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The race for Number 10

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suze
1343914.  Thu Mar 12, 2020 2:00 pm Reply with quote

PDR wrote:
I would just point out that you have picked two points in a 22 year period. The footsie (and more to the point some specific investments) could easily rise out of this trough - it's not like it's a new baseline or anything.


Yes, they could - but right now, few in the City seem to be expecting that to happen any time this side of the Apocalypse. Some commentators (mostly American ones) seem to think the stock markets will fall further and for longer than they did in 1929.


PDR wrote:
As of yesterday we have a grant of probate, but even that only came after writing a highly undiplomatic email to our MP. He forwarded it to the minister and a few hours later we got an email asking for some specific details - the grant was issued by email a whopping 20 minutes after our reply (some 9 weeks after the initial submission).


Let's not name him here, but I do know who your MP is. It sounds as if he's kicked some arses rather more successfully than is usual in these circumstances, so well done that man. Aren't you glad now that he didn't become Prime Minister?

Given what Mrs R does for a living you probably already know this, but just in case. If you sell any assets at a loss as compared to probate value, you can have part of the Inheritance Tax back.

 
Numerophile
1343920.  Thu Mar 12, 2020 3:05 pm Reply with quote

suze wrote:
If the actuality is 3.47%...

I am not for a moment suggesting that that figure is the 'normal' rate of return on managed investments; it is simply the average dividend yield of the FTSE100 over the past two and a half decades. Investment managers aren't limited to the FTSE100, or to dividends, and any competent manager should be able to achieve quite a bit better than this.

My point was just that you were only looking at capital growth and not taking into account income, and the compounding effect of reinvesting that income.

 
PDR
1343926.  Thu Mar 12, 2020 4:25 pm Reply with quote

suze wrote:

Let's not name him here, but I do know who your MP is. It sounds as if he's kicked some arses rather more successfully than is usual in these circumstances, so well done that man. Aren't you glad now that he didn't become Prime Minister?


Oh absolutely - Mr Spoonerism has undoubtedly earned his corn this week. Although in my experience this is the sort of thing that pretty well all MPs do well because they can provide service to someone who actually elects them without too much actual effort. It also handily illustrates the roles of the legislature and the executive. Such letters/emails to MPs are fielded by their office. The office will suggest forwarding it to the appropriate minister and draft a letter for the MP to "sign"*. It's a convention that any such letter from an MP *must* receive an appropriate answer and action - it's in the ministerial code of conduct because it's the formal role of MPs to hold the executive to account.

So the MP writes to the Minister, and the Minister's office, and the office pass it to the department for an answer. In some cases (as in this one, it seems) it just becomes an arse-kicking - "The minister has asked about this, so get your finger out and sort it!", while in others it just gets an answer. But it *always* get's a response because that's the rules.

Don't get me wrong, I am grateful to the RtHon Spoonerism for his intervention. But I'm pretty certain that any MP can and would do and achieve the same. As a constituent that's one of the services you should be able to expect from your MP. Their email addresses are all on the parliament website for this reason.

Quote:

Given what Mrs R does for a living you probably already know this, but just in case. If you sell any assets at a loss as compared to probate value, you can have part of the Inheritance Tax back.


This is true, but as the inheritance tax rate is less than 100% it's not all reclaimable...

PDR

* a physical signature isn't actually needed - it just gets sent in the MP's name

 
suze
1343930.  Thu Mar 12, 2020 5:13 pm Reply with quote

PDR wrote:
This is true, but as the inheritance tax rate is less than 100% ...


This is a vicious rumour!

Or does it just seem like about 5,000% at the time that you have to pay it?

 
PDR
1343933.  Thu Mar 12, 2020 6:21 pm Reply with quote

I hear you, Sister!

My father successfully constructed a will-trust arrangement which (when my mother died) left us with an embarrassingly small inheritance tax bill - one that was paid from her current account*. So in that case there would not have been sufficient tax reclaim.

That loophole was closed and my late F-i-L made no such arrangements, so his IHT bill is very much larger.

PDR

* This was one of the reasons my PPI payout made me sufficiently uncomfortable that I gave it to charity

 
Alexander Howard
1343937.  Thu Mar 12, 2020 7:00 pm Reply with quote

I attended a lecture once where an accountant demonstrated that a badly constructed legacy can actually be taxed at 120%. It was to do with the way that a 40% can hit three times. I can't remember the details except that I was glad I never took up accountancy.

Question for politicians: if all those inheritances sucked out of the hands of the children were to remain in the economy, as spending money and investment money, how much tax would the active money earn by VAT, income tax, and when the money grows through investment? I suspect it would be more than it provides as dead money.

 
suze
1343939.  Thu Mar 12, 2020 7:22 pm Reply with quote

There's no Inheritance Tax in Canada. It was abolished in 1972, and governments since have not found that this creates a cash flow problem.

Sajid Javid was known to be keen to ditch it here, but look what happened to him. It is a slight problem for the current government that The Farage also wants it abolished. I get the impression that - unlike Mr Cameron's government - Mr Johnson's government is very keen not to be seen doing things because that man wants it to.

 
Celebaelin
1343940.  Thu Mar 12, 2020 8:08 pm Reply with quote

Inheritance tax was described by my eldest sibling as 'iniquitous' - which is far from a word she uses lightly. On a rough calculation my father was, in combination with inheritance tax, paying something like 80% tax on his salary during at least a few years in the 70's. On average the combined effect would obviously be rather less but even then it's not a number that most people would find acceptable on a salary that wasn't even that high for the responsibility involved.

He had a tendency towards a low grumble and just accept it.

wrt the markets I'm thinking that many might be considering (or already going with) with 'bail out now and re-invest later' but where do you put the money? If it's done with over in China (as some suggest) then there probably...

On another note am I the only person who feels inclined to suggest that, at least as it seems so far, A. B. de P. Johnson isn't making a total hash of this?

 
cnb
1343948.  Fri Mar 13, 2020 5:10 am Reply with quote

Alexander Howard wrote:
Question for politicians: if all those inheritances sucked out of the hands of the children were to remain in the economy, as spending money and investment money, how much tax would the active money earn by VAT, income tax, and when the money grows through investment? I suspect it would be more than it provides as dead money.


I've always thought that Inheritance Tax was rather odd. It creates a lot of administration and suffers from a lot of avoidance because it's very blunt: one threshold, high tax rate thereafter.

Why isn't inherited money taxed as an income to the recipient? You'd probably need a mechanism to treat the income as arising over multiple years, but that wouldn't be too difficult. It would make the tax much more progressive, and would encourage people to distribute their estates more widely (as smaller amounts would probably be taxed at a lower rate).

 
cnb
1343949.  Fri Mar 13, 2020 5:16 am Reply with quote

Celebaelin wrote:
On another note am I the only person who feels inclined to suggest that, at least as it seems so far, A. B. de P. Johnson isn't making a total hash of this?


I get the impression Johnson's only made one choice: "Dom's making the decisions." The 'put the data scientists in charge' approach has Cummings written all over it.
There are plenty of people saying "it'll never work", but they said that about Vote Leave.
Putting him in charge of Conservative policy making could be very ugly, but - I can't quite believe I'm saying this - having him managing something like this is probably a very good thing.

 
PDR
1343954.  Fri Mar 13, 2020 6:36 am Reply with quote

cnb wrote:

I've always thought that Inheritance Tax was rather odd. It creates a lot of administration and suffers from a lot of avoidance because it's very blunt: one threshold, high tax rate thereafter.

Why isn't inherited money taxed as an income to the recipient? You'd probably need a mechanism to treat the income as arising over multiple years, but that wouldn't be too difficult. It would make the tax much more progressive, and would encourage people to distribute their estates more widely (as smaller amounts would probably be taxed at a lower rate).


As I understand it the original purpose of Death Duties (now called Inheritance Tax) was actually a bit of wealth redistribution. There was a view that taxation based on income hit the middle classes (who worked for their money) far more than it did the gentry (whose income was almost all from family capital and property). Death Duties forced the gentry to hand over chunks of the family capital which might otherwise be considered to be "avoiding" fair burden of taxation. SWMBO (tax accountant) suggests that taxing it as income is problematic for all sorts of technical reasons - amongst them being where the inheritees are children.

The net effect of death duties was to break up the large (originally feudal) estates into larger numbers of smaller farms owned by the people who worked them. I'd suggest that was probably a "good thing". The only reason it's become an issue now is probably the inflated value of property which brings far more people into the IHT bracket.

PDR

 
Jenny
1343967.  Fri Mar 13, 2020 10:11 am Reply with quote

My financial adviser and I put in place a plan eighteen months ago to guard against and minimise the effect of sudden drops in the market, because I was convinced that one way or another the Trump presidency would cause a financial crisis. Last year I was accepting that maybe I'd overreacted, but this year it's looking like a damn good idea. Said financial adviser believes that as the coronavirus pandemic ebbs, the market will recover. Let's hope he's right. Historically he should be.

 
suze
1343987.  Fri Mar 13, 2020 5:38 pm Reply with quote

Celebaelin wrote:
wrt the markets I'm thinking that many might be considering (or already going with) with 'bail out now and re-invest later' but where do you put the money? If it's done with over in China (as some suggest) then there probably...


There are two problems with that:
1. Do you actually believe anything that China says? After all, the Chinese appear to have tried to cover up the virus's very existence for six weeks or so, and some Chinese media - who say what they are told to say - reported that it had come to China from the US.
2. Even if you do believe what the Chinese government says, how inclined are you to invest in a third world dictatorship?

 
PDR
1344861.  Thu Mar 26, 2020 5:09 pm Reply with quote

I listened to this afternoon's five o'clock brief with interest, partly because it was the first real open press conference by Rishi Sunak. I have to say I was quietly impressed by his grasp of the subject matter, his plain-speaking manner and the quiet confidence with which he fielded questions, and the absence of tendency to resort to B/S and mis-speakings.

He may be the YTS kid who was brought in to hold the fort when others fell on their swords, but it is my impression that he could well be a far safer pair of hands than his last two predecessors.

Of course he's still a believer in the magic money tree, but in times like these I suspect the only option is to get a loan from the future.

PDR

 
suze
1344862.  Thu Mar 26, 2020 5:38 pm Reply with quote

Mr Sunak puzzles me. Either he genuinely is a Keynesian, in which case he's in the wrong party, or he's putting forth policies that he doesn't actually believe in.

We'll find out which it is in the autumn budget, but he will already be well aware that he's going to have a problem. If he increases the higher rate of income tax (which he probably has to) then the back bench far right will be out for his blood, but he increases the basic rate and not the higher rate (which would actually raise more revenue) there could be a general strike.

 

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