In the UK, Capital Gains Tax (CGT) is generally not the same as Income Tax. Why not?

MaizieD

M0nica

Capital gains are not necessarily income. We are paying a small amount of caapital gains this year because we sold our holiday cottage in France last year.

We simply turned a stone and mortar asset into a cash asset. A one year event, not to be repeated. It wasn't very much and we spent far more renovating the property than we made in capital gains over 33 years.

If it isn't 'income', what is it, MOnica.

It is an addition to the revenue/income you have available to spend or save as you wish. What you put into it over the years was purely for your own benefit. It would have been different if you were using it for a business.

As I said in my post, it is transferring capital from one form to another. The money has since been reinvested. We have not used any of it as income because it is still what it always was - a capital asset.

Usedtobeblonde

I did say in my post it was a second house.
We bought it for my S who was in what turned out to be a doomed relationship.
I would have kept it and rented it out, eventually downsizing into it ourselves but my H didn’t like that idea.

This happens a lot in practice you buy a property as a holiday home, rent it out for a while, when you retire move into it, no CGT on either property. You are supposed to declare the period it was rented out, but it gets forgotten or is below the CGT threshold. It’s very difficult to keep track of 2nd homes.

M0nica

MaizieD

M0nica

Capital gains are not necessarily income. We are paying a small amount of caapital gains this year because we sold our holiday cottage in France last year.

We simply turned a stone and mortar asset into a cash asset. A one year event, not to be repeated. It wasn't very much and we spent far more renovating the property than we made in capital gains over 33 years.

If it isn't 'income', what is it, MOnica.

It is an addition to the revenue/income you have available to spend or save as you wish. What you put into it over the years was purely for your own benefit. It would have been different if you were using it for a business.

As I said in my post, it is transferring capital from one form to another. The money has since been reinvested. We have not used any of it as income because it is still what it always was - a capital asset.

It was income that you chose to invest. No different from any other income that you might choose to invest.

Why should calling it 'capital' mean that it is taxed at a lower rate?

Lahlah65

PoliticsNerd

Just in case anyone believes this silliness of course AI can be wrong. It basically depends on data used in the training, which may reflect historical inequalities, stereotypes, or incomplete information.

This…..

What a sad pair. When AI rules the world you'll be in a state of distrust and disbelief of everything it does....

Would you care to point out where it has gone wrong?

Or, perhaps one of you would like to trace £100 as it moves through the economy being taxed as it is used for consecutive transactions?

When AI rules the world you'll be in a state of distrust and disbelief of everything it does....

So all the people who accept that not every printed word is accurate find themselves unable to believe any of it! Really Maizie? You may feel the need to take on the total belief or disbelief when you find a single point of agreement or disagreement but we haven't all lost our ability to think critically.

Why are you so prepared to make such foolish posts just because someone doesn't agree with your every word? Surely a discussion/debate on any subject is because we can all admit we don't know everything. Sometimes we may know very little but want to know more but what no debate needs is misleading intransigence.

but we haven't all lost our ability to think critically.

Well, your hatred of anything that smacks of understanding the way that taxation works in the domestic economy seems to have destroyed any ability you might have had think logically.

Instead of haranguing, and insulting me perhaps you could employ your 'critical thinking' ability in explaining why you think that AI has gone wrong when making some simple calculations.

... why you think that AI has gone wrong when making some simple calculations.

I didn't say it had Maizie. I didn't refer to the calculations as I wasn't interested in them and your comment about AI seem detached from them and a general comment.

There is more than one way of looking at taxation. There must be as every country doesn't tax in the same way. We already have a couple of Nordic countries which have applied a wealth tax for instance while the right-wing newspapers talk - inaccurately but with their standard quotation marks escape - about the loss of revenue cause by the last budget.

I don't see any tax experts on GN but that doesn't mean we can't work through opinions. Yours cannot be the only one allowed, although that seems to be is what you are insisting on. If that happens there is no point in us being here.

I haven't harangued or insulted you; just replied to your, often personal, attacks or not replied at all. That has recently, frequently seemed the best thing to do.

Regardless of how or whether taxation is spent, IMO there is an inherent unfairness in taxing earnings more than passive income or wealth, particularly when combined with means-tests on low-level benefits such as WFA and child benefit.

There is no reason why CGT shouldnt be the same as Income Tax, governments make a judgement and decide how much it wants to tax, or encourage businesses to reinvest. A business can’t reinvest if it sells an asset and pays a high tax rate.

There are of course reliefs for business assets but they have become quite restrictive in recent years. If you have an outdated property you want to sell and buy another paying CGT comes into the calculation. If a high rate of tax has to be paid you struggle on working inefficiently, over the years CGT has been an obstacle to business efficiency.

Poverty, and even living on a middle income doesn't make actually surviving all that "efficient" David49.

The basics of being able to buy, or rent a home at an affordable level have been stripped from those of low and middle income. The ownership of assets has been stripped from government and those on middle incomes. Like you Doodledog it is the politics of wealth I'm interested in.

Ways of moving in any direction can be found if the will is there. The treatment of great wealth and the movement of assetts from those on low and middle incomes has been moving further to the right since the 70's. All I am suggesting is that we find ways to bring it back to the middle.

PoliticsNerd

Poverty, and even living on a middle income doesn't make actually surviving all that "efficient" David49.

The basics of being able to buy, or rent a home at an affordable level have been stripped from those of low and middle income. The ownership of assets has been stripped from government and those on middle incomes. Like you Doodledog it is the politics of wealth I'm interested in.

Ways of moving in any direction can be found if the will is there. The treatment of great wealth and the movement of assetts from those on low and middle incomes has been moving further to the right since the 70's. All I am suggesting is that we find ways to bring it back to the middle.

It’s business efficiency that pays all the taxes, suppress that profits fall, industries collapse, we’ve seen this over the decades, failure to modernize, handicapped many industries. No more than the renewable and EV industries we are so far behind the investment curve it’s hard to be optimistic.

Housing IS affordable all the new houses built ARE selling the problem is the aspiration of lower income workers is too high and supply of social housing is inadequate, yet governments refuse to encourage more private or LA provision.

MaizieD What a sad pair. When AI rules the world you'll be in a state of distrust and disbelief of everything it does....

A simple google search with the question "can AI be wrong?" brings up a page of links illustrating exactly how AI can indeed be wrong. That it may have been correct in your example does not guarantee reliability in everything. You are of course entitled to believe absolutely everything it says, I'll join others in a degree of scepticism.

It’s not AI we should fear it’s the malicious use of AI that may be the problem.

Automation and robotics has deskilled many jobs, workers are often only slaves feeding robots. How we are going to earn wages to feed and house ourselves as well as pay taxes I’m not sure

To your question - because income is different to gains.

No need whatsoever to equalise tax rates on gains and income.

Why not, Norah? If anything, I'd rather see earned income attract less taxation, as there is also an output that benefits society as a whole, whilst 'gains' only benefit the individual.

What about the 40% tax from 2027 that will be imposed on any money left in pension pots upon death? I was expecting to inherit my spouses pension pot which he paid in with money that had already been taxed ( and vice versa). I have very little pension and we both contributed to a pension to try to try to safeguard our future independence but now stand to be taxed 40%. Seems unfair to savers.

Doodledog

Why not, Norah? If anything, I'd rather see earned income attract less taxation, as there is also an output that benefits society as a whole, whilst 'gains' only benefit the individual.

I'd like income tax bands changed, personal allowance and rates. I think as rates are people who make little are too heavily taxed. I don't see CGT as an answer.

Rosie51

MaizieD What a sad pair. When AI rules the world you'll be in a state of distrust and disbelief of everything it does....

A simple google search with the question "can AI be wrong?" brings up a page of links illustrating exactly how AI can indeed be wrong. That it may have been correct in your example does not guarantee reliability in everything. You are of course entitled to believe absolutely everything it says, I'll join others in a degree of scepticism.

Jeez. I'm perfectly well aware that AI can get it wrong, but do people seriously think that it can't manage a simple calculation? Maths can easily be checked. Real live humans have done just the same exercise and reached just the same conclusion.

I am still waiting for someone to tell me what was wrong with the exercise in question. Rubbishing AI isn't exactly debate, is it? It's just evading acknowledging that a result that some posters don't like could be correct. Or failing to state what could be wrong with it.

Norah

To your question - because income is different to gains.

No need whatsoever to equalise tax rates on gains and income.

Please explain how money which becomes part of your income, however transitorily, is different from income?

Sueki44

What about the 40% tax from 2027 that will be imposed on any money left in pension pots upon death? I was expecting to inherit my spouses pension pot which he paid in with money that had already been taxed ( and vice versa). I have very little pension and we both contributed to a pension to try to try to safeguard our future independence but now stand to be taxed 40%. Seems unfair to savers.

It will be used for calculating inheritance tax if his estate is more than £1,000, 000. if it's less than that it won't be touched.

Do stop this 'double taxation' thing. It's nonsense, as I've already pointed out.

David49

It’s not AI we should fear it’s the malicious use of AI that may be the problem.

Automation and robotics has deskilled many jobs, workers are often only slaves feeding robots. How we are going to earn wages to feed and house ourselves as well as pay taxes I’m not sure

The malicious use of industrialisation was a problem David49 but, due to people, from all walks of society, working together, they were able to improve life for those effected by it.

This time round we are, hopefully, more aware of the super-rich and their tendency to disregard the rest of humanity.

I'm interested Sueki. Where did you get the misleading information that had you worrying? News sources really ought to be governed by law to ensure the information isn't misleading.

MaizieD

Rosie51

MaizieD What a sad pair. When AI rules the world you'll be in a state of distrust and disbelief of everything it does....

A simple google search with the question "can AI be wrong?" brings up a page of links illustrating exactly how AI can indeed be wrong. That it may have been correct in your example does not guarantee reliability in everything. You are of course entitled to believe absolutely everything it says, I'll join others in a degree of scepticism.

Jeez. I'm perfectly well aware that AI can get it wrong, but do people seriously think that it can't manage a simple calculation? Maths can easily be checked. Real live humans have done just the same exercise and reached just the same conclusion.

I am still waiting for someone to tell me what was wrong with the exercise in question. Rubbishing AI isn't exactly debate, is it? It's just evading acknowledging that a result that some posters don't like could be correct. Or failing to state what could be wrong with it.

Goodness, I acknowledged AI was correct in your example, but your earlier post said AI has no biases. In a straightforward mathematical calculation that's true, as a blanket statement which is what yours appeared to be that's obviously untrue. Coupled with What a sad pair. When AI rules the world you'll be in a state of distrust and disbelief of everything it does.... your absolute faith in it seemed unquestioning. Don't shoot the messenger!

PoliticsNerd

David49

It’s not AI we should fear it’s the malicious use of AI that may be the problem.

Automation and robotics has deskilled many jobs, workers are often only slaves feeding robots. How we are going to earn wages to feed and house ourselves as well as pay taxes I’m not sure

The malicious use of industrialisation was a problem David49 but, due to people, from all walks of society, working together, they were able to improve life for those effected by it.

This time round we are, hopefully, more aware of the super-rich and their tendency to disregard the rest of humanity.

The super rich (over £10m wealth) have and will continue to live in their own world. They choose where they live and will change if it doesn’t suit them, they are less than 0.1% of the population we are not going to change that.

The real division is between the “haves” and “have nots”. Opinions here on GN from those with mortgages paid off and nice pensions are not willing to give up one penny of that wealth. They may talk the talk about helping the poor but do very little and insist all their wealth goes to their children

They choose where they live and will change if it doesn’t suit them ...

We don't need too. They are and should be taxed on UK assets, not on where they live.