Private companies could be prevented from accumulating untaxed personal wealth.
People must stop reinvesting past profits. That’ll sort things out, no?
Private companies could be prevented from accumulating untaxed personal wealth.
People must stop reinvesting past profits. That’ll sort things out, no?
How can companies accumulate private wealth? I must be missing something.
The plan is to steal everything isn’t it?
The plan is always to steal everything. Its never not to steal everything. The only thing that stops them short is fear. And they’re not afraid anymore.
Company profit is either retained or distributed. Both are subject to corporation tax (if dist. as dividend, income tax if as bonus).
Only bit of profit that isn’t taxed is capital allowances: i.e. money reinvested that is allowed by HMRC to be deducted before computing the corporation tax. When I did this for real, that was virtually nil (e.g computers written down over 10 years!)
Man’s a moron. He needs to read the Ladybird book of Accounting for Idiots.
That’s his objection – if it isn’t taxed twice, it’s tax avoidance.
Oh thank goodness. I’d missed the category header and thought this was going to be government policy. But it’s just Richiebollox. Phew.
Anyway, we get our new Prime Minister next week and he’s very likely to make Edward Samuel Miliband the chancellor of the exchequer.
(⊙_⊙)
Companies cannot accumulate untaxed wealth. All the accumulation comes after tax is charged on the income.
You’re funny!
Does the UK have dividend imputation ? Where the tax payed by the company is transferrable to the individual receiving a dividend as a tax credit. They are taxed at their full marginal rate on the dividend received but can apply the tax credit attached to the dividend, to the extent that the company actually paid tax that is. If they pay not company tax, no imputation credits can be attached.
No, but sorta. Dividends are taxed at rising rates dependent upon your gross income from all sources. Which has the effect of knocking the corporation tax off the bill you’ve got to pay.
Trouble with replacing a system of formal tax credit like that with “well the rate is lower to reflect…” is that is soon forgotten under the wailing “waaah he pays lower rate than me”… and we watch this playing out…
Pretty much the same thing with replacement of indexation with a lower CGT rate. Sure in principle that’s a simplification… In practice however the ratchet gets going
As on so many things, Lawson had it right
Dividends used to be paid with a notional tax credit of 10% but that was scrapped in 2016.
Dividends are taxed in full on the recipient at – basic rate 10.75%, higher rate 35.75% and additional rate 38.1%. The tax rates for other income are 20%, 40%, 45% so the lower dividend tax rate ‘sort of’ takes into account corporation tax already paid.
There used to be a tax-free dividend band of the first £5,000. That’s been whittled down to £500. Basic rate taxpayers can earn up to £1,000 interest tax free.
Ignoring that for comparative purposes:
£1,000 bank interest would mean a basic rate taxpayer would pay £200 tax.
£1,000 company profits would first be taxed at 19% (assuming small company rate applied). An £810 dividend would then suffer £87.07 tax if paid to a basic rate taxpayer. Total tax on £1,000 = £277.07.
I’d better quit and put my feet up, then.
“Does the UK have dividend imputation ?”
Used to have full imputation. Pretty much gone now.
I think Gordon Brown first restricted it (to 10%? when corporation tax was 20%?).
Then it was abolished (Osborne?) but replaced by lower rates on dividends received, which sort of worked out as equivalent to imputation.
But then they increased those rates (Sunak first, then further by Reeves?), but not to full income tax rates, so there was effectively partial imputation, but not full.
Then they increased the corporation tax rate from 19% to 25% (think that was Hunt, when Sunak was PM), but without cutting the dividend tax rates, so the proportion of imputation dropped further.
So yes, there’s still a very little bit of recognition that there’s double taxation, but very little.
I think Martin, near the M25 nails it in far less words than I ever could:
The UK has a wealth problem. The problem is that too few people have too much of our wealth, and most of the rest of us don’t have enough. That’s a definition of inequality, and that inequality is causing massive stress, social injustice, and political grievance. And you will have noticed that grievance. All of it is justified by the fact that this is a system that has been chosen by the government. Our tax system lets this wealth inequality happen.
When I read this what the subtext is appears to me to be: I am one of the cleverest people this country has ever seen (in his own estimation) – ordinarily such an intellect would get its just reward but instead (As the great Bongo revealed) my current income is £3 an hour. That’s ‘unequal’ and ‘the system is to blame’
As a straightforward matter of fact, the wealthy often pay a lower share of their income in tax than do people on very much lower incomes. That should be impossible, but it is true. We don’t have a progressive tax system overall in the UK, especially when it comes to the wealthy, and my research has shown that. We’ll provide a link down below to the Taxing Wealth Report, where the data is. We have a tax system that taxes the wealthy less than it should. So, why is that? And what can we do about it? That’s what this video is all about.
System looks pretty F%^&ing progressive to me – I lose half my income, if not more to a state and get nothing in return for that largesse. How is that justified?
The explanation lies in how our taxes are designed. Wealth is taxed differently from work in the UK. It always has been, ever since we introduced income taxes in the UK in 1805. And the system favours those who already have money. That is why inequality in this country keeps increasing. And when Margaret Thatcher made changes to our tax system in the 1980s, in particular, wealth increased rapidly, and nothing that has been done since has reversed that trend. And that’s why we need to change our tax system now.
Inequality has primarily increased with the growth of the public sector under Gordon Brown and during the era of unrestricted immigration. These are the two main causes of the inequality and with their reversal it should be a reverse cause. The rich are largely irrelevant.
And let’s be clear, in this context, wealth means having money left over at the end of the week. That is a particularly important idea that you have to keep in mind when we’re talking about tax. In the case of those with wealth, their income in a period exceeds their spending, so they save, and therefore they grow their wealth. Most people spend almost everything they earn, in contrast to those with wealth. But the wealthy and the wealthiest can save large amounts every year. And saving creates tax opportunities that earning wages never can. And those opportunities reduce the tax liabilities of the wealthy. Our tax system rewards those who have or can accumulate wealth.
So the goal is that we have absolutely no savings? Just because he has – noone else is allowed them. Save a fiver under the bed – he’ll be sending round a snatch squad to confiscate that for the Green New Deal.
One of his most spiteful posts ever – and it does reveal I think that he might have been demonetised on Youtube – the financial situation is getting pretty desperate.
Excellent as ever VP. As always he neglects to mention the huge wealth the public sector accrues through their absurd pensions. Anyone starting out today, before they can save a penny for their own future, must first fund the lifestyle of some pink haired civil servant who retired at 55.
This drivel fails a basic sanity check. If the UK was so favourable to the wealthy they’d be flocking here. The opposite is happening people and capital (including mine) are fleeing in horror.
Yep. Gone.
Gone too.
wealth means having money left over at the end of the week.
No it doesn’t. It means not being in debt. My Mum was quite wealthy when she retired, ‘cos she’d got a paid-off house and a pension. Over the years she got less and elss wealthy BACSUE SHE WAS SPENDING IT TO PAY TO STAY ALIVE.
THAT’S THE WHOELF CUCKING POINT OF ACCUMULATING WEALTH./
There is no reason why wealthy people can’t be in debt. It can be a very useful financial strategy.
Some “wealthy” people are all debt.
Aye, my aim is the Unseen University pension plan, be up to my eyeballs in debt on the day I die, having spent everything several times over.
May you be successful!
Things change, but I have no immediate plans to spend money staying alive. I’ll either catch a packet or I won’t.
My kids, if they’re good boys and girls, will get the wonga.
This is about the dog whistle: private untaxed wealth
All the other words in that statement are padding and ignored by those he’s targeting.
“private untaxed wealth” is an oxymoron. All private wealth is taxed at the point of creation (no, no-one is going to get wealthy by earning below the tax threshhold).
Goebbels tactic: tell a big enough lie often enough and you will fool some people.
I presume he means people who have assets have risen in value. Since CGT is paid on sales, until they’ré sold, it’s money he can’t get his hands on.
I don’t kow what he thinks will happen if he does. Money wise, there’s nothing there. To get at the value they have to be sold. Which requires a buyer. Where would the buyers be when anyone with a profit on assets is trying to sell them to pay tax?
It’s always his trouble with money. He can’t tell a book keeping entry from actual money you can spend. Why I have this obsession with the value underlying money.
I did eventually get a handle on how much spendable money/value there is in the UK economy. Since it has to be paid for, total earnings. Divide by twelve for roughly what’s circulating at the moment. A mere £100 billion.
No, no, no, you have it all wrong. Rich people’s wealth is all doubloons, stored in their vaults, which they count lovingly. He wants it, and all he needs is a VehÃculo longo.
He won’t be able to park it in that exec hovel development he infests, Must be traffic jams in the school run.
Do you mean assets that have risen in price? My house has risen in price while declining in value. It is, very rarely, possible for an asset to rise in value; it is quite common for an asset to rise in price. [Debasement of the currency, euphemistically called inflation, does this]
If the asset was purchased from income left over after HMRC had first taken its bite then it is not untaxed wealth.
If the asset was stolen, then it is the job of the police to deal with it, not HMRC.
Plenty of London properties have risen in value. True with most of the SE Up until very recently. You must have bough in the wrong place.
But Spud thinks of prices not value so… And only come into existence, briefly, during a transaction.
NO, they have risen in *price*. In Russian they have the same word for price and value which is one reason why the Russian economy is such a mess.
I bought in the right place when I was first allowed to buy; a few years later I got married and then my wife got upset because she was treated by my neighbours as “John’s wife” rather than a person in her own right so we moved to a nice town within tolerable commuting distance of work. When we moved from a 2-bedroom flat into a 3-bedroom house with a garden I paid off my mortgage (but had to take out another one for £10k a few days later to pay for all the repairs that the previous had not done after he got MS).
Mine’s actually doubled in value since 1999, allowing for CPI and all the bollocks. Thank god.
Oh, for Pete’s sake – has it grown three new bedrooms, a hot tub and a stairslift?
Stalin said price=value and killed more people than Hitlar.
It’s become more desirable, John. It’s in a nice place that people compete to live in. Most of London is now a shithole but my tiny pocket still isn’t. And if I ask AI its 1999 price in £ 2026, and what I now might get for it, it’s doubled, and TFFT because we need the equity.
If your tiny pocket has acquired new better neighbours then that may increased its value [we’ve got one new neighbour since 1996 who is definitely an improvement but I don’t think that can outweigh the difference between a three-bedroom house for a family of four and a one-bedroom two storage rooms (one of which can return to a bedroom at Christmas) house for two elderly people].
Otherwise it is just the price that has increased.
It hasn’t acquired new, better neighbours, but there are relatively few Islamic insurgents and homeboys here, and this is a leafy, solidly middle-class professional enclave with good schools. 2-bed flats like mine can go for nearly a million, unlike 2-bed flats in Barking or Blackburn, which go for rather less. There’s a reason for that, which is why my flat is probably more valuable than your house.
A good point. The value of my parents’ emergency calls mobile phone increased when they learned how to use its other features, especially letting cleverer brother install a tracking app on it.
With a house, there’s probably some analogy that works, perhaps discovering that you like gardening as you get older, or the village petty criminal accidentally killing himself in a bike crash.
They have risen in value.If I’d have rented out all those early flat conversions I did. Did what a lot of others did. Used them as security & pyramided, I’d have exceedingly rich now in real terms. Or just as likely, one of the ones caught a fatal cold during John Major’s little flurry. Which is why I didn’t. Being wise after the events counts for nothing.
Price is NOT value.
If I had ignored all the rules about trading shares I could have been a multi-millionaire too, but I didn’t care *that much* about being rich and I am quite comfortable (occasionally my wife wife nags me about IHT even though the current rules state that anything left to the widow is exempt).
Of course price isn’t value. A Lambo is pricey but of less value to me than my battered Polo. It’s of a load of Veblen value to someone else, though, which is why BiS is right. The price I’d pay for a Lambo would be low enough for me immediately to flip it for a handsome profit, and no-one would sell it to me for that, so no deal. Not so the Veblen buyer.
Thinking about it, I’ve been able to ignore inflation. Never affected me. I’ve never been on a wage & paid with government scrip. I get paid for the value I create. Inflation proof. It’s relative value. The relative value of a pair of shoes, a chair, a pound of steak, a night out & what I do never changes much. And my money has always worked for its living.
Amuses that with all Spud’s blathering about quantum he missed the only thing that is. Like Scrodinger’s cat, price is. The electron of economics.
Yeah, my Mum’s house was worth less when she died than when she bought it 40 years ago due to four decades of neglect. Usefully, though, it had increased in price enough to pay her rent in her care home.
It’s not that we have neglected the house [we’ve spent £thousands on upgrading each of the kitchen and bathroom and the dining-room (which a previous owner got away with adding as a “conservatory”) and over £12k on double-glazing the front windows because the LA Planning team insisted we had to use wood not PVC] but that the boys have grown up and left home so there are now two of us in a three-bedroom semi (not the one mentioned in the post above) so it has less value: a bedroom has been downgraded to a store-cupboard.
Less value to you, John, but more to the people who need those bedrooms, and that’s where you’ll get the equity from, as BiS says.
There is a difference between value and potential value if … and if … and if … and if pigs could fly.
The value of my house is ONLY the value to my wife and myself – everything else is imaginary.
What is the value of a made-to-measure suit? A lot to the guy who ordered and whom it fits – zilch to anyone else.
Look John. I agree about your definition of value. Utility value. I go further, the value used in many contexts is meaningless. There is only price revealed in a transaction. Thus the value of the stock market is its utility value. The dividends paid. It’s not the issuance times prices because it’s impossible to sell the stockmarket because there’s no buyers. Same applies to a share holding. Its price can only be discovered in a transaction. Quoted share prices are bids & offers. By definition, transactions haven’t happened. So you can’t presume the “value” equals the consideration on a contract note.
But in this case we’re talking house values. Usually based on the price estate agents are listing houses. Yes it’s nonsense, but it’s the nomenclature of the trade. Again it’s unrealisable because it depend on how many houses are for sale at the instant. It’s something I was pointing out in another conversation. Asset values depend on someone buying the asset. So your pensions, savings & houses depend, when you want to liquidate them into money that will buy you dinner, on the quantity of value circulating in commerce at the future time you want to do it. If that is very small, asset values are zero. We’ve been there. In the depression in the US, people walked away from their houses because without an income a house is just a well appointed coffin. We started there. In subsistence farming the value of land is zero. There’s no surplus to buy it with.
You have been conned. You are talking about house prices – just as Lenin and Stalin, and Michael Foot, would want you to do.
FYI I have no intention of ever needing to sell my house so the sale price is utterly irrelevant.
You are also totally wrong about the value of land to subsistence farmers – it was their TOTAL wealth.
Also it was in the post-Clinton era that people walked away from houses to avoid the mortgages.
Private companies, not limited liability companies? Yeah, I see where Professor Kartoffel is coming from.