What is a rich household?

My Granny often quotes Churchill - "You don't make the poor richer by making the rich poorer". (They're the ones that help create the jobs for us)

Quite honestly, that's a load of nonsense. The entrepreneurial rich get richer by taking money from the poorer. The already rich get richer partly in much the same way. Like the land and property owners who make more money by renting and leasing out their assets. Or the country house owners who charge for visiting their houses..

Churchill died when the UK was well on its way to reducing the unequal distribution of 'wealth' by means of controls on the offshoring of capital, high tax rates for the wealthy and high inheritance taxes (death duties). He also came from a wealthy background which had no intention of sharing its wealth.

cc

Many feel that money “earned” in this country should also be taxed here, even if the person earning it does not live here.

I think you're on the right lines.

The whole purpose of governments issuing money throughout the ages was to enable trade and other economic activities to continue. The purpose wan't, and still shouldn't be, to enable wealthy people to hoard it and cause a money shortage leading to reduced economic activity.

Governments taxed it back to ensure that they weren't continually having to issue excessive amounts in order to
maintain the few services they carried out (like paying for the army and navy). Which kept money circulating.

Of course profits made from our money in our country should be taxed.

cc

Many feel that money “earned” in this country should also be taxed here, even if the person earning it does not live here.

Try making UK governments see this, and follow it through.
We sold a flourishing business here in the UK and were able to transfer ALL the funds into a new business abroad. We just disappeared taking everything, lock, stock and barrel with us.

Barbadosbelle

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I've always thought that the first £20k of earnings should be tax free and the rest - no matter how much- should all be taxed at at flat percentage of, say, 25%. No ifs. No buts. No get out clauses.

The Government would end up just as well off especially as they wouldn't need the hundreds of thousands of Civil Servants now needed to check and delve into the present mash of clauses, exemptions etc.
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Well, I'm not sure there are hundreds of thousands of Civil Servants working in HMRC.

Nicksmrs46

If it’s $250,000 then it’s definitely not the UK ..!!

Income of $250 or £200k is less than 0.5% of the UK population, there are apparently 34m tax payers in the UK, so 170,000 declare over £200k for income tax

But that’s not the whole story the assets (property, shares etc). they have increase in value and are not declared for CGT until they are sold at a much lower tax rate.

Marxist, authoritarian and vicious.

Better off people will disconnect from the grid and generate their own power.

Lilyflower

Marxist, authoritarian and vicious.

Better off people will disconnect from the grid and generate their own power.

Many already do with Solar and batteries, however it’s expensive and takes 10 yrs plus to see any gain. In practice if you’re a high earner electricity bills are not your prime concern.

My simple question would be: How do you enforce a tax like this? The number of people would be miniscule and the cost of collecting the tax would probably exceed the revenue'

'Rich people' are not a static group, every year some people will have a high income the next year they may not, especially if their income is partly dependent on bonuses.

After DH retired he worked in a self employed capacity for 20 years. His self-employed income varied considerably from year to year and he was always negotiating with the tax people because they demand tax up front, based on the previous years income and if a quiet year followed a busy year this caused real problems. Trying to charge us extra for electricity would have ended in endless negotiations and a high adminstrative cost.

An energy tax based on income would be a nightmare to administer. If it’s electricity the rich can afford to buy solar panels, avoid any tax and most of their electricity cost as well.

Thanks for posting that Silverbrooks. It's always a good idea to read the whole story rather than just the headline.

The point seems to be that currently low users pay proportionately more for standing charges, however much energy they try to save. If the system were to be changed, presumably people would pay less for standing charges and more for the units of energy they use - therefore, higher users (mainly those who could afford it ie richer households) would end up paying more for their energy bills.

Just read this, David
(And M0nica?)

Business Relief and Agricultural Relief are an important driver of ‘horizontal inequity’: differences in the effective tax rates paid by estates with the same amount of wealth. This inequity is substantial. Excluding estates eligible for the spouse exemption, a quarter of estates above £10 million have EATRs above 37%, but another quarter pay less than 9%, and one in six pay less than 4%. This implies that what matters for how much IHT an estate pays is not just how much wealth the estate has in total, but which types of asset are held.

(My bold)
I found it here:
centax.org.uk/wp-content/uploads/2024/10/AdvaniDisslbacherForresterSummers2024_IHTReliefs.pdf

NotSpaghetti

Just read this, David
(And M0nica?)

Business Relief and Agricultural Relief are an important driver of ‘horizontal inequity’: differences in the effective tax rates paid by estates with the same amount of wealth. This inequity is substantial. Excluding estates eligible for the spouse exemption, a quarter of estates above £10 million have EATRs above 37%, but another quarter pay less than 9%, and one in six pay less than 4%. This implies that what matters for how much IHT an estate pays is not just how much wealth the estate has in total, but which types of asset are held.

(My bold)
I found it here:
centax.org.uk/wp-content/uploads/2024/10/AdvaniDisslbacherForresterSummers2024_IHTReliefs.pdf

As I’ve explained many times business assets have lots of allowances attached to them, which is why it’s very difficult to “tax the rich” their wealth is tied up in the business.

Successive government have always allowed these concessions because family businesses are important to the economy. It doesn’t matter if it’s JCB Excavators or Joe the farmer, most of the money stays with the business in the next generation. If however the business or part of it is sold then full tax is payable. Income tax is paid on personal drawings or salary, Company tax also if it’s a company. If IHT or CGT was paid in full the business would collapse, unless it made large profits from year to year.

This is what farmers are complaining about, they are not going to be able to pay any tax, if half the farm is sold the business is not viable.

As I’ve explained many times business assets have lots of allowances attached to them, which is why it’s very difficult to “tax the rich” their wealth is tied up in the business.

We all know your thoughts on this!
Probably because you have told us many times but I foolishly thought I was adding to the discussion. It was you who started talking about estates over 10 million and I'd just read the piece above.
1 in 6 pays less than 4% is certainly interesting to me.

Apologies if you find it irrelevant.

I was dealing with a tax on electrical consumption, and for that purpose how you would define rich, where the number with incomes above a certain level. esecially around the margins will be constantly changing.

There is a much simpler solution. Incorporate the cost of maintaining the grid, gas and electricity, into the cost of the electricity/gas unit price.

growstuff

Thanks for posting that Silverbrooks. It's always a good idea to read the whole story rather than just the headline.

The point seems to be that currently low users pay proportionately more for standing charges, however much energy they try to save. If the system were to be changed, presumably people would pay less for standing charges and more for the units of energy they use - therefore, higher users (mainly those who could afford it ie richer households) would end up paying more for their energy bills.

For reference- I have been sent a bill of £45 for the electricity in my caravan. We have used precisely no electricity in the billing period (December to March).

Even when we are there a lot, there are lights, a fridge/freezer, a microwave, a tv and things like a hairdryer and chargers, but nothing like the sorts of power-guzzling appliances in the average home. The heating is gas, as is the cooker.

As I’ve said before on here, holiday parks are money pits, and the owners can be sharks; but this does illustrate how difficult it must be for people on very low incomes to budget. £45 is a week’s groceries for many, and if a bill with no usage whatsoever takes that, what’s the point in turning things off or restricting things like tumble drying? And that is for a caravan, not a family house.

This is not a moan about holiday parks, and I realise that having a place there is optional etc. My point is that the bill was a stark reminder that standing charges are so high, as usually they are just part of the bill that includes so much more. It’s not fair to put people in the position where they can’t take control and ration what they use to keep bills down. And that’s without the immorality of people making billions from others’ need to be warm and to cook food.

M0nica

I was dealing with a tax on electrical consumption, and for that purpose how you would define rich, where the number with incomes above a certain level. esecially around the margins will be constantly changing.

There is a much simpler solution. Incorporate the cost of maintaining the grid, gas and electricity, into the cost of the electricity/gas unit price.

Agreed

A daily standing charge is just a way of getting more money out of customers

MaizieD

^My Granny often quotes Churchill - "You don't make the poor richer by making the rich poorer". (They're the ones that help create the jobs for us)^

Quite honestly, that's a load of nonsense. The entrepreneurial rich get richer by taking money from the poorer. The already rich get richer partly in much the same way. Like the land and property owners who make more money by renting and leasing out their assets. Or the country house owners who charge for visiting their houses..

Churchill died when the UK was well on its way to reducing the unequal distribution of 'wealth' by means of controls on the offshoring of capital, high tax rates for the wealthy and high inheritance taxes (death duties). He also came from a wealthy background which had no intention of sharing its wealth.

Those who start a business either provide a service or product a customer either wants or needs, the customer always has an alternative.

You don’t have to buy a Costa coffee or restaurant meal you could make your own for much less, you dont have to buy a TV or Tumble drier, you buy because you want one. For all those examples you are paying 20% VAT in addition to the value of the product.

It’s easy stop buying and organize your life differently, previous generations did just that and consumed much less.

David That is assuming that everyone is earning enough (and without working three full-time jobs simunltaneously) to house, feed and clothe their family BEFORE they decide they need a TV or Tumble drier, or a restaurant meal.

"It’s easy stop buying and organize your life differently, previous generations did just that and consumed much less."

Stop buying what? Food? Clothes? Children's shoes? Bedding? Books? How far can you cut back ?

Previous generations scrubbed their washing in the sink by hand with a kettleful of hot water, a scrubbing brush and Fairy soap, without a washing machine, let alone a tumble dryer, and the only book in the house was often the Bible.

And you can’t organise your way out of paying a standing charge for electricity, unless you are suggesting living off-grid?

Elegran

David That is assuming that everyone is earning enough (and without working three full-time jobs simunltaneously) to house, feed and clothe their family BEFORE they decide they need a TV or Tumble drier, or a restaurant meal.

"It’s easy stop buying and organize your life differently, previous generations did just that and consumed much less."

Stop buying what? Food? Clothes? Children's shoes? Bedding? Books? How far can you cut back ?

Previous generations scrubbed their washing in the sink by hand with a kettleful of hot water, a scrubbing brush and Fairy soap, without a washing machine, let alone a tumble dryer, and the only book in the house was often the Bible.

That’s exactly the point Elegran. David49 has in his head that everybody, however poor, has some disposable income, which they spend unwisely. For many people that really is not the case, by the time they have paid for their rent and other essentials they have no discretionary money to spend at all.

Considering what a small proportion of the population the really rich are, we do spend an awful lot of time taalking about them.

pably15

I read that and couldn't believe, why on earth should rich households ( and I'm not from a rich household ) pay any more for the energy they use than anyone else, what someone works for and earns is nobody's business

My thoughts exactly. How absurd. Even a small kinder child could come up with a wiser idea. So embarrassing.

I have decided I live in a rich household because I can currently pay my bills and eat without visiting a food bank.

Charleygirl5

I have decided I live in a rich household because I can currently pay my bills and eat without visiting a food bank.

Indeed.

There is no definition, or none agreed upon by GN.

I don’t get why you pay tax on pensions. You’ ve already paid tax on the money that went towards it. The government are thieving off you. Thankfully we don’t have that otherwise many of us older people would be very poor.