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

fancythat

I am not just talking about "wage earners".

There are all sorts of other peoples and groups who pay taxes.

But you will know me by now, I am not going to keep on and on about something.

A# we are now considering “black holes” of £25 or even £50bn needed to balance the budget, there have got to be changes that happen quickly so we can forget IHT or CGT.
The quick way is to increase, VAT or Income Tax, those that earn most can afford to pay most, maybe Reeves will renege on election promises, they have U turned on everything else.

But you will know me by now,

I do indeed. Not willing to back up your assertions with evidence.

I am not just talking about "wage earners".

There are all sorts of other peoples and groups who pay taxes.

But you will know me by now, I am not going to keep on and on about something.

As the only tax increase for wage earners this government has effected has been the increase in employers' national insurance contributions inflation is the only thing that can be causing finances 'taking a hit',

You cannot blame something that hasn't happened.

It has something to do with the time of life, me and mine are in, as well.

If I was just a pensioner, with maybe a small private pension, everything is relatively stable, finances wise.
As it is, quite a number of people I know are not in that position.
Finances taking a hit all over the place.

It feels like, according to our pockets.

I suspect that that might have more to do with rising inflation than 'high' taxation.

^Whatever it "feels" like probable has something to do with where you get your news.
^

Um,. no!

It feels like, according to our pockets.

fancythat

growstuff

GG13 I don't think anybody has suggested that one's own home should be liable to CGT.

It feels like so much tax in this country, and the Labour government keeping finding "black holes", that iI personally wouldnt rule anything out. Anything at all.

Whatever it "feels" like probable has something to do with where you get your news.

It isn't a fact - or perhaps you can point to statistics that say we are, as a country, anything other than average with comparable countries?

With respect, I was rather hoping it wouldnt be you who replied!
You and I never agree on anything, money related.

fancythat

Trouble

The issue I have with CGT is that there is no allowance for inflation. No issue with gains above inflation being taxed at the same rate as income tax.

That is an excellent point.

Hang on.

You buy for £100,000, you sell for £150,000. You have a £3,000 allowance then you are taxed on the remaining gain of £47,00 at 18% (if a basic rate tax payer) . tax taken = £8,460

You're left with £42,540 of your 'gain'.

And you want inflation to be taken into account? 😱

What a joker...

Moii

There is generally risk involved in capital gains income, if it's increased people will be less likely to invest and take risk which isn't good for the economy.

Trouble is with CGT, it goes back decades.
Not sure of my point really.

growstuff

GG13 I don't think anybody has suggested that one's own home should be liable to CGT.

It feels like so much tax in this country, and the Labour government keeping finding "black holes", that iI personally wouldnt rule anything out. Anything at all.

Trouble

The issue I have with CGT is that there is no allowance for inflation. No issue with gains above inflation being taxed at the same rate as income tax.

That is an excellent point.

You can’t accumulate wealth above house and pension if you are an employee, even if you have a high salary, because a high salary usually means similar lifestyle. You have to invest in growth of some enterprise, it may be you own business it may be shares of another business, as that business expands your share expands with it. BUT, if that business is not successful the value of your share will fall, so all enterprises are a risk. Personally I chose to invest in my own business so that can control the risk and invest in opportunities as the arise.

Your own home is the obvious place to invest as a priority apart from Stamp Duty it’s largely untaxed, over the years your domestic property have been very safe investments

growstuff

Norah

growstuff

Norah

MaizieD

Wealth can easily be built without legacies, out of income. Many have successful profitable businesses started out excess income from working.

But growstuff demonstrated how this was not possible unless one earned a very high income. Which most people don't. The maths are against you...

growstuff's maths began with low numbers.

---IMO, 35 years has no basis in reality, 50-60 years is more logical.

The mean income for all workers in the UK in 2024 (before tax) was £38,224pa.

---Half of workers earn more, some earn much more. Many families have 2 workers. Adjust the maths, my premise has merit.

No, Norah, I'm afraid we're not going to agree.

I chose 35 years as a random figure. If people have to wit until they're 80 after 50-60 years) to be wealthy, I would argue they're not going to see much benefit.

You really don't seem to understand how ordinary people on average incomes live. Families with two incomes have two people to feed, clothe, transport to work, etc. They're still not going to have enough excess money to save enough to put them in the top 1%.

I agree, we disagree.

Did anyone say wealth after 70 was no benefit?

Of course families with 2 incomes have 2 workers to feed, clothe, transport. However, I believe 2 wouldn't work if total family income was not greater than with merely one working.

Two people on average incomes still wouldn't earn enough to accumulate £3.5 million even after 50-60 years. After mortgage/rent, taxes (including council tax), utilities, food, clothes, travel has been paid, there would be nowhere near enough to save towards a multi-million pot. Heaven forefend if they should actually want an occasional holiday or have children.

Do the maths Norah.

I have done the maths.

Heaven forefend they may earn above the average on which you base your maths. Nobody said these mythical people couldn't both earn above the low average. Earn a bit above average and save. Easy concept.

Norah

growstuff

Norah

MaizieD

Wealth can easily be built without legacies, out of income. Many have successful profitable businesses started out excess income from working.

But growstuff demonstrated how this was not possible unless one earned a very high income. Which most people don't. The maths are against you...

growstuff's maths began with low numbers.

---IMO, 35 years has no basis in reality, 50-60 years is more logical.

The mean income for all workers in the UK in 2024 (before tax) was £38,224pa.

---Half of workers earn more, some earn much more. Many families have 2 workers. Adjust the maths, my premise has merit.

No, Norah, I'm afraid we're not going to agree.

I chose 35 years as a random figure. If people have to wit until they're 80 after 50-60 years) to be wealthy, I would argue they're not going to see much benefit.

You really don't seem to understand how ordinary people on average incomes live. Families with two incomes have two people to feed, clothe, transport to work, etc. They're still not going to have enough excess money to save enough to put them in the top 1%.

I agree, we disagree.

Did anyone say wealth after 70 was no benefit?

Of course families with 2 incomes have 2 workers to feed, clothe, transport. However, I believe 2 wouldn't work if total family income was not greater than with merely one working.

Two people on average incomes still wouldn't earn enough to accumulate £3.5 million even after 50-60 years. After mortgage/rent, taxes (including council tax), utilities, food, clothes, travel has been paid, there would be nowhere near enough to save towards a multi-million pot. Heaven forefend if they should actually want an occasional holiday or have children.

Do the maths Norah.

GrannyGravy13

growstuff

GG13 I don't think anybody has suggested that one's own home should be liable to CGT.

It has been suggested that income on increases price of one’s home is passive and therefore should be taxed.

Who has suggested that? I must admit I haven't seen it.

growstuff

GG13 I don't think anybody has suggested that one's own home should be liable to CGT.

It has been suggested that income on increases price of one’s home is passive and therefore should be taxed.

I really do not care how anyone makes their money as long as it is legal and the appropriate taxes are paid along the way.

But the contention raised in the OP is that the taxes aren't 'appropriate'. That taxation falls more heavily on those who are least able to avoid them because the tax system favours the wealthy.

growstuff

Norah

MaizieD

Wealth can easily be built without legacies, out of income. Many have successful profitable businesses started out excess income from working.

But growstuff demonstrated how this was not possible unless one earned a very high income. Which most people don't. The maths are against you...

growstuff's maths began with low numbers.

---IMO, 35 years has no basis in reality, 50-60 years is more logical.

The mean income for all workers in the UK in 2024 (before tax) was £38,224pa.

---Half of workers earn more, some earn much more. Many families have 2 workers. Adjust the maths, my premise has merit.

No, Norah, I'm afraid we're not going to agree.

I chose 35 years as a random figure. If people have to wit until they're 80 after 50-60 years) to be wealthy, I would argue they're not going to see much benefit.

You really don't seem to understand how ordinary people on average incomes live. Families with two incomes have two people to feed, clothe, transport to work, etc. They're still not going to have enough excess money to save enough to put them in the top 1%.

I agree, we disagree.

Did anyone say wealth after 70 was no benefit?

Of course families with 2 incomes have 2 workers to feed, clothe, transport. However, I believe 2 wouldn't work if total family income was not greater than with merely one working.

Norah

MaizieD

Wealth can easily be built without legacies, out of income. Many have successful profitable businesses started out excess income from working.

But growstuff demonstrated how this was not possible unless one earned a very high income. Which most people don't. The maths are against you...

growstuff's maths began with low numbers.

---IMO, 35 years has no basis in reality, 50-60 years is more logical.

The mean income for all workers in the UK in 2024 (before tax) was £38,224pa.

---Half of workers earn more, some earn much more. Many families have 2 workers. Adjust the maths, my premise has merit.

No, Norah, I'm afraid we're not going to agree.

I chose 35 years as a random figure. If people have to wit until they're 80 after 50-60 years) to be wealthy, I would argue they're not going to see much benefit.

You really don't seem to understand how ordinary people on average incomes live. Families with two incomes have two people to feed, clothe, transport to work, etc. They're still not going to have enough excess money to save enough to put them in the top 1%.

GG13 I don't think anybody has suggested that one's own home should be liable to CGT.

I really do not care how anyone makes their money as long as it is legal and the appropriate taxes are paid along the way.

I do however have a problem when it’s suggested that when one’s home is sold that it should be liable to CGT if it is sold for more than what you paid for it.

If anyone is fortunate enough to have saved their taxed income, by all means tax any interest paid on the capital sum (ISA’s exception) I just do not get the tax, tax tax mentality.

I am more interested in where and how local councils, county councils and government spend (squander) their funds.

MaizieD

^Wealth can easily be built without legacies, out of income. Many have successful profitable businesses started out excess income from working.^

But growstuff demonstrated how this was not possible unless one earned a very high income. Which most people don't. The maths are against you...

growstuff's maths began with low numbers.

---IMO, 35 years has no basis in reality, 50-60 years is more logical.

The mean income for all workers in the UK in 2024 (before tax) was £38,224pa.

---Half of workers earn more, some earn much more. Many families have 2 workers. Adjust the maths, my premise has merit.

David49

growstuff

Funnily enough David you'd be surprised. I realise you suffer from inverted snobbery, but a university education hasn't stopped me from using my imagination and experience or having a very wide circle of friends and acquaintances. What my education has given me is an ability to be objective and to fight against being blinkered.

I know very well how small businesses work. My ex-husband ran one, as did my late father-in-law, although his small business became quite big. My ex-husband hasn't worked for decades, but has a property portfolio which provides an income. He doesn't "save" anything and certainly doesn't live frugally. My father-in-law got to the point where he didn't need to work either and his widow lived for years on the interest. Thinking about it, most of the people I would call friends run small businesses.

Then you do know how it all works so why try to deny it by posting nonsense about doing out of savings

I'm beginning to feel I live in a parallel universe.