| Non-motoring > That Budget | Tax / Insurance / Warranties |
| Thread Author: zippy | Replies: 39 |
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New Sat 2 Nov 24 14:08
That Budget - zippy
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Capital gains on farmland. This will hurt a lot of farmers who want to keep the farm in the family, so to speak, but I guess it was aimed at those farm buyers like James Dyson who owns 36,000 acres of farmland so as to avoid capital gains tax. The equalisation of capital gains rates. This one hurts me as I have some shares outside of an ISA (idiot), but it makes sense. I was surprised the rates weren't more closely linked to income tax levels - i.e. 20%, 40% and 45%. Bus fares: Own goal. This is going to hit a lot of people on lower incomes who rely on public transport. Minimum wage increase (not strictly budget). I have often thought that many benefits were subsidising businesses. They could get with paying low wages with the knowledge that the State would often make up the difference in benefits if the workers had a family. The increase in minimum wages will reduce the benefits bill because amounts claimed per person will reduce accordingly. 5% (up 2%) stamp duty surcharge on second homes - ouch. I don't have a second home or rental property, but this will hurt many people looking to buy for investment. No rise in fuel duty - yay. Reduction in the cost of a pint by about 1p. Pah! Should have been 10p to help pubs. NI: This is going to hurt a lot of businesses, big and small. For small businesses, the reduction in the rate at which NI gets paid from £9,100 to £5,000 is really going to hurt and I think will force them to postpone that point at which they take on that extra employee. It is going to hurt marginally profitable businesses. The increase in rates by 1.2% is again going to hurt marginally profitable businesses. Pensions: I am surprised by this. Not that pensions are now to be included in inheritance tax calculations - after all they are an asset like any other - though it will hurt many. What gets me is the double taxation potential. E.g. a high earner would be taxed 40% to 45% on withdrawal of the pension pot then 40% for any element above the threshold so it could be possible - if I understand it correctly that a pension in an estate for capital gains could be subject to "marginal" tax of between 80% and 85% - this doesn't seem equitable. |
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New Sat 2 Nov 24 14:47
That Budget - Falkirk Bairn
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Somebody with a huge Pension pot retires at 67. The pot is in a SIPP and he/she can drawdown money and this is taxed. If however, they have other income - State Pension, BTL property, shares, own a business etc etc they can live off their Capital/ other income leaving the Pension Pot untouched. If they then died aged 75+ year old their estate would be be taxed at 40% IHT rate when over the IHT levels. The Pension pot would have been IHT free and no tax deducted - in the future the Pension Pot will be added to the estate with it all being taxed. Fair or Unfair? That's a matter of opinion. |
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New Sat 2 Nov 24 15:20
That Budget - Bromptonaut
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>> If they then died aged 75+ year old their estate would be be taxed at >> 40% IHT rate when over the IHT levels. >> The Pension pot would have been IHT free and no tax deducted - in the >> future the Pension Pot will be added to the estate with it all being taxed. >> >> Fair or Unfair? >> >> That's a matter of opinion. Was the pot outwith IHT until age 75 or after? |
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New Sat 2 Nov 24 20:31
That Budget - Falkirk Bairn
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New Sat 2 Nov 24 15:11
That Budget - Bromptonaut
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>> Capital gains on farmland. This will hurt a lot of farmers who want to keep >> the farm in the family, so to speak, but I guess it was aimed at >> those farm buyers like James Dyson who owns 36,000 acres of farmland so as to >> avoid capital gains tax. There is apparently a significant industry around high net worth individuals buying farms and sheltering wealth from IHT by doing so. James Dyson may be one. Jeremy Clarkson was quite open that part of the rationale for Diddly Squat was to reduce potential IHT. A limit is a straight anti-avoidance measure. How it bites depends on detail and reliefs. If the one million limit affects ordinary small farms, if they still exist, depends on how it is implemented. Martin Lewis suggested that in practice, on second death, there are two allowances of 1 million and residential relief on an associated house. On that basis those then we're well towards 2.5million for those who have planned. There may be easements on how tax is to be paid and other stuff; the devil is in the detail. >> The equalisation of capital gains rates. This one hurts me as I have some shares >> outside of an ISA (idiot), but it makes sense. I was surprised the rates weren't >> more closely linked to income tax levels - i.e. 20%, 40% and 45%. I suspect this is work in progress. >> Bus fares: Own goal. This is going to hit a lot of people on lower >> incomes who rely on public transport. How long was the £2 limit in place and what were the fares before that? Best part of a fiver each way sticks in my mind. As I'm now 100% WFH it's academic but when I worked in Northampton the last bus was too early and the whole thin was once an hour. Getting bums on seats needs a more frequent service. If it's a massive subsidy then it may need to be trimmed. >> Minimum wage increase (not strictly budget). I have often thought that many benefits were subsidising >> businesses. They could get with paying low wages with the knowledge that the State would >> often make up the difference in benefits if the workers had a family. The increase >> in minimum wages will reduce the benefits bill because amounts claimed per person will reduce >> accordingly. Agree. It should reduce the amount needed to top up low wages but most of what people get is rent. If that goes up and the LHA rate (ie the ceiling for a given house size in a given area) tracks it then it might not be as dramatic as you'd hope. >> No rise in fuel duty - yay. But there should be. >> NI: This is going to hurt a lot of businesses, big and small. For small >> businesses, the reduction in the rate at which NI gets paid from £9,100 to £5,000 >> is really going to hurt. It's that change and not the headline rate that's making money. >> Pensions: I am surprised by this. Not that pensions are now to be included in >> inheritance tax calculations - after all they are an asset like any other - though >> it will hurt many. What gets me is the double taxation potential. E.g. a high >> earner would be taxed 40% to 45% on withdrawal of the pension pot then 40% >> for any element above the threshold so it could be possible - if I understand >> it correctly that a pension in an estate for capital gains could be subject to >> "marginal" tax of between 80% and 85% - this doesn't seem equitable. If there's a trap there, like those around the point where the Personal Allowance is eroded, it needs dealing with. I don't buy the argument that paying IHT on money saved from taxed is some sort of double taxation; most of the gain is from houses or equities and was not taxed before. |
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New Sat 2 Nov 24 16:43
That Budget - Lygonos
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There's a way to avoid IHT. Give your s*** away before you die. Zero sympathy for billionaires dying with their billions - give it to your family while you're alive. |
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New Sat 2 Nov 24 17:10
That Budget - smokie
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Yes, there's no point being the richest corpse in the graveyard... Some snippets from my mind and some I've seen. Firstly I fully appreciate the need to raise significantly more money. I'm not sure re-engineering the way debt is calculated really fits that bill. Smells more of kicking it down the road to me. The 1p a pint is derisory on a £5 pint. The cost of a beer will go up much more as many pubs use minimum wage staff. Why would farms expect to be treated differently from other small businesses as far as IHT goes? (Ignoring the Dyson type mentioned above...) (Similarly I'm not sure why doctors feel they should be treated differently) Not raising personal allowances will gradually bring more and more people into tax. I hope they realised that. I also hope they realised that putting up business staffing costs will result in higher prices, Why wasn't fuel duty raised? I read that up up a third of the £22bn they were left with actually covers the public services pay settlements they agreed. I suppose the pension piece is fair but it is the one which impacts me most (well, my family). I'm glad they didn't touch the 25% tax free from my SIPPs but it wouldn't surprise me if it happened sometime so I'm taking it out as a lump anyway as I can stuff it into ISAs. I'm kind of against second homes anyway. There are loads of other places you can invest and they are snapping up and tying up housing stock which really is desperately needed for first homes. It's costing the country a fortune to provide accommodation for all kinds of people due to the shortage. I'm OK with people buying purpose built holiday flats. Bus fares - shame they couldn't leave it where it is but at last it's still capped for now. Based on my miniscule observations in my area the buses do look to be a bit busier and the limited amount I've used them it's pretty good but they need to attract people out of cars more and so maybe a carrot AND stick would help. If the services were better (and the profits weren't being soaked up by directors and shareholders) they would be able to expand which would be good all round. Public ownership may be the answer but is unlikely. I was pleased the non-dom status seems to be being reined in as it seemed pretty unfair to me, though I've not read about it since hearing her say it.. In other news "The government's new Value for Money chief has headed up several big projects that went massively over-budget." www.bbc.co.uk/news/articles/c1lgpejq85po Last edited by: smokie on Sat 2 Nov 24 at 17:11
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New Sat 2 Nov 24 19:02
That Budget - Terry
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Labour, I assume not just Rachel Reeves, seem to believe the public are innumerate fools. Redefining the fiscal rules is smoke and mirrors - borrowing money for investment needs to be repaid - but borrowing is forecast to increase over the life of this Parliament. All despite protestations in the election campaign that they would live within the existing rules. Farming is not a profitable business - imports from places with lower standards than the UK, more clement weather, powerful supermarket chains. No problem with taxation on those who invest in farmland as a tax avoidance strategy. However owner occupier farms could face real problems. The average size of a farm is ~250 acres in the UK. Farmland, depending on grade and location is £7-10k per acre. A modest farm may have a value of £2-3m. Farming cash flows are insufficient to borrow to cover inheritance tax bills - many will be forced to sell. Consequences - less motivation for environmental husbandry, more imports, traditional farming businesses closed. It is about 5 years since personal tax allowances were raised. The claim that personal tax has not increased is mathematically correct but a half truth - in real terms personal taxes are increasing materially and set to do so for a few more years. The inheritance tax changes I largely agree with. Tax relief is allowed on pension contributions to encourage saving for retirement and taxed when drawn as a pension. It was never intended as an inheritance tax avoidance scheme. It cannot be taxed twice - it is either drawn and taxed before death, or should be taxed on inheritance. Increasing taxes on second homes - those brought for rental income make zero difference to the housing crisis - the solution is build more houses in places folk want to buy. Increasing NI has zero immediate personal impact for most. But increased business costs can have the effect of (a) increasing prices and inflation, (b) increasing lower priced imports, (c) reducing headroom for future pay increases, (d) reducing employment, (e) reducing dividends. Probably a mix of all - a little like freezing personal allowances the consequences are far greater than what is immediately apparent. |
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New Sun 3 Nov 24 22:32
That Budget - Lygonos
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>> Similarly I'm not sure why doctors feel they should be treated differently GP partners. Has no impact on consultants and other salaried doctors. My Practice will incur ~£12k extra costs is there is no U turn (which I suspect there will be) As we cannot increase our income that means I take a £2k pay cut or we dump staff or cut the service we provide. This is on top of a year when consultants got a £5-6k bigger pay rise than GP partners. This direction of travel makes it increasingly difficult to attract young doctors into the community, and away from the wholly underproductive hospital system. If there is no U turn I can categorically assure you that we will be cutting the services we provide, preserving our staff and our incomes. |
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New Mon 4 Nov 24 06:35
That Budget - Lygonos
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www.bma.org.uk/media/k5ani1lf/bma-gpce-letter-to-darren-jones-hmt-01november2024.pdf |
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New Mon 4 Nov 24 12:49
That Budget - Terry
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>> My Practice will incur ~£12k extra costs is there is no U turn (which I >> suspect there will be) >> >> This direction of travel makes it increasingly difficult to attract young doctors into the community, >> and away from the wholly underproductive hospital system. >> >> If there is no U turn I can categorically assure you that we will be >> cutting the services we provide, preserving our staff and our incomes. I have some sympathy. The Chancellor announced an extra £22.6bn for the NHS - surely some of this should flow in the direction of GP contracts. For most GPs are, or should be, the first point of contact with the NHS. If it takes days or even weeks to get an appointment it is no wonder A&E becomes overwhelmed having to deal with that which could be sorted in a GP practice by a doctor or nurse. |
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New Mon 4 Nov 24 13:01
That Budget - Lygonos
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Cheers Terry, The biggest reason for A&E getting stuffed is it not being able to push patients into the rest of the hospital. For now. General Practice is now at a point where we will increasing be using Safe Workload Guidance and simply telling patients "we are at safe capacity - if you feel you need to be seen today call NHS24 or attend A&E". There are twice as many WTE hospital consultants now compared to when I started in 2001, while the number of GP WTE is almost unchanged. The proportion spent on General Practice (where 90% of patient contacts happen) of the NHS budget has fallen from around 11-12% to more like 7%. The over 65 population is 25% higher in the last 20 years, and multimorbidity has increased even faster. We are the cheap, efficient bit of the NHS. Nothing we do can be done cheaper in a hospital - 2 A&E attendances costs more than a Practice gets for looking after a patient for a year. Last edited by: Lygonos on Mon 4 Nov 24 at 13:02
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New Mon 4 Nov 24 14:28
That Budget - zippy
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I sympathise Lygonos. Miss Z (a registrar) works on a department with 5 consultants. Recently 4 of whom did not want to deal with a patient who was clearly very ill, but nothing was showing up on the CT Scan. Miss Z was convinced patient was seriously ill. Miss Z arranged with consultant number 5 consultant to open up the patient to see what was wrong and 40cm of dead "plumbing" was removed. 5th consultant was very happy with Miss Z. Miss Z thinks they they have the right number of consultants but some are in the wrong job and don't actually care about the patient. Miss Z's problem is she probably cares too much. Last edited by: zippy on Mon 4 Nov 24 at 14:29
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New Mon 4 Nov 24 14:38
That Budget - Lygonos
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They have too many consultants doing too few procedures. The last 20% in consultant numbers had led to a 4% rise in procedures. Productivity in hospitals is terrible. |
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New Mon 11 Nov 24 11:54
That Budget - Mapmaker
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Smokie “ Why would farms expect to be treated differently from other small businesses as far as IHT goes? (Ignoring the Dyson type mentioned above...) “ Interestingly they’re not. Business Property Relief is the same as Agricultural Property Relief and both have been restricted. The whole point of these reliefs is so that small businesses don’t have to be sold or wound up when the owner dies, on the basis that such businesses are valuable for society/employment etc. I don’t approve of IHT. If you have 100% IHT then society does not advance - think to an era when people were buried with all their possessions. However it does exist and Dyson et al were using agricultural land purely for IHT purposes. This has driven up land prices and made farming uneconomic… which is why farmers specifically need IHT relief on something that isn’t worth (from a return on investment perspective) as much as it costs. So it’s not the free market in action as it’s skewed by tax. So reliefs are required. Which skew the market further. Don’t ask me what the solution is. |
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New Mon 11 Nov 24 12:32
That Budget - CGNorwich
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“think to an era when people were buried with all their possessions.” That a silly analogy. If you are buried with all your wealth that wealth is removed from the economy. In the case of IHT the wealth is returned to society, hopefully to be spent by the government in a more useful manner than it would be if passed to the family. |
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New Sat 2 Nov 24 20:43
That Budget - Falkirk Bairn
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Modest Assets - NO IHT £3M in assets - say house £1.5m & £1.5m other- cash, shares BTL etc etc To live comfortable for unknown span of years they might hold on to their wealth IHT due on death (assuming no living spouse) could be £1m - 33% of total wealth £30m of assets - dispose of £27m to family etc and live for more than 7 years. IHT roughly £1m - 3% of total "real wealth" Asset Poor = No IHT Wealthy = huge IHT debts Really Wealthy = Modest IHT compared to "real wealth" Former PM David Cameron's father was a wealthy banker - his estate was (drum roll!!) Under £400,000 - IHT extremely modest |
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New Sun 3 Nov 24 14:00
That Budget - CGNorwich
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“There's a way to avoid IHT. Give your s*** away before you die.” Good idea. I As long as you can guarantee you won’t die in the next seven years that will work. Will my GP provide such a guarantee? |
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New Sun 3 Nov 24 15:42
That Budget - Biggles
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| You can take out a life insurance policy to cover the tax charge if you want. |
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New Sun 3 Nov 24 16:36
That Budget - Bromptonaut
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>> You can take out a life insurance policy to cover the tax charge if you >> want. My parents did exactly that. The policy was part term cover and part invested in trust to pay on second death. The term cover declined as the sum invested rose. IIRC the premiums were seen as gifts so limited to £3k per annum so as not to breach IHT rules. On my Mother's death it paid a tidy sum and, becuase by then the IHT regime was so generous, there was no IHT to pay. |
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New Sun 3 Nov 24 20:28
That Budget - Dave_
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>> As long as you can guarantee you won't die in the next seven years that will work But it reduces the amount that would have had to have been paid anyway if you make it past 3 years. Better in your family's pockets than the taxman's. If the recipients have the self-control to put the equivalent tax amount away (i.e 40% of the gift) in a savings account for the duration, it does work. Last edited by: Dave_ on Sun 3 Nov 24 at 20:29
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New Sun 3 Nov 24 21:19
That Budget - Robin O'Reliant
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>> >> As long as you can guarantee you won't die in the next seven years >> that will work >> >> >> Myself and three work colleagues chip in for a joint ticket in the Euromillions lottery every Tuesday and Friday. The person who buys the ticket is deemed to be the benificiary and any money paid to the others is regarded as a gift and taxable should he be awkward enough to snuff it within seven years. The chances of a win are almost non existent but just incase we've downloaded an official form from the organisers classing us as a syndicate and exempt from any tax liabilities. When you've blown all ten million or so on Ferraris, Lear jets, drugs and hookers the last thing you need is a massive bill from HMRC. |
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New Sun 3 Nov 24 21:47
That Budget - zippy
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>> When you've blown all ten million or so on Ferraris, Lear jets, drugs and hookers >> the last thing you need is a massive bill from HMRC. >> Surely... When you've wisely spent all ten million or so.... :-D |
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New Sun 3 Nov 24 21:54
That Budget - Robin O'Reliant
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>> >> >> >> >> Surely... >> >> When you've wisely spent all ten million or so.... >> >> :-D >> That's what I said. |
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New Sun 3 Nov 24 18:43
That Budget - Kevin
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>This will hurt a lot of farmers who want to keep the farm in the family, so to speak, but I guess it was >aimed at those farm buyers like James Dyson.. Like Rachel Reeves I'm no economist so I'm picking up how this affects different people bit by bit from what's reported in the media and online. In the case of farmers, a spokesman (person?) explained that the govt. treats agricultural land as a business in some circumstances and a personal asset in others and switches between the two depending on what they are trying to enforce. There are already regulations in place which define what is required for a farm to be considered as a "working" farm and if the intention was to stop people shielding wealth by owning agricultural land then a simple change to those regulations could have achieved that. She accused the govt. of conflating those circumstances (and basically lying about the consequences and numbers - my words). In general I must admit that I was a bit comfused at first when Reeves said that it was a budget for growth until I realised that she was referring to public sector payroll and national debt but overall there's no big surprise. Tax and spend, it's what Labour do. |
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New Sun 3 Nov 24 18:52
That Budget - Kevin
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| PS. I loved the reactions to the pic of Steve Reed, our Environment Secretary, in £400 wellies gifted by Lord Alli. |
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New Sun 3 Nov 24 19:51
That Budget - Robin O'Reliant
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| Surely a faired way to apply IHT to farms would be to exempt those who pass the business onto their direct offspring and only apply it when it is sold on to a third party. |
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New Sun 3 Nov 24 20:20
That Budget - smokie
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| I've always felt if someone had a large tax bill they've usually had an even larger revenue of some sort, so ought not have much to moan about. I suppose Id not really factored in that it may be goods rather than money, but in this case it does seem that they've tried to reduce the impact of the cash demand by deferring payments etc. |
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New Mon 4 Nov 24 15:17
That Budget - CGNorwich
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Philosophical question? Why is it better for wealth to be passed to a few selected individual chosen by the deceased rather than to revert to the state for the benefit of society as a whole? |
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New Mon 4 Nov 24 15:39
That Budget - zippy
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>> >> >> Philosophical question? >> >> Why is it better for wealth to be passed to a few selected individual chosen >> by the deceased rather than to revert to the state for the benefit of society >> as a whole? >> The deceased built up the wealth. Perhaps what happens to that wealth should be up to the deceased? It's how the nobility / royalty kept hold of theirs for centuries. Of course the problem is, it keeps the same lot in power / holding the wealth to the detriment of most of the remainder of the population. So, I have no problem with a reasonable amount being kept and some re-distribution to the state. Unfortunately the state are not an efficient means of distribution :-/ |
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New Mon 4 Nov 24 16:23
That Budget - CGNorwich
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Unfortunately the state are not an efficient means of distribution :-/ Nor typically is giving it to the family. Family owned businesses typically have a three generation cycle wher the founder makes the money, the second consolidates the wealth and the third blow the lot. Individualss too often are unable to cope with major acquisition of wealth. You only have to read the histories of the aristocracy. |
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New Mon 4 Nov 24 19:21
That Budget - Falkirk Bairn
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>>if someone had a large tax bill they've usually had an even larger revenue of some sort That can be true in many businesses. But in farming the "Farm Value" is often way above what profits the farm provides. Paying back loans needs profits and these are not guaranteed year on year. |
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New Mon 4 Nov 24 19:54
That Budget - zippy
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There was a weird inheritance tax discussion somewhere recently but I can't find it now... Basically, someone died and left an estate that was mainly crypto-currency plus a house. The crypto was valued at the day of death and was worth a fortune. Since then the particular currency has plummeted in value. HMRC are claiming inheritance tax based on asset values at the time of death. At the time of sale all of the assets don't come anywhere near to being able to pay off the inheritance tax resulting in nothing left in the estate whatsoever for the beneficiaries. I have no idea how accurate this is but understand that some allowance is made for shares which can fluctuate in value. Last edited by: zippy on Mon 4 Nov 24 at 19:59
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New Mon 4 Nov 24 20:03
That Budget - Robin O'Reliant
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>> >> >> That can be true in many businesses. >> But in farming the "Farm Value" is often way above what profits the farm provides. >> >> Paying back loans needs profits and these are not guaranteed year on year. >> >> >> I knew a farmer who gave his farm up and trained as a driving instructor. His words at the time were that most farmers were asset rich, cash poor. |
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New Tue 5 Nov 24 05:41
That Budget - CGNorwich
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| Most farmers are tenants and are both asset poor and cash poor. |
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New Tue 5 Nov 24 09:03
That Budget - bathtub tom
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>> Most farmers are tenants and are both asset poor and cash poor. www.google.com/search?client=firefox-b-d&q=i%27ve+never+seen+a+farmer+on+a+bike#fpstate=ive&vld=cid:856a4ca1,vid:BNQ3itmFug8,st:0 |
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New Tue 5 Nov 24 16:52
That Budget - Terry
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>> Most farmers are tenants and are both asset poor and cash poor. >> According to the government figures there are 216000 farm holdings: 54% are owner occupied 14% are tenanted 31% are a mixture 1% not known Most are asset rich and cash poor due to low profits. The extent to which the asset price has been inflated by the inheritance tax benefits is open to debate. |
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New Tue 5 Nov 24 18:17
That Budget - Kevin
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>The extent to which the asset price has been inflated by the inheritance tax benefits is open to debate. Farmer just been on TV saying that the biggest driver of inflation in land prices is currently large companies buying for carbon offsets and solar panel installation. |
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New Tue 5 Nov 24 17:52
That Budget - Biggles
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| If I was a 40 year old farmer working on my 65 year old dad's farm, I would expect to be in a partnership with him. On his death only a portion of the farm's value would be assessed for IHT. Say my partnership value was 1/3 and his 2/3. On his death another 1/3 would be transferred to me with the other 1/3 to my mum then eventually to me, all IHT free. |
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New Tue 5 Nov 24 18:10
That Budget - zippy
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On phone so please excuse typos... I used to have an agro-chemical supplier as a client. They had to start taking liens on crops because farmers didn't have the cash flow to pay on normal terms. Their business model basically changed to them taking shares in crop yields. Rules around argo chemicals are far more complicated than I had imagined (basically ingredients for poisons or explosives). |
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