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Potential Budget Proposals
Shetland
Posted: 15 October 2017 12:05:22(UTC)
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Only a few weeks to go before the budget and I wonder what peoples expectations are. My expectation, and I hope I am wrong, is that the chancellor will seek to reduce the cost of ISA's, either by reducing the amount that can be paid in each year, or by taking away some of the CGT benefit.
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Mickey on 15/10/2017(UTC), colin overton on 16/10/2017(UTC)
Captain Slugwash
Posted: 15 October 2017 12:45:06(UTC)
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With Blue Labour currently in power I am expecting energy price caps, more tax on dividends and restrictions on ISA contributions and further fiddling with pensions re relief or LTA.
Also more tax on booze, fags and fuel.

May only get a combination of the above, but best to expect the worst as it still gives them the option of leaving me pleasantly surprised.
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Shetland on 15/10/2017(UTC), jvl on 16/10/2017(UTC)
jeffian
Posted: 15 October 2017 13:18:29(UTC)
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With the budget deficit far from under control, the one thing you can be certain of is that the 50% of us who do pay all the income taxes (including the 300,000 people at the top who pay 27.5% of the total) will have to pay more. This Chancellor has followed in the footsteps of George Osborne with 'stealth' taxes and taxes disguised as giveaways (e.g. the £5k dividend 'allowance' - actually an increase from 0% to 7.5-32.5% - reduced this year to £2k without even being debated or going through the Finance Act) and I think you can expect more of the same.

I have written before on these forums about the untrustworthiness of politicians when it comes to taxes and how yesterday's promises are forgotten tomorrow (e.g. the reduction in CGT to offset the loss of taper relief....only to be put up again later) and, like Shetland, would not wish to bet the farm on ISA's remaining 'tax-free'. As they get bigger over time, it'll just be too tempting a target. However, I don't see that as being an imminent threat. In the short term, I think the attack on pensions will continue (leading to more people not bothering with them and preferring ISA's instead at which point..........!).
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Keith Cobby on 15/10/2017(UTC), Mickey on 15/10/2017(UTC), Aidan MacGinley on 16/10/2017(UTC), Tim D on 16/10/2017(UTC)
Tony Peterson
Posted: 15 October 2017 15:22:37(UTC)
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Whereas there is unlikely to be any attempt to get any inheritance tax at all from the last Duke of Westminster's £8.600,000,000 handing down of UK property to his family.

I suppose I should be comforted that my executors will be paying more in IHT than his had to.
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Mr Helpful
Posted: 15 October 2017 17:54:35(UTC)
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The ISA contribution lift from £12,000? to £20,000 per year did seem OTT.
Esp with so many (younger) people struggling to make ends meet.
Think that was an Osborne masterstroke?
Him of the 'Evening Stannit'.
Leaves ISAs now looking somewhat over-exposed for the Chancellor's attention.
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Shetland on 15/10/2017(UTC), jvl on 16/10/2017(UTC)
Shetland
Posted: 15 October 2017 18:01:56(UTC)
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Mr Helpful;52010 wrote:
The ISA contribution lift from £12,000? to £20,000 per year did seem OTT.
Esp with so many (younger) people struggling to make ends meet.
Leaves ISAs now looking somewhat over-exposed for the Chancellor's attention.



I think it went from £15240 to £20,000. Still a very significant increase
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Mr Helpful on 15/10/2017(UTC), jvl on 16/10/2017(UTC)
Tyrion Lannister
Posted: 15 October 2017 20:22:44(UTC)
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With interest rates so low I think it's unlikely that ISAs will be tampered with. In relative terms they cost next to nothing in lost tax revenue.

The more likely by far imo is that tax relief on pensions will be restricted to 20% for all. I haven't seen the sums but was told this would raise some £30 billion pa.

As a precaution, I'm going to max out my pension before the budget, it probably wouldn't take effect until the next tax year but I'm not taking any chances, budget measures have often Taken immediate effect in the past.
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Tim D on 15/10/2017(UTC), Shetland on 16/10/2017(UTC), jvl on 16/10/2017(UTC)
xcity
Posted: 15 October 2017 22:19:04(UTC)
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I'm thinking I should complete my contribution for this year. And withdraw the 25%.
I've no idea what Hammond will do, but he has shown no sign of sense or political judgement and might well go for something dramatic though ill-judged attempting to restore his reputation.
My options are limited, but it makes sense to reduce my exposure to these risks. I won't be doing anything I wouldn't do anyway, just shifting the timing. It's likely to be my last year with significant contributions anyway.

I don't understand why they appear to be wanting to go for the youth vote. They won't be voting Conservative anyway, and the last election only really started to swing with the dementia tax. They should always have been trying to govern for the country as a whole.
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Tyrion Lannister
Posted: 16 October 2017 05:15:19(UTC)
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xcity;52014 wrote:

I don't understand why they appear to be wanting to go for the youth vote. They won't be voting Conservative anyway, and the last election only really started to swing with the dementia tax. They should always have been trying to govern for the country as a whole.


You could equally ask why they pander to the older generation, particularly pensioners, who will vote for them anyway.

The point of targeting the youth vote is that many haven't formulated any political views so are more open to persuasion. It's about harnessing voters for the future, not just the upcoming election.
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Mickey on 16/10/2017(UTC)
Shetland
Posted: 16 October 2017 06:35:26(UTC)
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Tyrion Lannister;52013 wrote:
With interest rates so low I think it's unlikely that ISAs will be tampered with. In relative terms they cost next to nothing in lost tax revenue.

The more likely by far imo is that tax relief on pensions will be restricted to 20% for all. I haven't seen the sums but was told this would raise some £30 billion pa.

As a precaution, I'm going to max out my pension before the budget, it probably wouldn't take effect until the next tax year but I'm not taking any chances, budget measures have often Taken immediate effect in the past.



I think that the real cost is the lost tax from CGT and the lost tax on dividends
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Mickey on 16/10/2017(UTC), Tim D on 16/10/2017(UTC)
Mickey
Posted: 16 October 2017 08:21:32(UTC)
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Tyrion Lannister;52016 wrote:

The point of targeting the youth vote is that many haven't formulated any political views so are more open to persuasion. It's about harnessing voters for the future, not just the upcoming election.

Although successive governments are telling us to 'switch' for the best value, perhaps the younger generation will take this idea into their voting pattern also.
jvl
Posted: 16 October 2017 10:37:49(UTC)
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xcity;52014 wrote:

I don't understand why they appear to be wanting to go for the youth vote. They won't be voting Conservative anyway, and the last election only really started to swing with the dementia tax. They should always have been trying to govern for the country as a whole.


The Conservatives seem to be insane at the moment, drawing entirely wrong conclusions from their loss. Before the election they moved further to the left and didn't do anything free-market and they lost more votes. Their conclusion: more of the same?!!!! Crazy.

It's mind-boggling that they can't see it. More tinkering when they need to cut welfare spending and low-quality immigration and cut foreign aid? Tax take is near record highs already and fewer than half of us pay any tax!

They're squeezing the poor taxpayers in the middle so much that even natural free-market libertarians like me are starting to think it wouldn't be such a bad idea for Corbyn to get in for 5 years of chaos, just to get a proper choice back at the end of it. At the moment there's no choice at all.
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Keith Cobby on 16/10/2017(UTC), Freddy4Skin on 16/10/2017(UTC), Captain Slugwash on 16/10/2017(UTC), Aidan MacGinley on 16/10/2017(UTC)
Shetland
Posted: 16 October 2017 10:54:36(UTC)
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Does anyone have any ideas what the chancellor might do which would be invetment / savings / pension related ?
colin overton
Posted: 16 October 2017 11:19:00(UTC)
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I have come to the conclusion that Spreadsheet Phil is in fact The Kommissar's long, lost brother and is working to destroy the system from within. I'm only glad that I've taken my 25% tax free from my pension. I would imagine that SP will close some of the tax loop holes in the pension system, I stopped paying in some years ago.
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Shetland on 16/10/2017(UTC)
Sara G
Posted: 16 October 2017 11:32:07(UTC)
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Perhaps the key question is whether any changes are likely to be implemented immediately or in April 2018. If the latter (as I suspect) then it may be prudent to wait and see before taking any action.

As regards shifting the tax burden on to older taxpayers, I think this would be attempting to solve the wrong problem. Whatever the tax advantages, younger people will continue to prioritise saving for a house over saving for their old age, and won't be able to afford to do both due to static wages and high house prices. By contrast penalising pension savers in their 40's and 50's is arguably counter-productive since most of them need to be incentivised to save more not less in order to avoid running out of money later.
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markus
Posted: 16 October 2017 11:33:54(UTC)
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Shetland;52020 wrote:
Does anyone have any ideas what the chancellor might do which would be invetment / savings / pension related ?



the only thing for sure is the middle will be squeezed...anything else is pure guesswork
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Tyrion Lannister
Posted: 16 October 2017 19:33:46(UTC)
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markus;52026 wrote:
Shetland;52020 wrote:
Does anyone have any ideas what the chancellor might do which would be invetment / savings / pension related ?



the only thing for sure is the middle will be squeezed...anything else is pure guesswork


And if the middle continue to blindly vote for them it'll continue.

I voted LibDem last time and right now would probably do so again.
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Shetland on 17/10/2017(UTC)
Tim D
Posted: 16 October 2017 20:14:12(UTC)
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Shetland;52017 wrote:
Tyrion Lannister;52013 wrote:
With interest rates so low I think it's unlikely that ISAs will be tampered with. In relative terms they cost next to nothing in lost tax revenue.

The more likely by far imo is that tax relief on pensions will be restricted to 20% for all. I haven't seen the sums but was told this would raise some £30 billion pa.

As a precaution, I'm going to max out my pension before the budget, it probably wouldn't take effect until the next tax year but I'm not taking any chances, budget measures have often Taken immediate effect in the past.


I think that the real cost is the lost tax from CGT and the lost tax on dividends


Interesting to look at the total ISA pot up for grabs in the govt's statistics here (2017). The pdf claims almost £600bn total, of which half in stocks-and-shares, half cash.

I do wonder whether a chancellor might be tempted to target at least the stocks-and-shares variety with some sort of wealth tax... 1%pa say. Spin it as a low low payment for the privilege of not having to fuss with CGT and tax free divis; and if anyone doesn't like it well they should just sell off those 1.5% OCF units, fire their advisers and invest in low cost trackers (so there's also an opportunity to spin it as a tax on the fund management industry). In fact per the latest desperate Tory attempts to ingratiate themselves with the kids it could also be spun as taxing the old and wealthy who've accumulated more, while actually being a stealthy tax on young savers who'll have it eating away at their lifetime savings for decades, something the oldies never had to endure (although we did have the 1.5%+ OCFs and the advisers and 5% initial charges).

However... that'd only raise say £3billion which is ~0.5% of total receipts (so comparable with stamp duty on shares or air passenger duty or betting&gaming duties).

(BTW interesting I see Denmark - which is apparently a hideously investor unfriendly place - was toying the idea of creating some sort of investment vehicle using such a model, and at 1.25%pa too).

Similar document with many stats for personal pensions here. I'd agree with the other folks here who think the £30-40bn in pension tax relief seems a more likely target for a chancellor wanting to claw back some significant cash than ISAs.

I also wonder if it's conceivable that at some point nearer exit day we'll see a return to the early days of PEPs when only UK investments were eligible. Maybe they'll freeze/scrap ISAs and announce a whole new BOSSA... a British Only Stocks and Shares Account for people to patriotically invest In proper British businesses (if there are any left).
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andy
Posted: 17 October 2017 04:12:35(UTC)
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Pension tax deference seems to be on the way out. In the same way that the government borrows and borrows to bring consumption forward with the obvious problems that this will reduce growth later - the move from a pensions saving system to an ISA saving system bring the tax take forward. It just leaves future governments with a problem. Pensions have always been a good idea - the question is one of balance between people who pay tax and people who consume from the system. This government knows that some people (like many on here) will save regardless of the tax regime.

Separately - the Tories know that they are on the way out. Following the self abuse that is BREXIT the young will vote Labour. The only Tory with any voter appeal is Ruth Davidson - I am shocked that the new hard right Tories put up with her. BREXIT is this generations poll tax. I remember the poll tax mantra - "they put you out of a job - now put them out of a job".
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Tim D on 17/10/2017(UTC)
jeffian
Posted: 17 October 2017 09:16:28(UTC)
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" - the move from a pensions saving system to an ISA saving system bring the tax take forward. It just leaves future governments with a problem."

It doesn't. Unfortunately, as per my earlier comment, you can't trust politicians not to change the goalposts as they have done with so many taxes and incentives. If the Government move towards an ISA-style savings system of 'taxed in, tax-free out' you can bet your bottom dollar that a few years down the line when they hope we've forgotten the change, they would reintroduce taxation of savings income.
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Mickey on 17/10/2017(UTC)
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