Budget 2024

[1nvest]

Consistent


(data sourced from gov.uk and ONS (CPI))

Labour and Reform are at least both offering to remove those on a basic state pension and modest savings out of having their low levels of income being taxed. Not so for the Tories given past actuals.

[Nimrod103]

Gains in monetary terms due to inflation require no skill, but are not "real" gains. They do not buy you an extra pound of rice.
Gains in "real" terms usually do require skill or hard work, and a big element of risk.

Yes, I know all this. So I'll ask again. What assets are you sitting on that are going to cause you a CGT problem? Or are you worrying on behalf of the owner of the Telegraph?

One does no 'sit on assets'. They generate an income which is taxed.
But if the gain due to inflation of the underlying asset is also taxed, then effectively the total gain (revised asset value+income) is double taxed. Selling an asset after say 10 years of holding could easily lead to having received no gain in "real" value at all.

[ukmtk]

I would argue that for most people ISA limits are not low!
I have never filled up an ISA allocation - especially now the limit is £20K and I'm on a good salary with no mortgage or children.
When I mention our ISA & pension schemes to my German boss he is jealous as they don't have such tax friendly schemes.

[Arborbridge]

Taxes are supposed to encourage actions that are useful to the country, as well as raising revenue.

As you say, buying shares on the secondary market doesn't achieve much. Especially if they are the US shares beloved by Lootman.

And people do actually leave property empty. A popular trick for Russians with London properties for example. And I know someone who casually keeps a house empty because he expects the value to keep going up. Meanwhile we have increasing numbers of people living rough.

You already have ISAs, pensions and CGT thresholds. You haven't really made the case for any further generosity.

ISAs have low limits, and are still subject to stamp duty tax. Pensions are mostly just deferred taxation, and CGT thresholds have largely been abolished.
People do leave property empty, but in my neighbourhood is rare, and usually caused by probate or planning permission delays.

All political parties seem to want greater investment, and you write that 'Taxes are supposed to encourage actions that are useful to the country', so why are investment returns heavily taxed in the UK. As mentioned before, many countries do not tax gains, and so they prosper.

I thought this wasn't the politics board - but as you see yourself, politics runs through the whole debate in one form or another.

[MrFoolish]

One does no 'sit on assets'. They generate an income which is taxed.
But if the gain due to inflation of the underlying asset is also taxed, then effectively the total gain (revised asset value+income) is double taxed. Selling an asset after say 10 years of holding could easily lead to having received no gain in "real" value at all.

Clearly you are not going to answer what your personal concern is in this matter. It would be nice to discuss a tangible example. And I'd love to get out my violin for you.

[1nvest]

When I mention our ISA & pension schemes to my German boss he is jealous as they don't have such tax friendly schemes.

The Tories look to be aspiring to catch up with Germany on that front.

[tjh290633]

I would argue that for most people ISA limits are not low!
I have never filled up an ISA allocation - especially now the limit is £20K and I'm on a good salary with no mortgage or children.
When I mention our ISA & pension schemes to my German boss he is jealous as they don't have such tax friendly schemes.

Back when ISAs were new, I used the £6k limit several times as I had lump sums from pensions to reinvest. I can see people with SIPPs or other pensions being in the same position, and needing several years to complete the job.

I grant you that most people will not have sufficient surplus income to use the full allocation in normal circumstances, but the need can arise when insurance policies mature or inheritances are received.

TJH

[servodude]

This thread shows that some of us are in danger of losing this most human of traits.

I suspect that this could be true of the Tory voter and right wing generally.
Arb.

I think that ship has already sailed...
...but also looks to be sinking, quickly

[Nimrod103]

One does no 'sit on assets'. They generate an income which is taxed.
But if the gain due to inflation of the underlying asset is also taxed, then effectively the total gain (revised asset value+income) is double taxed. Selling an asset after say 10 years of holding could easily lead to having received no gain in "real" value at all.

Clearly you are not going to answer what your personal concern is in this matter. It would be nice to discuss a tangible example. And I'd love to get out my violin for you.

This is in essence and origin a board for people with an interest in financial matters and an ambition to increase personal wealth, whether well off or just starting out on improving one's financial position. Therefore all contributors should have an interest in keeping taxes down to the minimum necessary level, and maintain fairness in their application.
The British economy is currently heading for the rocks, and neither Conservatives nor Labour has done much to encourage the investment they both say is needed to turn things around. Is there any evidence they have?

[ukmtk]

TJH wrote:I grant you that most people will not have sufficient surplus income to use the full allocation in normal circumstances

I must admit that I realised taking my 25% tax free cash from my SIPP meant that I could (along with my wife) stuff £40K (£80K if around the tax year start/end) into ISAs and get the income from my investments tax free.

So I would avail myself of the generous allowance at that time.

[Tedx]

I would argue that for most people ISA limits are not low!
I have never filled up an ISA allocation - especially now the limit is £20K and I'm on a good salary with no mortgage or children.
When I mention our ISA & pension schemes to my German boss he is jealous as they don't have such tax friendly schemes.

Back when ISAs were new, I used the £6k limit several times as I had lump sums from pensions to reinvest. I can see people with SIPPs or other pensions being in the same position, and needing several years to complete the job.

I grant you that most people will not have sufficient surplus income to use the full allocation in normal circumstances, but the need can arise when insurance policies mature or inheritances are received.

TJH

Not sure why you would take it out of a (personal) pension / SIPP and put it into an ISA - these days anyway.

[tjh290633]

Back when ISAs were new, I used the £6k limit several times as I had lump sums from pensions to reinvest. I can see people with SIPPs or other pensions being in the same position, and needing several years to complete the job.

I grant you that most people will not have sufficient surplus income to use the full allocation in normal circumstances, but the need can arise when insurance policies mature or inheritances are received.

TJH

Not sure why you would take it out of a (personal) pension / SIPP and put it into an ISA - these days anyway.

You mean that you would not extract your 25% tax free lump sum, and invest it in a tax free account?

What would you do then?

TJH

[swill453]

Not sure why you would take it out of a (personal) pension / SIPP and put it into an ISA - these days anyway.

You mean that you would not extract your 25% tax free lump sum, and invest it in a tax free account?

What would you do then?

I took my 25% tax free a couple of years ago when it looked like there might be a possibility of the lifetime allowance being further reduced, and the perennial rumours of PCLS being abolished at some point.

Neither look very likely now, so with hindsight I'd probably have left it in, and continued the piecemeal approach of UFPLS drawdown.

Scott.

[Tedx]

Not sure why you would take it out of a (personal) pension / SIPP and put it into an ISA - these days anyway.

You mean that you would not extract your 25% tax free lump sum, and invest it in a tax free account?

What would you do then?

TJH

Leave it in the pension. I's already in a tax free account. Use your ISA for other money.

Things are far more flexible these days.

[kempiejon]

Leave it in the pension. I's already in a tax free account. Use your ISA for other money.

Things are far more flexible these days.

Nah, pensions are tax deferral. Take the 25% out, invest it into the ISA, all income is tax free. Leave it in the SIPP all income is taxed at your marginal rate.

[Tedx]

Leave it in the pension. I's already in a tax free account. Use your ISA for other money.

Things are far more flexible these days.

Nah, pensions are tax deferral. Take the 25% out, invest it into the ISA, all income is tax free. Leave it in the SIPP all income is taxed at your marginal rate.

Errr....no. You can flexibly access the 25% TFC any time in whatever amounts you want

[kempiejon]

Ah.

Errr....no. You can flexibly access the 25% TFC any time in whatever amounts you want

Gotcha. Ta

[MuddyBoots]

You mean that you would not extract your 25% tax free lump sum, and invest it in a tax free account?

What would you do then?

TJH

Leave it in the pension. I's already in a tax free account. Use your ISA for other money.

Things are far more flexible these days.

How are pensions tax free, apart from the 25% lump sum allowance? Have I missed a trick?

On a side note, I've often wondered why drawdown derived from share-based pensions is taxed as income tax. I have a small DC pension like that and it gives me an income derived from selling units in an equity fund. Why isn't it classed as capital gains?

Alternatively, why can't I arrange to have an income stream from dividends from the underlying shares, thus falling under a lower income tax rate?

Maybe that's just how the legal framework around pension funds works and if I wanted something more flexible I should have used an ISA or SIPP instead.

[Lootman]

CGT is just a tax on the increase in asset prices caused by Government debauching the currency. Why is that such a difficult concept for people to understand? It is an iniquitous tax.

So you admit there was no skill or hard work behind the gains.

But if you like me to get out my violin for you, give some examples of where you've had to pay this supposedly unfair tax.

I am curious why you think nobody pays CGT? On an investment website of all places?

I have paid CGT every year going back twenty years. In fact I pay more in CGT annually than I do in income tax or any other tax.

Again, if you think there is no "skill" or "hard work" in successful investing then why spend time on a site devoted to the skill and work involved with that endeavour?

[swill453]

Leave it in the pension. I's already in a tax free account. Use your ISA for other money.

Things are far more flexible these days.

How are pensions tax free, apart from the 25% lump sum allowance? Have I missed a trick?

You're right, it makes no difference really, from an Income Tax point of view. If you've got spare capacity in an ISA, take the lump sum and put it there if you want. Otherwise leave it in the SIPP till later.

For the taxable portion of the SIPP it makes sense to withdraw at a rate that keeps you in as low a tax bracket as possible.

There are potential Inheritance Tax advantages to leaving as much as possible in the SIPP though.

Scott.