Burnhams Tax on Cash ISAS and Death tax

It could be good for the economy, Lathyrus, and much would come back to the Treasury as tax, but it could also be inflationary if there weren't enough things to spend it on

Ah. Thank you.

If everyone spent everything week to week there would be no economy, nobody would invest or save, no incentive to do anything.

David49

If everyone spent everything week to week there would be no economy, nobody would invest or save, no incentive to do anything.

A great many people do precisely that, David because they don’t have any money left over after paying for their basic needs. .

Though they are actually keeping the economy ticking over because they are not diverting any money away from it into unproductive savings and ‘investments’.

MaizieD if people didn’t save for their retirement, or for when household items breakdown, or various other things should we rely on the state to pick up the tab?

I haven’t got any faith in any government to look after me or my family anymore.

GrannyGravy13

MaizieD if people didn’t save for their retirement, or for when household items breakdown, or various other things should we rely on the state to pick up the tab?

I haven’t got any faith in any government to look after me or my family anymore.

Where does that leave people who have absolutely no spare money to save?

So what do you suggest MaizieD? Something fair?

I'm not in suggesting mode at the moment.

I'm rather more interested in what people who do have a bit of spare cash to save think what people who don't have it (don't forget that 20% of the UK population live below the poverty line) are supposed to do.

Aveline

So what do you suggest MaizieD? Something fair?

Well I would say that if people wish to save for the future then fine! Tbat has to go within a society that provides for those who genuinely NEED assistance not one that gives to those who dont need it as they have their own savings or a good enough income to live on!

Re the original OP the 10% on all estates makes absolute sense to me .

Why shouldn’t they. My man is in a care home which we had to sell her house to pay for it. The woman in the next room has never worked a day in her life getting it all for free.

The woman in the next room has never worked a day in her life getting it all for free.

What would you like to happen to this woman, then, Menopauselbitch? Turn her out and let her rot and die at home?

No point speculating re death tax until we know if it's actually going to be introduced and learn the details.

MaizieD

GrannyGravy13

MaizieD if people didn’t save for their retirement, or for when household items breakdown, or various other things should we rely on the state to pick up the tab?

I haven’t got any faith in any government to look after me or my family anymore.

Where does that leave people who have absolutely no spare money to save?

The state looks after them MaizieD pension credits, universal credit along with paying for their care home places if needed.

Just because some people cannot save shouldn’t stop those who can from doing so.

I will not wear the proverbial hair shirt for being able to save for my retirement.

They'll be taxing the very air we breathe soon!

So if I sell a property for £100,000, the tax will be £10,000? Is that correct?. It’s not going to affect just the rich is it, it’s going to affect a lot of people with lower value properties.

Smileless2012. Yes people transfer property with a view to avoiding paying care costs. Also a lot think that if they survive 7 years after doing so the value will not be counted. Afraid there is no time limit as far as assessment for care costs is concerned. People have a real difficulty when asked "Why the property was transferred", very rare to have an acceptable answer to exclude the value. There is also the HMRC expectation that a market rent shoukd be paid and uf not that us sonething that will be taken into account for taxation. Transfering property is not the easy option to avoid care costs.

MaizieD

^Yes, this is how I understood the proposal to work. A small amount from everyone, rather than a larger amount from the richest 4% of the population.^

I'm finding the way that people are supporting this notion is quite interesting.

If you left an estate worth, say, £750,000 the tax payable on it would be £75,000, whereas, assuming the appropriate allowances and transfers between spouses applied, under IHT there would be no tax due at all.

(Someone tell me I'm wrong?)

I support it (as I understand it, anyway), as I think we should all pay in, not just those who work and save. This way, yes, the person you describe would pay £75k, but as things stand, if they went into care they could pay much more. Either way, it's a gamble, as most people don't ned care, but I would rather live in a society where everyone is covered by an insurance scheme paid for by everyone. From each according to ability, and to each according to need.

I don't know how it will work for individuals rather than couples, but even if the 10% is 20% for a couple it means that those with lower value houses will still have 80% left to pass on, whereas currently they can easily be wiped out financially by care costs.

I thought the age allowance on ISAs was because S&S ones need holders to take a long-term view, which isn't much use when you're 90.

Foxyferret

So if I sell a property for £100,000, the tax will be £10,000? Is that correct?. It’s not going to affect just the rich is it, it’s going to affect a lot of people with lower value properties.

We don't know for sure, but that is the assumption, yes. The difference is that if you go into care now, your £100k will last about 15 months before you have nothing left above the limit of £23k. Under this proposal, if it is as has been mooted, you will be left with £90k to pass down. Is that not better?

The state looks after them MaizieD pension credits, universal credit along with paying for their care home places if needed.

Then we have posts dripping with angst because one person has to pay for their care and another gets it free.

There is a general feeling of resentment that these differences happen.

I think that Burnham has the right idea in proposing a National Care Service. Like the NHS.

Who drips with resentment because the person in the next bed to them has never paid NI? They don't even know the status of the person in the next bed and that is right if you support the principle of free at the point of need.

And if we all stopped believing that we have somehow paid through our taxes for a 'free' service provided by the state we might get rid of this feeling of deep unfairness...

The state spends and then taxes back much of what it spends. We need state issued money. Everyone, rich and poor need it.

So we all have nothing except what the govt gives us?

Do people 'drip with resentment'? Or do they just want to see a system where everyone pays something? Not full fees, not equal contributions to an insurance scheme, but something?

The alternative is that some get a free ride - not working and producing anything, not paying tax and then getting the perks of living in a welfare state for no contribution.

If we all pay something, then those such as in the example suggested by Foxyferret above will still have something at end of life, rather than being wiped out after a lifetime that has resulted in an estate of £100k being reduced to £14k, when someone in a similar house in a different part of the country pays the same fees and is left with tens of thousands, and someone else gets the same care with no input at all.

I don't 'drip with resentment', but I think that is unfair, and a small contribution from everyone is a fairer system. The hyperbolic language doesn't strengthen your argument- I could claim to think that people 'chuckle with glee' at not having to pay anything, but that wouldn't be true, either.

Aveline

So we all have nothing except what the govt gives us?

I really don't follow your reasoning.

If people want to provide private provision for themselves they are welcome to. But there is no reason why it cannot provide a quality service for all.

GrannyGravy13

Graphite what percentage of the U.K. has £300,000 in ISA’s?

More than you might think. ISA holders aged over 65, hold an average of £64K.

www.theinvestorscentre.co.uk/investing/statistics/isa-stats-uk/

"As of 5 April 2023, HMRC data confirmed 5,070 ISA accounts worth £1 million or more — a record high at the time and a 4.5% increase on the 4,850 recorded a year earlier. The total number of ISA millionaires has grown by over 1,000% in seven years.

The top 25 ISA investors hold an average of £11.3 million each in their ISA accounts — all returns and income completely free of UK tax."

Doodledog

Foxyferret

So if I sell a property for £100,000, the tax will be £10,000? Is that correct?. It’s not going to affect just the rich is it, it’s going to affect a lot of people with lower value properties.

We don't know for sure, but that is the assumption, yes. The difference is that if you go into care now, your £100k will last about 15 months before you have nothing left above the limit of £23k. Under this proposal, if it is as has been mooted, you will be left with £90k to pass down. Is that not better?

As Doodledog rightly says- we don't know for sure yet.

You wouldn't be selling your property yourself foxyferret when you're dead. It would be sold following probate and proceeds go to whoever you name in your will after such a proposed tax is paid of such a policy was implemented.

I agree- much better for you to pass £90k down than have to sell your property when alive, on admission to care home to pay for fees. £10k may only last between 5 to 7 weeks on average that way depending on fees in that home. Under this proposal the state would pay the care fees, free at point of need.