United Kingdom
General community for news/discussion in the UK.
Less serious posts should go in [email protected] or [email protected]
More serious politics should go in [email protected].
Try not to spam the same link to multiple feddit.uk communities.
Pick the most appropriate, and put it there.
Posts should be related to UK-centric news, and should be either a link to a reputable source, or a text post on this community.
Opinion pieces are also allowed, provided they are not misleading/misrepresented/drivel, and have proper sources.
If you think "reputable news source" needs some definition, by all means start a meta thread.
Posts should be manually submitted, not by bot. Link titles should not be editorialised.
Disappointing comments will generally be left to fester in ratio, outright horrible comments will be removed.
Message the mods if you feel something really should be removed, or if a user seems to have a pattern of awful comments.
view the rest of the comments
Messing with income tax won't fix anything, it's capital gains and all the loopholes that need dealing with.
Income tax starts at 20% then goes up. Capital gains starts at 20% then goes down.
It's worse than that..
For lower rate tax payers, it starts at half the income tax rate (with no national insurance). So 10% instead of 32%. For residential property, 18% (with no NI) so 18% instead of 32%.
For higher rate income tax payers it's half the income tax rate (with no national insurance). So 20% instead of 52% (if NI wasn't also tilted in favour of high earners). For residential property, 28% (with no NI) so 28% instead of 52%.
But higher rate tax payers get a massive cut in NI too at not much above the higher rate income tax threshold, paying only 2% NI on earnings above the higher NI threshold, so on that portion of their earnings it is 20% (or 28%) instead of 42%.
Then the very rich get to play with massive loopholes, only paying tax if they feel like it. Which, mostly, they don't.
Yeah I left out NI for brevity lol. TL;DR for everyone else, in the last couple years they changed the boundaries for NI to match those for income tax. NI is 0% for the first £12,500, 12% up to £50k, 2% over £50k. So really you can just combine it with income tax, and the total tax bands are 0%, 32% and 42%. This means the take home tax rate difference is only 10%, not 20% like commonly perceived with the 20% and 40% rates.
There's also some fuckery around the £120k mark, where basically you take home less as your salary goes up a bit. I forget the exact details, but you have to punch through to almost £150k for it to be worthwhile, or something.
Then there's salary sacrifice, which anyone earning over £50k should consider. Basically, you agree with your employer to reduce your salary, and the extra goes straight into your pension. When you do this with income above £50k, you avoid paying the 40% tax at that time. If when you retire your retirement income remains below the 40% tax bracket, then you'll never pay the 40%, only 20% when you withdraw your pension.
Wait it goes down?! Excuse me wtf.
Yes, through loopholes.
An example, you may have heard of "Employee Owned Businesses", a system introduced by the Tories, modelled after John Lewis/Waitrose, which is an employee owned company. Essentially, under the scheme a privately owned cash-rich business can buy itself from its owners. This is done with the set up of an Employee Owned Trust (EOT), a separate business that temporarily owns the main business over however many years it takes to pay off the owners for the full price. After that, the business is fully employee owned and operated. However, the big incentive is that it's tax free for the original owners.
Say the business was worth £50 million. In theory you could restructure the business into an employee owned business, or sell it to anyone else, but you'd have to pay £10 million in capital gains tax, and you'd only take home £40 million. By going the EOT route you get the full £50 million.
Most high value transactions that are done use some tax incentive scheme or another to reduce the capital gains tax below the starting level of 20%. Such loopholes are not available for income tax. However, truly wealthy people don't make most of their money through salaries, their main income is capital gains.
Personally I don't think income should be taxed, at least not below some very high threshold (to prevent exploitation). You're already giving up your time, which is the ultimate value, and you're doing so in service of a business which itself is in service of society. You've done your part, you're not getting the excess profit. The things that should be taxed are when people make money from assets, when they make money not by doing things but by exploiting what they own.