the capital ratios of banks. Less lending, and withdrawing mortgage products, and increasing the necessary deposit, results.

Option 1 is rarely, if ever pursued as a policy, but economic recession can effectively do the same thing, although that hurts peoples incomes and job prospects too, so isn't necessarily good either at improving affordability.

The second is to "create" subsidies, which only work at the margin, and continue to distort the market. To keep the effect going ever more subsidies are necessary to be deployed.

Unfortunately this continuing cycle of subsidy creates distortions such that affordability is always stretched, or beyond, many who desire to own their own home. It doesn't stop politicians, and vote seekers, continuing this approach. Either because they think it right, will deliver votes, or because the effect of stopping, and allowing the market to find the right price again, will be worse than continuing.

scrumpyjack
Lemon Quarter
Posts: 4811
Joined: November 4th, 2016, 10:15 am
Has thanked: 605 times
Been thanked: 2675 times

Re: Budget

#390890

Postby scrumpyjack » February 28th, 2021, 1:13 pm

Yes government policy on housing has been crazy for many decades because they have dug themselves into a hole with no option other than to dig deeper so housing becomes progressively more unaffordable, building land prices continue to escalate and house builders (bar when they misjudge the cycle) an excellent investment. I continue to hold Barratt and Persimmon and builders seem to continue to be a licence to print money. Ludicrous.

Meanwhile owner occupied houses continue to be free of CGT and to be easily bought with someone else's money plus a small deposit. It's bananas.

NeilW
Lemon Slice
Posts: 760
Joined: November 4th, 2016, 4:27 pm
Has thanked: 149 times
Been thanked: 226 times

Re: Budget

#391017

Postby NeilW » March 1st, 2021, 5:46 am

dealtn wrote:The second is to "create" subsidies, which only work at the margin, and continue to distort the market. To keep the effect going ever more subsidies are necessary to be deployed..


The sad fact is that the more ability we create for banks to lend on housing, the higher house prices go. The amount a house buyer can pay per month doesn't change, but a bank can extend the term to capitalise more of your life. So we have ever extending terms of mortgages (and another reason why interest rate rises won't bite - the term will just be extended to keep the monthly payment the same).

Which gives us one more method of controlling house prices - limiting the income stream capitalisation options of banks. And the best way to do that is to reduce the retirement age with, if necessary, an automatic guillotine that says mortgages unwisely written by banks will be unenforceable after the state retirement age.

NeilW

NeilW
Lemon Slice
Posts: 760
Joined: November 4th, 2016, 4:27 pm
Has thanked: 149 times
Been thanked: 226 times

Re: Budget

#391018

Postby NeilW » March 1st, 2021, 5:51 am

88V8 wrote:The BoE is independent. So we're told.
Or are you saying that politicians have been lying to us?


They would never do that would they...

As you, and everybody rational in the financial markets, knows the BoE is owned and controlled by HM Treasury. The only people who believe the myth of 'independence' are those whose large salaries and fat pensions depend upon maintaining the pretence.

Having said that why would the BoE allow 'markets' to push up interest rates, or expectations of interest rates, in a depressed economy to the extent that the necessary spending to bring about recovery is suppressed? That is, after all, why 'QE' was introduced initially.

The only difference of opinion here, bizarrely, is that the BoE is signalling 'spend' by holding down current interest rates and HM Treasury is refusing to accept that signal because it is working on the expectation of interest rates rising in the future (even though it issues Gilts at a fixed rate and could issue perpetuals if it wished - without getting into the 'why not just use the Ways and Means and pay yourself' argument).

88V8
Lemon Half
Posts: 5769
Joined: November 4th, 2016, 11:22 am
Has thanked: 4097 times
Been thanked: 2560 times

Re: Budget

#391084

Postby 88V8 » March 1st, 2021, 10:13 am

NeilW wrote:The only difference of opinion here, bizarrely, is that the BoE is signalling 'spend' by holding down current interest rates and HM Treasury is refusing to accept that signal because it is working on the expectation of interest rates rising in the future (even though it issues Gilts at a fixed rate and could issue perpetuals if it wished - without getting into the 'why not just use the Ways and Means and pay yourself' argument).

Lewis Carroll would have made a good Bank governor.

V8

ursaminortaur
Lemon Half
Posts: 6944
Joined: November 4th, 2016, 3:26 pm
Has thanked: 447 times
Been thanked: 1717 times

Re: Budget

#391100

Postby ursaminortaur » March 1st, 2021, 11:04 am

NeilW wrote:
88V8 wrote:The BoE is independent. So we're told.
Or are you saying that politicians have been lying to us?


They would never do that would they...

As you, and everybody rational in the financial markets, knows the BoE is owned and controlled by HM Treasury. The only people who believe the myth of 'independence' are those whose large salaries and fat pensions depend upon maintaining the pretence.


The independence of the BoE is purely on the ability to set interest rates and even that is constrained since the Government sets the BoE's targets. It's only real, and welcome effect, is to prevent the government of the day changing interest rates to boost its chances in the run-up to a general election as used to happen before BoE independence.

dealtn
Lemon Half
Posts: 6072
Joined: November 21st, 2016, 4:26 pm
Has thanked: 441 times
Been thanked: 2324 times

Re: Budget

#391107

Postby dealtn » March 1st, 2021, 11:17 am

ursaminortaur wrote:
NeilW wrote:
88V8 wrote:The BoE is independent. So we're told.
Or are you saying that politicians have been lying to us?


They would never do that would they...

As you, and everybody rational in the financial markets, knows the BoE is owned and controlled by HM Treasury. The only people who believe the myth of 'independence' are those whose large salaries and fat pensions depend upon maintaining the pretence.


The independence of the BoE is purely on the ability to set interest rates and even that is constrained since the Government sets the BoE's targets. It's only real, and welcome effect, is to prevent the government of the day changing interest rates to boost its chances in the run-up to a general election as used to happen before BoE independence.


The Bank of England doesn't set interest rates. The body responsible for the setting of base rate as policy is the Monetary Policy Committee, which in addition to the majority representatives from the (independent) Central Bank, the Bank of England, also comprises a minority of independent members.

ursaminortaur
Lemon Half
Posts: 6944
Joined: November 4th, 2016, 3:26 pm
Has thanked: 447 times
Been thanked: 1717 times

Re: Budget

#391111

Postby ursaminortaur » March 1st, 2021, 11:28 am

dealtn wrote:
ursaminortaur wrote:
NeilW wrote:
They would never do that would they...

As you, and everybody rational in the financial markets, knows the BoE is owned and controlled by HM Treasury. The only people who believe the myth of 'independence' are those whose large salaries and fat pensions depend upon maintaining the pretence.


The independence of the BoE is purely on the ability to set interest rates and even that is constrained since the Government sets the BoE's targets. It's only real, and welcome effect, is to prevent the government of the day changing interest rates to boost its chances in the run-up to a general election as used to happen before BoE independence.


The Bank of England doesn't set interest rates. The body responsible for the setting of base rate as policy is the Monetary Policy Committee, which in addition to the majority representatives from the (independent) Central Bank, the Bank of England, also comprises a minority of independent members.


A quibble without a distinction since the Monetary Policy Committee is a committee of the BoE and has an inbuilt majority of BoE members.

https://www.bankofengland.co.uk/about/people/monetary-policy-committee


The Monetary Policy Committee (MPC) is made up of nine members – the Governor, the three Deputy Governors for Monetary Policy, Financial Stability and Markets and Banking, our Chief Economist and four external members appointed directly by the Chancellor.

External members are appointed to make sure that the MPC benefits from thinking and expertise from outside of the Bank of England. A representative from HM Treasury also sits with the MPC at its meetings. The Treasury representative can discuss policy issues, but is not allowed to vote. They are there to make sure that the MPC is fully briefed on fiscal policy developments and other aspects of the Government's economic policies, and that the Chancellor is kept fully informed about monetary policy.

Charlottesquare
Lemon Quarter
Posts: 1775
Joined: November 4th, 2016, 3:22 pm
Has thanked: 105 times
Been thanked: 560 times

Re: Budget

#391117

Postby Charlottesquare » March 1st, 2021, 11:46 am

scrumpyjack wrote:
absolutezero wrote:Do we expect any changes (either way) in the annual ISA allowance of £20,000?


My guess, for what it's worth, which is probably zero, is that he will leave most things alone but

increase corporation tax

restart the fuel tax escalator (green, raises lots of tax easily, doesn't break any manifesto commitments)

might align CGT on shares with that on property (28%). Can't see him taxing it as income without reintroducing indexation, which would bring too many complications.

may reduce some of the CGT allowances for entrepreneurs etc

abolish AIM shares IHT exemption (there isn't really any justification for it)

not make any other significant changes until he sees how the post-covid recovery works out


My guess is this one will have little change in taxes and more trumpeting support to take us out from under Covid/rebuild, the tax hike budget imho will be November if we are a bit more on the mend by then.

Charlottesquare
Lemon Quarter
Posts: 1775
Joined: November 4th, 2016, 3:22 pm
Has thanked: 105 times
Been thanked: 560 times

Re: Budget

#391120

Postby Charlottesquare » March 1st, 2021, 11:54 am

Lootman wrote:
scrumpyjack wrote:might align CGT on shares with that on property (28%). Can't see him taxing it as income without reintroducing indexation, which would bring too many complications.

abolish AIM shares IHT exemption (there isn't really any justification for it)

I get the impression that a fair number of Lemons hold AIM shares at least partly for the IHT benefits. And such positions tend to be held rather than traded. So I would worry that their share prices would be hit if a major tax benefit of them were withdrew overnigbt, given the illiquidity of many of them. Whether the government would care about that is another matter, but at minimum they would have to manage the timing of any announcement in order to prevent a tidal wave of sell orders.

The 20% higher-rate CGT rate might go to 28%, although that is harsh without indexation. But what about the CGT 10% rate for basic-rate taxpayers? Taxing gains as ordinary income would be a very aggressive move and I would not expect that, unless accompanied by some kind of relief or increased allowance or exemption.

Neither is perfect for the government here. IHT is revenue in the future rather than the present, and is considered a voluntary tax by many. Whilst even CGT can be seen as voluntary in the sense that investors do not have to sell, and the government relies on people being honest about their gains, which might happen less if rates were higher.


Well it could be that if AIM share relief does gets withdrawn there will be a wall of money chasing agricultural land ,this may be a relief for farmers seeking an exit given once we get into heavy livestock sales periods life may be very difficult for them if the export of animals and animal products into the EU is as difficult as it is currently predicted to be.

scrumpyjack
Lemon Quarter
Posts: 4811
Joined: November 4th, 2016, 10:15 am
Has thanked: 605 times
Been thanked: 2675 times

Re: Budget

#391123

Postby scrumpyjack » March 1st, 2021, 12:06 pm

Charlottesquare wrote:Well it could be that if AIM share relief does gets withdrawn there will be a wall of money chasing agricultural land ,this may be a relief for farmers seeking an exit given once we get into heavy livestock sales periods life may be very difficult for them if the export of animals and animal products into the EU is as difficult as it is currently predicted to be.


Possibly, but agricultural relief is only meant to be available where the land is farmed as a profit making venture by the deceased. There is a strong argument for tightening that up as I know of many cases where farming was not the principal occupation of the land owner and the main reason for owning land was to escape IHT (eg James Dyson). These sorts of exemptions should really only be available where a business would otherwise be broken up to the significant detriment of the national economy. I did read somewhere that if HMG abolished all these special exemptions/reliefs the IHT rate could come down to 30% and still raise the same revenue. Perhaps Rishi will tackle this?

dspp
Lemon Half
Posts: 5884
Joined: November 4th, 2016, 10:53 am
Has thanked: 5825 times
Been thanked: 2127 times

Re: Budget

#391128

Postby dspp » March 1st, 2021, 12:21 pm

scrumpyjack wrote:
Charlottesquare wrote:Well it could be that if AIM share relief does gets withdrawn there will be a wall of money chasing agricultural land ,this may be a relief for farmers seeking an exit given once we get into heavy livestock sales periods life may be very difficult for them if the export of animals and animal products into the EU is as difficult as it is currently predicted to be.


Possibly, but agricultural relief is only meant to be available where the land is farmed as a profit making venture by the deceased. There is a strong argument for tightening that up as I know of many cases where farming was not the principal occupation of the land owner and the main reason for owning land was to escape IHT (eg James Dyson). These sorts of exemptions should really only be available where a business would otherwise be broken up to the significant detriment of the national economy. I did read somewhere that if HMG abolished all these special exemptions/reliefs the IHT rate could come down to 30% and still raise the same revenue. Perhaps Rishi will tackle this?


The local chequebook farmers are very careful to cut one hedge per year, and raise a few lambs in order to be able to claim that they are personally engaged in farming. The other thousand acres are of course dealt with by contractors, hence the moniker "chequebook farmers". In the last ten years I have never even seen the neighboring farmer walking his own land on a single occasion. He drives a 4x4 around the perimeter maybe once a month at most.

This IHT exemption for farmers should be very severely curtailed. At the moment it is a very deliberately designed tax avoidance scheme for a particular group of voters.

regards, dspp

Charlottesquare
Lemon Quarter
Posts: 1775
Joined: November 4th, 2016, 3:22 pm
Has thanked: 105 times
Been thanked: 560 times

Re: Budget

#391130

Postby Charlottesquare » March 1st, 2021, 12:40 pm

dspp wrote:
scrumpyjack wrote:
Charlottesquare wrote:Well it could be that if AIM share relief does gets withdrawn there will be a wall of money chasing agricultural land ,this may be a relief for farmers seeking an exit given once we get into heavy livestock sales periods life may be very difficult for them if the export of animals and animal products into the EU is as difficult as it is currently predicted to be.


Possibly, but agricultural relief is only meant to be available where the land is farmed as a profit making venture by the deceased. There is a strong argument for tightening that up as I know of many cases where farming was not the principal occupation of the land owner and the main reason for owning land was to escape IHT (eg James Dyson). These sorts of exemptions should really only be available where a business would otherwise be broken up to the significant detriment of the national economy. I did read somewhere that if HMG abolished all these special exemptions/reliefs the IHT rate could come down to 30% and still raise the same revenue. Perhaps Rishi will tackle this?


The local chequebook farmers are very careful to cut one hedge per year, and raise a few lambs in order to be able to claim that they are personally engaged in farming. The other thousand acres are of course dealt with by contractors, hence the moniker "chequebook farmers". In the last ten years I have never even seen the neighboring farmer walking his own land on a single occasion. He drives a 4x4 around the perimeter maybe once a month at most.

This IHT exemption for farmers should be very severely curtailed. At the moment it is a very deliberately designed tax avoidance scheme for a particular group of voters.

regards, dspp


He might eventually just move APR within BPR and any farm would need to meet the qualification for same. I can see the logic of BPR, one does not want a family business to have to be sold each time there is a death of say the last surviving parent.

However not convinced he will actually do very much this time, I believe some of the consultations are actually still running, I do not follow them but I phoned a CTA last week who does, so maybe this one will be preparing the ground.

scrumpyjack
Lemon Quarter
Posts: 4811
Joined: November 4th, 2016, 10:15 am
Has thanked: 605 times
Been thanked: 2675 times

Re: Budget

#391139

Postby scrumpyjack » March 1st, 2021, 1:11 pm

Charlottesquare wrote:
dspp wrote:
scrumpyjack wrote:
Possibly, but agricultural relief is only meant to be available where the land is farmed as a profit making venture by the deceased. There is a strong argument for tightening that up as I know of many cases where farming was not the principal occupation of the land owner and the main reason for owning land was to escape IHT (eg James Dyson). These sorts of exemptions should really only be available where a business would otherwise be broken up to the significant detriment of the national economy. I did read somewhere that if HMG abolished all these special exemptions/reliefs the IHT rate could come down to 30% and still raise the same revenue. Perhaps Rishi will tackle this?


The local chequebook farmers are very careful to cut one hedge per year, and raise a few lambs in order to be able to claim that they are personally engaged in farming. The other thousand acres are of course dealt with by contractors, hence the moniker "chequebook farmers". In the last ten years I have never even seen the neighboring farmer walking his own land on a single occasion. He drives a 4x4 around the perimeter maybe once a month at most.

This IHT exemption for farmers should be very severely curtailed. At the moment it is a very deliberately designed tax avoidance scheme for a particular group of voters.

regards, dspp


He might eventually just move APR within BPR and any farm would need to meet the qualification for same. I can see the logic of BPR, one does not want a family business to have to be sold each time there is a death of say the last surviving parent.

However not convinced he will actually do very much this time, I believe some of the consultations are actually still running, I do not follow them but I phoned a CTA last week who does, so maybe this one will be preparing the ground.


Well the current system is grossly unfair- to tax people differently depending on what assets their wealth is held in. In the case of family businesses, the logical solution would be for the tax man to give the option of IHT being paid by handing over a portion of the shares so that the business does not need to be sold. As for land I know people with many thousands of acres who will escape IHT. Though one of them did have a problem when his wife divorced him and wanted her share - no agricultural relief there!

Lootman
The full Lemon
Posts: 18677
Joined: November 4th, 2016, 3:58 pm
Has thanked: 628 times
Been thanked: 6560 times

Re: Budget

#391146

Postby Lootman » March 1st, 2021, 1:40 pm

scrumpyjack wrote:the current system is grossly unfair- to tax people differently depending on what assets their wealth is held in.

Perhaps the most glaring aspect of that is the punitive way that BTL landlords are taxed currently. Not only are borrowing costs excluded from tax relief, unlike any other kind of business, but there is also a higher rate of CGT to pay upon sale, as well as a higher rate of stamp duty upon purchase.

Given the rumours that CGT may go up for sales of BTLs to one's marginal rate of income tax, it would appear that discrimination between assets will continue and may increase. Quite why the government would want to demotivate those who provide vital housing services to those who need them is beyond me.


Return to “The Economy”

Who is online

Users browsing this forum: No registered users and 4 guests