About time for a thread on the state of the UKs piggy bank.
Keep it friendly you scoundrels.
Personally. I would like a huge tax simplification exercise.
Scrap inheritence tax.
Scrap stamp duty.
Scrap NI
Increase income tax on a sliding scale to a level to compensate for above.
Reverse the idiotic taxes and dis-insentivisations on bussiness.
Your turn.
Tax its a numbers game.
The UK’s tax burden in historical and international context
Start it off with some stats for balance . We are lower than many European nations. especially Germany France and the Scandinavian nations.
Is there a problem with our taxation levels or is it just people want government services Health, Education Defence etc, but want someone else to be taxed to pay for it,
Keep IHT but raise the limit from current and get rid of tapering on estates +ÂŁ2m (especially as pensions will be inside estate from 2027)
Remove the previously imposed limit on BR and AIM
Keep SDLT but again raise limits
Scrap NI
Otherwise raise threshold for tax from ÂŁ12,500 to ÂŁ20k
No tapering of any allowances, no reduction / removal of benefits once thresholds reached
Then complete raise of all tax to flat rate of 25% on everything (Income tax, CGT, IHT)
All allowances to rise with RPI (not CPI) annually
If you made it simpler then less people would try to avoid any sorts of tax. Also whilst progressive tax rate works in theory, in practice all you’re doing is suppressing wages so everyone has a more equalised income.
Yes…
In what way?
I think the problem is we are taxing things in so many different ways and I agree with @Paracetamol that we need to simplify things.
Why if I receive income from dividends do I get taxed on this income differently to the income I acquire from employment & savings interest?
The other thing is that NI was cut by 4% by Jeremy Hunt in an effort to win the election (failed), now while the cost to employ someone has increased on businesses and this has 100% affected pay rises this year, my pay packet is being taxed less than it was before the 2024 budget.
Now if Income Tax is to be increased, as has been suggested which would break the manifesto of the current government, I’d like to see this done alongside a change to the thresholds.
I’ve built some worked examples to show how this could look based on the latest data.
Current Income Tax
Overall Income tax from these 4 workers = ÂŁ26,369.72
Proposed Changes
New Income Tax Paid
Overall Income tax from these 4 workers = ÂŁ25,526.10 (ÂŁ843.62 lower)
I’d also go and remove the Tax Free Allowance Tapering over 100k as well and perhaps adjust the additional rate of 45% to begin at £100k (give & take)
Fiscal drag along with suppressed wages compared to rest of developed world in short. As a nation we should all have levels of disposable income yet everyone questions each year how much they can afford to have the heating on in winter.
Norway for example uses their part of the north sea oil fields to supplement their government spending but our government would rather sell the rights and not reap the ongoing rewards.
This seems like a sensible approach.
I’d love to see simplification of taxes, do away with the over 100k rule and adopt a more linear tax system including those paid via dividends. I’d also get rid of the rules unfairly targetting single income families.
I’d be OK with this and I already pay a lot.
Crucially I have never been against paying more tax, so long as it is used sensibly. If the increase were used specifically for servicing the national debt for example.
I was thinking about this - why not an income tax rate based on what percentile band pegged to average wage.
Those who average income is in the lowest 10% pay no tax, those in the 90% pay 47.5%
And then you graduate for each 10% band in between making things more fairer & more spread out than boxes 1, 2, & 3
But Norway still tax at 43% while UK tax at 34%, OBR figures
Agreed, I would also outlaw tax avoidance schemes that some wealthy people use/have used to lower their tax burden e.g. Jimmy Carr, Nigel Farage Ryanair Pilots
The UK is currently in a period that some are terming as stagflation or stagflation-lite. This is one of the most difficult things to successfully exit, as almost any action (including inaction) can exacerbate the situation and cause runaway inflation.
I’m actually inclined to believe we need to do a post-2008 Iceland and deliberately default on international debts. This most definitely will cause short-term and pretty damn sharp pain, but we’re currently in a spiralling situation; debt increases, the cost of servicing the debt increases, we borrow more to pay the cost of the debt whilst raising taxes, so debt increases etc. Domestically, this means cuts to services whilst simultaneously working people paying more tax to the state, leading to high levels of discontent as people question why they’re paying more to receive less.
There’s plenty of work out there that demonstrates how, when a state puts up barriers to trade, it suffers economically - even where such barriers are protectionist measures. Indeed, one of the leading causes of WW2 was all of the major powers becoming isolationist and protectionist as a result of The Great Depression. We’ve just had our biggest exercise in protectionism; leaving the EU’s free trade agreements and now we’re witnessing the consequences of that.
Personally, I don’t think domestic alterations to taxation can be large enough to solve the systemic problems facing the country right now without causing significant civil unrest - the scale of the problem is too great. I think it’s only a matter of time before we go cap-in-hand to the IMF again.
The last Labour Chancellor who did that was Denis Healy in IIRC 1974.
I’m trying to leave party politics out of it for 2 reasons:
Firstly, we don’t have the best record on this forum of maintaining civility when party politics gets involved. Secondly, I actually believe the problems are bigger than the parties. They may swing the balance slightly within the system, but not to a degree that’s going to make significant differences.
However the timing of what you’ve mentioned is actually noteworthy. Just before this happened we had a major upset within the world economic system with the dropping of both the gold standard by the United States and the fixed exchange rate mechanisms used for global trade - it was a fundamental change to the way things were done.
Looking at the current systems at a strategic level, I think we’re on the cusp of something of similar magnitude happening again. What it will be is anybody’s guess. What’s worth noting for us, however, is that the UK is uniquely exposed amongst developed nations right now and not in a position where it can absorb major shocks and changes to the global financial system. If a substantial structural change were to manifest with the global economic & financial systems, the UK would likely suffer quite significantly.
I fear the day the AI bubble bursts.
The US stock market and therefore global financial security is currently propped up by companies that will be hit verrrrrry hard in terms of stock price.
this is on the cards…
It is indeed.
Being compared to the .com bubble and I think it was either Sam Altman or the Anthropic CEO that has already gone on the defence and talked about it not being like that and being “a good kind of bubble”.
Flat rate tax as per some EU countries?