View Full Version : Possible tax changes and the pre-budget report
Well with the pre-budget report due out in the next week or so what do we think will be the tax cuts old Gordo will be using to buy the next election?
What I would like to see is the re-introduction on mortgage tax relief, but know it will never happen as it does not benefit a large proportion of the labour party's supporters :| After all it is the mortgage market that caused this crisis to start and the forclosure of them is a big problem, so tax relief on them would be a huge boost to those of us who have a mortgage on a house we live in (after all you can get this already if you do not live there and rent it out :| ).
I think it will be an extra tax allowance for the 20% tax bracket again, being paid for in part by the 40% tax payers, or at the minimum it being setup so that the 40% payers do not benefit again by reducing the threshold for 40% once more.
I also put my guess in right now and families being mentioned at least 22 times in the report and not one mention of single, employed home owners :|
Speaking of families, they could re-instate the option to share your tax code with your partner, which would reduce the pressure on families to have both partners working, which in turn would make some of those jobs available to others.
douglasb
16-11-2008, 09:25
What I would like to see is the re-introduction on mortgage tax relief, but know it will never happen as it does not benefit a large proportion of the labour party's supporters :|
I also put my guess in right now and families being mentioned at least 22 times in the report and not one mention of single, employed home owners :|
You're right. All those council estate dwellers are the first in line when it comes to planting their X.
Anyway, Labour have always been the natural constituency for the pink vote.
I also put my guess in right now and families being mentioned at least 22 times in the report and not one mention of single, employed home owners :|
...or married homeowners with no children who work ridiculous hours for not much over minimum wage which means they get shafted the most in taxes :(
I actually meant it in a little more depth than that. Labour's strong holds are northern counties where the average income is lower and on average less people have mortgages or large ones anyway so the introduction of mortgage relief there will have less impact than say a 5% increase in tax allowance and extra family tax credits, where towards the south and the conservative strongholds there are more single people with houses and large mortgages in the 40% tax bracket who are unlikely to benefit from such cuts but would benefit massively from mortgage tax relief. Ideally we would see both, but given the choice they will go for the one benefitting their own supporters who I am sure they think are worse off. Just because someone is in the 40% tax bracket does not mean that they are well off as often they have to live in more expensive areas to get these higher paing jobs, and these are the jobs that are at very high risk right now (e.g. finance sector in the city, IT jobs etc).
I may well have it wrong, but those earning more tend to spend more and when they stop spending then it hurts everyone so allowing all the 40% tax payers to have even less disposable income and higher risk of losing everything is surely a very bad thing?
I know I am hoarding money at the moment and trying to minimise my spending heavily.
...or married homeowners with no children who work ridiculous hours for not much over minimum wage which means they get shafted the most in taxes :(
Not sure about just over minimum wage, but it is worst where the couple earn over 45k combined but only pay 20% tax, where as a single person earning that pays the 40% tax rate with both in a house the single person is much worse off in msot ways as eating for one tends to cost as much as eating for two I find and obviously all the bills are to one person too. Only discount is 25% off your council tax.
But MIRAS was only ever allowed up to £30000 single or £60000 joint mortgages. So your large mortgage north/south divide wouldn't make any difference anyway as the relief will be capped so that all gets the same amount of relief on average.
Apparently he is putting back the car tax increases on pre 2006 cars a year. Means my focus wont cost me £260 until 2011. Saves me around £85 so I'm happy about that.
As for what else, it would be nice if he abolished VAT on all food, gas and electric as that would benefit everyone.
Too simple that though. No doubt it will be something silly he comes up with.
A few nights ago Newsnight's Economics Editor, Paul Mason, quoted an un-named senior Labour party person as saying the borrowed billions will be 'given to the people that need it and people that will spend it'.
Loads of people have been spending borrowed money and that has come to an end of it's own accord. I would imagine the Treasury will look at the US fiscal injection that was targeted at income tax payers (I think) and largely went into savings accounts or helped towards paying off borrowings. It didn't help the retail side of the economy.
There will be plenty of higher rate tax payers in the UK who would do what is sensible and use any gift or tax cut from the Treasury to reduce their borrowings if possible. I doubt Gordon and Alistair want that. After all, any gift or tax cut funded by extra Government borrowing is still to be paid for by all of us, and probably quite soon.
The cynic in me thinks they will use the report to buy votes. We'll get something (or at least the promise of something, suitably vague so that we can't be sure if we qualify or not) in the Pre-Budget report and have an election next March. I hope I'm disappointed. They could do something clear and immediate that everyone can benefit from, like reducing the highest rate of VAT or abolishing VAT on energy bills and road fuels.
But MIRAS was only ever allowed up to £30000 single or £60000 joint mortgages. So your large mortgage north/south divide wouldn't make any difference anyway as the relief will be capped so that all gets the same amount of relief on average.
Yes but that was many years ago, obviously it would have to be adjusted for today's equiv mortgage value. Maybe 100k single and 200k joint.
Not sure about just over minimum wage, but it is worst where the couple earn over 45k combined but only pay 20% tax, where as a single person earning that pays the 40% tax rate with both in a house the single person is much worse off in msot ways as eating for one tends to cost as much as eating for two I find and obviously all the bills are to one person too. Only discount is 25% off your council tax.
That's the bracket we fall into (pretty much). I am on just over minimum wage because although salaried I am pro rata paid. I get hit like mad for tax. I'm just lucky that we have completely shared finances so I don't go short like two of my colleagues who are married, but each 'pay their way' :thinking: They are massively worse off because of it.
I know after the 10p tax thing I am paying more tax. I've had a pay scale increase and also a pay rise, but because of that, pay more pension, student loan repayment so actually, I am worse off :|
EDIT: It looks like I don't pay my way :lol: I do but our wages go into one 'pot' and then get divied up as needed - they pay the same amount each which leaves them with nothing and they're perminently skint, although as a couple they earn a lot. Each to their own, but I can't quite get my head around it personally.
Bapapapa
16-11-2008, 12:29
Kryten are you gonna be a bachelor forever or just a confirmed bitter jaffa..?
Me me me..! You appear to be better off financially than most people, but still moan the most.. :D
My missus works her plums off during the week whilst I have the kids and I then work weekends whilst she has them - any tax credits we get practically amount to **** all!!
So I dunno why you keep thinking most families are on some sort of tax haven gravy train..
farmroad38
16-11-2008, 13:08
...As for what else, it would be nice if he abolished VAT on all food, gas and electric as that would benefit everyone.
Too simple that though. No doubt it will be something silly he comes up with.
...They could do something clear and immediate that everyone can benefit from, like reducing the highest rate of VAT or abolishing VAT on energy bills and road fuels.
As I understand it, EU regulations prevent VAT being abolished on something once it has been introduced. I think they can reduce it, but there is a minimum rate.
Kryten are you gonna be a bachelor forever or just a confirmed bitter jaffa..?
Me me me..! You appear to be better off financially than most people, but still moan the most.. :D
My missus works her plums off during the week whilst I have the kids and I then work weekends whilst she has them - any tax credits we get practically amount to **** all!!
So I dunno why you keep thinking most families are on some sort of tax haven gravy train..
Do not get me wrong, I am all for famalies getting the tax breaks, but I think everyone should get them, not just those that decide to spawn offspring ;)
Bapapapa
16-11-2008, 13:47
Yeah the £10 a week tax credit we get really makes a difference... :nuts:
Yes but that was many years ago, obviously it would have to be adjusted for today's equiv mortgage value. Maybe 100k single and 200k joint.
Abolished in 2000, so not that many years ago.
I'm so glad your not chancellor.
belgarion_v
16-11-2008, 16:40
....
As for what else, it would be nice if he abolished VAT on all food, gas and electric as that would benefit everyone.
Too simple that though. No doubt it will be something silly he comes up with.
I'm not 100% sure, but I believe that items which have VAT are dictated by Europe so not much scope there, I think Europe isn't happy that we have a lower VAT rate on gas and electric already.
Vince
Abolished in 2000, so not that many years ago.
I'm so glad your not chancellor.
But 2000-2008 in terms of average mortgage value is a lot! House prices are on average over double, probably approaching 3x in most places so mortgage value would be too?
Yeah the £10 a week tax credit we get really makes a difference... :nuts:
And you should probably get more, but so should others. I am sure say 25 quid a week would make a difference? It certainly should heat a house and probably provide most of the electric too.
LiviLion
17-11-2008, 21:33
My situation is married man with two children. Wife is currently on maternity leave (but the final 3 months of the 12 is unpaid) and works part time as she likes to be home to bring up the children whilst I am away on work most weeks.
We don't get a penny in tax credits so I don't want to see that enhanced.
I also don't want to see the 20p rate 'tweaked' at the expense of the 40p tax rate as that will either make us worse off or no better off.
I've no debts apart from a car loan and the mortgage so I want some of the following:
1 - MIRAS - that would be nice, good to stimulate the housing market at no cost to the financial sector
2 - No unfunded tax cuts, scrap stupid ID Cards and big brother databases and pay for it that way.
3 - Change the tax bands upwards for both the 20p rate and the 40p rate so that everyone benefits.
4 - Don't dare sneak through any NI tinkering as that is where I seem to have been hit quite hard since 1997.
However, in real life I expect to be worse off as I have been every year since 1997.
I think they should drop the 5% VAT on fuel, that should ease the fuel price problem slightly, then 10p/25p/45p for tax
I think they should drop the 5% VAT on fuel, that should ease the fuel price problem slightly, then 10p/25p/45p for tax
You want him to raise taxes by 5%!
Another to the glad your not chancellor list.
3 - Change the tax bands upwards for both the 20p rate and the 40p rate so that everyone benefits.
people who are in the 20p band now, will still be in the 20p band if you up it, so really you mean so that 40p payers benefit and nobody else does.
DeadYankee
18-11-2008, 10:01
I may well have it wrong, but those earning more tend to spend more and when they stop spending then it hurts everyone so allowing all the 40% tax payers to have even less disposable income and higher risk of losing everything is surely a very bad thing?
I know I am hoarding money at the moment and trying to minimise my spending heavily..
As far as most current economic policy thinking goes then yes, you do have it wrong. Your last comment indicates why you'll be at the foot of the list for those gatting tax breaks. The government wants to put more money in the hands of the poorest as it is that sector which will spend, spend, spend and put some life into the economy. The last thing the government/economy wants is to give money to people who will hoard it.
pyrogena
18-11-2008, 11:09
I'm with Kryten and think Brown will throw tax cuts at families. Whilst this perhaps is needed, it should be an across the board tax cuts and everyone should benefit.
As for what tax cut I'd like to see, surely it would make sense to cut fuel taxes - at the pumps and in people's housing bills. This is where people are feeling the major pinch.
For purely selfish reasons I really wish someone would look into tuition fees that mature students pay and there should be some kind of tax relief for tax already paid or being paid whilst studying. Oh how I wish someone would now come along and tell me there is so I can have a brighter day...anyone?
neilalford
18-11-2008, 11:37
people who are in the 20p band now, will still be in the 20p band if you up it, so really you mean so that 40p payers benefit and nobody else does.
It would benefit people in the 20p band though, as less of their income would then be in the 20p band, meaning they pay less tax.
I really can't see them raising the 40p band though (at least no more than the regular fiscal drag correction, which is likely to be pretty tiny next budget anyway by the look of things) and raising the 20p band would benefit people in the 40p band as well (as long as the 40p threshold was not lowered to compensate, like it was with the 10p u-turn)
...and raising the 20p band would benefit people in the 40p band as well (as long as the 40p threshold was not lowered to compensate, like it was with the 10p u-turn)
Bingo, this is my main worry here in that they make it so that the 40% tax payers are no better off than they are now by reducing the threshold on the 40% bracket to compensate for any increase in base allowance, just ad they did with the 10p tax U-Turn. :mad:
I don't see why they don't introduce a new tax threshold at say 50% for people earning over £300,000 or more :shrug:.
pyrogena
18-11-2008, 11:56
I don't see why they don't introduce a new tax threshold at say 50% for people earning over £300,000 or more :shrug:.
Because all major Labour party donators and no doubt many members of the cabinet would be stung by that.
Yup, that is how I see it.
neilalford
18-11-2008, 15:27
I am beginning to worry that Labour are going to win an election next year by offering tax cuts, then in two or three years time we're going to be stuck with a massive tax bill to pay for that borrowing, plus all their crazy databases etc. screwing up our lives and also draining huge amounts of money, increasing taxes even further.
Then you've got more and more people sliding into poverty and turning to crime, leading to a need for increased Police power coupled with massive amounts of surveillance and monitoring. Dystopiatastic :thumbs:
Sounds doom and gloom but worryingly realistic chance of it happening with the short sighted voters just looking at their current state at the time of the election and not the last 10 years or so and the outlook for the future based on the spending of the Labour government.
I hope to be out of the country all being well by the time the tax hikes have to happen again, unless they happen next week or at next years budget that is for me, to pay for all the tax cuts to other people they will be giving out.
KennyVader
18-11-2008, 16:27
Don't forget that Gordon likes to announce things *twice* so any tax cuts probably won't take effect until after the *next* budget. That way he gets to talk about them now and then again next time and the less clever sector of the electorate thinks he's cutting tax again!
DVDWotcha
19-11-2008, 12:10
I don't see why they don't introduce a new tax threshold at say 50% for people earning over £300,000 or more :shrug:.
Or say a 75% tax on bonuses.
Or say a 75% tax on bonuses.
But what about us that get bonuses but not earning massive salaries?
douglasb
19-11-2008, 12:49
Or those of us not earning massive salaries and not getting bonuses either? Let's shoot the buggers and start again!
farmroad38
19-11-2008, 13:21
Or say a 75% tax on bonuses.
Why on earth should bonuses be taxed at that rate? As Kryten suggests, I suspect you're thinking about the City traders who earn millions in bonuses, but there are many others who earn more modest amounts who would also be affected. Bonuses would be taxed at whatever your higher rate is anyway - it's not as if you get them tax free!
KennyVader
19-11-2008, 13:28
I can't see anything being done about bonuses to be honest, too many sales peoples' remuneration structures are mostly bonus/commission based rather than conventional salary, trying to put any limits or special tax on bonus or commission payments would be devastating to sales people across all industries, and not just estate agents and car salesmen!
belgarion_v
19-11-2008, 18:06
What they need to do is sort out the complicated system we have regarding Tax AND National Insurance.
They could have tax bands at 10, 20, 30, 40 and 50%, just alter the point at which each becomes payable.
The current 40% is set too low, unless they allow you to add your partners tax free allowance.
As for bonuses, then if you've earnt them - fine, but you will be taxed at the prevailing rate.
If anyone is refering to bonuses at any financial institution at the moment, I can't see how they could be justified, bonuses relate to performance, and the only performance financial institutions have done recently is to drag this country into its worst recession in living memory - potentially.
Vince
neilalford
24-11-2008, 09:51
So, we get the announcement later today and so far the rumours seem to be;
VAT temporarily reduced to 15%
Really can't see the point of this, the shops aren't going to go round adusting all their prices down by 2.5%, so all that happens is that they'll make slightly more profit at the expense of Government tax revenue, right when the Government is already needing to borrow more to cover falling revenues.
Plus, even if the shops did adjust their prices (and in the case of suppliers that actually add VAT at the time of sale) is a 2.5% drop in the price of stuff really going to encourage people to spend? And in that case, what's going to be the cost of updating systems\prices for what is apparently just a temporary measure?
New 45% tax band above £150,000 coming in in a few years
Not going to raise a huge amount, but might annoy a few high earners (who don't have decent accountants)
The £120 rebate continues for another year
Or to put it more correctly, the 20% band level is not being dropped back to it's old level, though the fact that it's still being called the £120 rebate makes it sound like it may not be adjusted for fiscal drag this year, so this may actually make it a tax increase compared to where the 20% band should have been after the next budget. Though obviously, saying that tax is increasing doesn't sound as good as saying that the government is giving people £120.
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