Potential CGT changes could cost landlords £11,000

This needing to be discussed at all shows how unstable the operating environment has become. To begin with, the state creates inflation, and then taxes those with the audacity to hold assets that hedge it. Taper relief was supposed to be an acknowledgement that gains are a product of inflation, but then the rug was pulled. People took the risks, invested capital, and then were retrospectively robbed. If this state was anything other than a shipwreck, they would have categorically denied it already.

Governments sold the utilities and anything else that they could privatise to fuel the feel good factor and win votes.

Then, they printed money like it was going out fashion to fuel the feel good factor.

Now, with the country virtually bankrupt, they are stealing from landlords to fix the mess that they created.

Massive net migration is destroying the country.

That is a really simplistic way of calculating it and doesn't take into account behavioural changes that landlords would obviously make.

https://www.investopedia.com/terms/l/laffercurve.asp#:~:text=The%20Laffer%20curve%20shows%20the,disincentivizes%20workers%20from%20earning%20wages.

Reply to the comment left by Monty Bodkin at 06/08/2024 - 09:21
Very good Monty.
I think the optimum tax take is 11% ie charge all 11%. The higher earners would keep going for it. And ultimately pay more tax.
But the lower earners would never have that, What u charging him that earn's £10 million a year 11%? I'm not happy about that, I'm voting the other party in.
Even though the £10 million earner would be paying loads of tax, it doesn't look good to the lower earners.
Hence the balance the Govt has to find.
Someone correct me on this, was it the 1970's that all the pop stars cleared off out the UK cause 70% + tax, so the Govt ended up getting none of their tax.
Same now with F1 drivers etc. in Monaco/Switzerland. Charge em 5% 11%, they may just come back.

Reply to the comment left by Monty Bodkin at 06/08/2024 - 09:21
Mark Alexander has put this on before-Very good.

The Tax System Explained In Beer
Suppose that once a week, ten men go out for beer and the bill for all ten comes to £100. If they paid their bill the way we pay our taxes, it would go something like this.

The first four men (the poorest) would pay nothing.
The fifth would pay £1.
The sixth would pay £3.
The seventh would pay £7.
The eighth would pay £12.
The ninth would pay £18
And the tenth man (the richest) would pay £59.

So, that’s what they decided to do. The ten men drank in the bar every week and seemed quite happy with the arrangement until, one day, the owner caused them a little problem. “Since you are all such good customers,” he said, “I’m going to reduce the cost of your weekly beer by £20.” Drinks for the ten men would now cost just £80.

The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected. They would still drink for free but what about the other six men? The paying customers? How could they divide the £20 windfall so that everyone would get his fair share?

They realized that £20 divided by six is £3.33 but if they subtracted that from everybody’s share then not only would the first four men still be drinking for free but the fifth and sixth man would each end up being paid to drink his beer.

So, the bar owner suggested that it would be fairer to reduce each man’s bill by a higher percentage. They decided to follow the principle of the tax system they had been using and he proceeded to work out the amounts he suggested that each should now pay.
And so, the fifth man, like the first four, now paid nothing (a 100% saving).

The sixth man now paid £2 instead of £3 (a 33% saving).
The seventh man now paid £5 instead of £7 (a 28% saving).
The eighth man now paid £9 instead of £12 (a 25% saving).
The ninth man now paid £14 instead of £18 (a 22% saving).
And the tenth man now paid £49 instead of £59 (a 16% saving).

Each of the last six was better off than before with the first four continuing to drink for free. But, once outside the bar, the men began to compare their savings. “I only got £1 out of the £20 saving,” declared the sixth man. He pointed to the tenth man, “but he got £10”

“Yes, that’s right,” exclaimed the fifth man. “I only saved £1 too. It’s unfair that he got ten times more benefit than me”

“That’s true” shouted the seventh man. “Why should he get £10 back, when I only got £2? The wealthy get all the breaks”

“Wait a minute,” yelled the first four men in unison, “We didn’t get anything at all. This new tax system exploits the poor”
The nine men surrounded the tenth and beat him up.

The next week the tenth man didn’t show up for drinks, so the nine sat down and had their beers without him. But when it came time to pay the bill, they discovered something important – they didn’t have enough money between all of them to pay for even half of the bill.

And that, boys and girls, journalists and government ministers, is how our tax system works. The people who already pay the highest taxes will naturally get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy and they just might not show up anymore. In fact, they might start drinking overseas, where the atmosphere is somewhat friendlier.

For those who understand, no explanation is needed.

For those who do not understand, no explanation is possible.

Reply to the comment left by Mick Roberts at 06/08/2024 - 10:27I believe in the 70s there was a top rate band of 83% for income tax and an additional unearned income surcharge of 15% for those with incomes of around £200,000 plus (in todays money). I looked into this a few years back out of interest.
98% tax on the top slice of income - absolutely insane. Presumably the pop stars royalties on previous work would class as unearned income along with any rents on investment property.

Reply to the comment left by Keith Wellburn at 06/08/2024 - 10:56
Wow 98%. Looney Govt or what.

Reply to the comment left by Keith Wellburn at 06/08/2024 - 10:56I always remember that 98% tax figure. A PWC partner told me about it in the early 1990s when I started a career in accounting. Absolutely shocking. I wonder if we are going to slowly head back up to stupid rates?

Any Landlord selling a property that they have held for 10 years or more is likely to lose money, in real terms, if they sell and pay CGT.

We have been approached, a number of times, by tenants wanting to buy, but in each case it has been impossible to replace the sold property with a similar one using the proceeds of the sale and after CGT has been deducted along with the 4%(Wales), second homes tax plus costs added.

In reality, there has been no capital gain using the time value of money relative to property values.

The whole CGT system needs overhauling in respect of businesses where capital is being reinvested.

The way Landlords are being taxed is currently preventing us from investing in additional rental properties. which we are sure is the case with other Landlords.

If you earn between £50-60k you pay an effective rate of 50.85% on that band of income if you lose your Child Benefit. If you earn between £100k and £125k you pay an effective rate of 62% on that band.

The world has gone mad when it doesn't pay to work because the government gets more than you do!

I wouldn't even mind if the tax was well spent!