Why is it that those who live off financial speculation are taxed so much less in the UK than those who work for a living?

Because Sunak et al get most of their money from speculating I think. He was a hedge fund manager - that's speculation in my book. Share trading - that's speculation too, as is currency trading. A lot of the latter went on at the time of the Referendum and a lot of money was made by some people, including Farage from what I recall at the time.

All of those things mentioned Dinahmo are where pension providers make money and then provide some of us with public/private pensions to top up the meagre SP - which so many compare negatively with our European cousins.

Can we have a comparison with other countries please DaisyAnne?

Look at where your pension/s and ISA’s are invested before cutting off one’s nose to spite one’s face.

Having worked for a living and been a higher rate tax payer for over 40 years I don’t want to pay massive taxes on my pension investments (which some may call financial speculation) which are funded from money I earned and have already paid tax on. I don’t know the answer and I’m not a conservative. Does this situation on,y apply to the UK? Do investors everywhere else pay massive taxes? What about tax havens?

GG13 yes!

Labour Peer, Prem Sikka, did the calculations in the House of Lords. You can see them here on Richard Murphy's blog

www.taxresearch.org.uk/Blog/2022/04/01/why-is-it-that-those-who-live-off-financial-speculation-are-taxed-so-much-less-in-the-uk-than-those-who-work-for-a-living/

Basically, someone with earned income of £30,000, paying tax and NI has net pay = ££24,205

Net income of £30,000 from speculation in shares = £28,230

What Sikka didn't go into was the position of people who receive income in the form of share dividends. As far as I know, they are allowed £2,000 tax free on top of the Personal Allowance and then dividends are taxed at 7.5% if they are a basic rate taxpayer. On a share dividend income of £30,000, £14750 tax free, £15,250 taxed at 8.75% (new rate from 1st April) = £1,334 (approx) tax.

Net income £28,666

That Hard Work that people seem to think is so laudable isn't very rewarding, is it?

Any quibbles, Dinahmo?

dividends are taxed at 7.5%

sorry, missed this when editing. New rate from 1/4/22 is 8.75%

which are funded from money I earned and have already paid tax on.

But, Blossoming, you pay tax on just about everything you purchase out of income that has already been taxed. What is the difference?

Go after the big boys not those of us in the middle who pay taxes now and always have done.

The difference is MaizieD that I’m paying tax on the earnings of my investments that I made from previously taxed earnings from my employment. By the time I buy goods, services or whatever using those investment earnings I have paid tax thrice over, depending on what I buy. I’m not a billionaire cabinet minister.

I’m on the fence about this issue. Anybody can choose to speculate, with a small or large stake if that’s what they want to do. I know somebody who has built an initial £100 stake to over £100,000 (over a number of years). He puts a huge amount of his time into it though, studying the markets and moving shares around. The risks are high though as well as the potential gains.

GrannyGravy13

Go after the big boys not those of us in the middle who pay taxes now and always have done.

I agree, GG13. But if you start exempting people from paying tax (which is a method of controlling inflation) where do you start?

And not every penny of income, from whatever source, is taxed. There is always a tax free allowance.

I've mentioned this in 2 different posts recently - the personal allowance for 2021/2 is £12570. The exempt amount for CGT is £12300. In my book that totals £24870. Thus people not of pensionable age and not in employment or self employment or have rental income could have income and gains from shares totally free of income tax and NIC.

If you have a 2 person household, both of them share dealing, their combined income, without paying any taxes would be a little under £50k. How pensioners with a combined income of £50k are not paying any income tax?

Blossoming

Having worked for a living and been a higher rate tax payer for over 40 years I don’t want to pay massive taxes on my pension investments (which some may call financial speculation) which are funded from money I earned and have already paid tax on. I don’t know the answer and I’m not a conservative. Does this situation on,y apply to the UK? Do investors everywhere else pay massive taxes? What about tax havens?

I imagine that you got tax relief at your marginal on your pension contributions?

PS I have ignored the £2000 dividend allowance and the lower rate of 7.5% (2021/22) .

Pantglas2

All of those things mentioned Dinahmo are where pension providers make money and then provide some of us with public/private pensions to top up the meagre SP - which so many compare negatively with our European cousins.

Can we have a comparison with other countries please DaisyAnne?

If you do the research - yes, of course.

GrannyGravy13

Go after the big boys not those of us in the middle who pay taxes now and always have done.

Why should anyone be excluded unless they haven't reached their Personal Tax Allowance? As long as the tax is 'progressive', you will pay less than your "big-boys" do. If everyone is taxed on all their income, those who are "just about managing" and even further up the income deciles, if they only have income from labour, should be paying less than they are now overall.

Do those of you who are against paying equal tax on all incomes streams really think it is okay for you to get richer while our tax system keeps others in poverty or barely above it?

Casdon

I’m on the fence about this issue. Anybody can choose to speculate, with a small or large stake if that’s what they want to do. I know somebody who has built an initial £100 stake to over £100,000 (over a number of years). He puts a huge amount of his time into it though, studying the markets and moving shares around. The risks are high though as well as the potential gains.

I've known people like that too, one or two of them don't work but just manage their investments and so their portfolios will be rather larger than your friend's I imagine.

I have no objection whatsoever to them doing that. It is hard work to keep on top of it and it takes many hours if you are managing a large portfolio of your own investments.

Pantglas2 I am well aware that pension funds rely upon brokers etc to advise on their portfolios, but given the nature of pension funds they are not going to be investing hugely in the more risky end of the investment market.

Farage was accused of currency shorting at the time of the Referendum, which he denied, but he twice said publicly that the Leavers had lost - "Farage twice said he thought the remain campaign had won the referendum but, according to Bloomberg, was privy to private exit poll data indicating the public had voted in favour of leaving the EU."

I have to declare all income (earned and unearned) apart from any profit made from ISA’s.

I pay taxes at various levels.

DaisyAnne go after the crooks…

MaizieD No quibbles with your post today 15.06.

GrannyGravy13

I have to declare all income (earned and unearned) apart from any profit made from ISA’s.

I pay taxes at various levels.

DaisyAnne go after the crooks…

I am not personally "going after" anyone, am I GrannyGravy.

What is wrong with equality in the tax system? I can't see any economic reason why all taxation on all sources of income shouldn't be the same.

All you have convinced me of is that some people want to be able to pay less in tax than others do on the same amount of income. Why is that a satisfactory economic or even moral system?

No one has told me that yet.

DaisyAnne There is nothing wrong with equality in the tax system.

I get the impression that some on here are quite happy with the current regime.

Seems reasonable to me, DaisyAnne.

Adam Smith called those who lived on income from speculation, inherited wealth, who didn't actually work for a living, 'rentiers' and said they should not be allowed to sit in parliament because they had no interest in promoting the wealth of the nation, just in accumulating more for themselves, so would legislate solely in their own interests. I think he had that about right and that is why we see the tax system today skewed in favour of rentiers rather than workers.

Those who make their money solely by manipulating the stock market and the financial markets, though they might work hard at it, don't contribute to the general 'good' of the nation.They're not entrepreneurs, they create nothing, they contribute no skills. Why should they be treated preferentially?