Savings and Investments thread

bobmunro

valleynick66 said:

PragueAddick said:

Rob7Lee said:

I’ve said for many years, our tax system needs wiping and starting again.  But no party is going to do that as it’s likely to upset as many people as it pleases which will simply lose votes.

The Country is in a world of pain financially and it’s not going to improve any time soon, I fully expect more elastoplasts (ie more additional tax changes), sadly it’s only going to get worse.

one bit on yours I don’t understand, why are you still taxed in the UK? Or more so I guess why are you still tax resident? Surely by now you can not be?

I haven't been tax resident since 1996. That's been accepted by HMRC on all my returns each year, completed by a professional adviser. However I continued to have to pay UK tax through to 2023 because of the  rental income on my house in Surbiton . For some reason HMRC claim they are entitled to the tax on that, no matter you are tax non- resident. But when I sold it, my adviser got a written agreement from HMRC that I no longer needed to submit self-assessment. So the application to get an NR tax code should have been a formality, especially with the nice stamped confirmation from the Czech tax office that I am paying tax here. Nine months later I still didn't have it, until finally I got through to "Colin", and suddenly I had it. 

I wish British people would moan less about paying tax and more about the failure of HMRC  to collect the agreed tax fairly and efficiently. 

But most British people aren’t exposed to this aspect. They only know / feel what they pay. 

As said above it’s our political leaders who are most at fault for not getting to grips with it. 

It is true that most UK taxpayers never need to deal directly with HMRC - they have one employed job or pension, have a standard tax code of 1257L (Personal Allowance) and deductions are via PAYE, applied and collected by their employer and itemised on their payslip.

However, of the 37m UK taxpayers, 12m do have to submit a self-assessment for any number of reasons - multiple jobs, capital gains, taxable benefits, taxable income from investments, self-employed (in whole or part) and so on - so roughly a third of all taxpayers. That is still a very sizeable minority who are expected to understand what they can and can't claim as relief or pay on top of any tax/NI deducted at source. If you understand the UK tax system in sufficient detail self-assessment is pretty straightforward - if you don't then it can be a minefield mainly because people generally don't know what they don't know and HMRC will only tell you if you owe them money and not that they could owe you money if you lawfully claimed for x, y or z. Pension contributions is a prime example - 20% tax relief is applied via PAYE and any additional relief if you are a 40%/45% taxpayer has to be applied for by the individual - HMRC won't tell you, and it is amazing how many people don't realise that additional relief on contributions is available at your marginal rate.

Yes, the tax system is way too complicated and is only ever tinkered with, which ultimately makes it ever increasingly complicated! Systemic changes are needed, but so too is the provision of effective education for taxpayers.

cantersaddick

golfaddick said:

IMF downgrading worldwide economic growth due to the war in Iran.

The UK fares the worst with the IMF saying GDP falling 0.5%, from 1.3% to 0.8%.

By comparison the US GDP only set to fall by 0.1%, from 2.4% to 2.3%.

Why does the country who started the damn thing get off more or less intact - whereas the uninvolved (like us) gets worse hit ??

(Rhetorical question as I don't want to run this political)

And I know it's to do with the UK more reliant on imported oil than other countries, inflation, interest rates etc etc.

On this. The US started this war in an attempt to make them the default supplier of oil worldwide (now that they've siezed Venezuela's oil) and to strengthen the petro-dollar. Even though its not been completely successful and much of Asia are moving or considering moving from the petro-dollar (some even dumping reserves) they were never gonna go out of this badly hit. 

For us it's over exposure to fossil fuel reliance and complex imported supply chains for basically all consumer goods but particularly things like food which then rely on complicated supply chains and fossil fuels for fertiliser. 

The interesting thing from the IMF forecasts - and the OECD ones which were basically the same - was that they warned the UK and European economies against raising interest rates in an attempt to deal with the rising inflation that will inevitably comes as a result of this crisis. This is something I've been banging on about for a while and is one of the fundamental economic misunderstandings that has been taught and then espoused by the press. Interest rates as a mechanism to control inflation will only work against domestic driven demand led inflation. It will not work against external supply shock inflation such as this, or what we saw after Russia invaded Ukraine. Raising interest rates in this situation will have a negligible impact on inflation but will cause economic hardship for millions through increased mortgage rates and will destroy demand for domestic small businesses. We have so few levers against external supply shocks that we simply have to ride them out and support the worst affected whilst also working towards insulating our economy from them in the future (domestic production of renewables and food as a start). 

This does raise questions over the role and purpose of the BoE in a modern economy. For me their focus should more be on the role as lender of last resort and as a regulator and lender for the banking sector. Which in itself raises the question of independence and of whether we should still be paying the BoE £70bn a year in interest on the marginal time between government spending money and it being assigned to borrowing or tax funded. 

valleynick66

And that’s rather my point; people don’t know what they don’t know and hence why they don’t complain about it. 

The complaints will therefore be about what they do pay. 

Carter

The two options the way I see it and I'm a light year away from being an expert 

1) the massively over-complicated tax system in this country needs reform, like starting from scratch and simplifying 

2) we all need to be educated in the tax system so effectively become unpaid tax solicitors/accountants. 

cantersaddick

On the HMRC point. Professor Richard Murphy of Tax Research UK makes the point that HMRC has been deliberately underfunded for political reasons over decades. He goes further to suggest certain parts of it in particular have been targetted for cuts because they focused on money being taken offshore and corporate tax avoidance. He estimates the tax gap to be quite a bit higher than the HMRC estimate and thinks with funding this could be closed. He also makes lots of points around customer service and usability due to cuts. He's written about this a lot but one here seems to cover a range of points 

https://www.taxresearch.org.uk/Blog/2024/02/29/reforming-the-organisation-goals-and-funding-of-hm-revenue-customs/#:~:text=It also seems that HM,be enrolled in this programme.

golfaddick

It baffles me that tax collection went from tax experts ( HMRC)  checking tax returns to make sure you were paying the correct amount of tax to Self Assessment where the onus was on the general public (who know very little about tax) to declare their earnings, expenses etc.. It then went further to banks paying all interest gross and , once again, assuming the general public will be honest with how much interest they have received on their savings.

It's a bit like getting rid of MOT stations & asking car owners to self certify that their car is road worthy.