What caught my eye this week.
We’re at the point now where about the only potential tax hike that hasn’t been run past the committee of public opinion is a revival of the 200-year old window tax.
Don’t laugh! It could be a real revenue spinner in our era of skyscrapers in the City and bifold doors in the suburbs.
In the meantime, a rise in income taxes in the upcoming Budget seems to finally be – maybe – on the agenda.
Yes, those same higher income taxes that were ruled out ahead of the last election.
I have my doubts, but who knows. Perhaps Rachel Reeves and Keir Starmer believe the situation really is dire enough to warrant breaking the pledge? It’s already motived them to lift their silence on the £100bn hit to the economy – and the resulting black-hole-sized £40bn shortfall in state revenues – that Brexit has cost us.
Or maybe Labour thinks they might as well be hanged for a sheep as a lamb, considering the kicking they got anyway for dancing around taxes on ‘working people’ with the last budget?
Or maybe it’s just another ill-advised attempt to scare us with a worst-case scenario so that the real medicine doesn’t taste so bad.
We’ll find out on 26 November. But hell will hath no fury like the voting public if income tax rates rise by a bald 2p in the pound without a ‘sterilising’ 2p cut in National Insurance – which would undo much of the revenue-raising potential anyway.
And cutting national insurance won’t help the legions of vote-happy pensioners…
A stitch in time
I happen to believe that from a bunch of very unpalatable options, just hiking the basic rate of income tax and getting on with it wouldn’t be the worst.
But that would be partially on the grounds that it’s such a game-changer that it could have quashed the rumours and uncertainty caused by chipping away at absolutely everything else – from pensions, ISAs, dividends, and capital gains to property and the rest – to the sidelines.
However we’ve already had another three or four months of uncertainty. It’s made people save more, spend less, dither about moving house, and thrown yet more sand into the wheels of our lacklustre economy.
Worse, we’ve already had last year’s employer’s NI hike. Which had exactly the effect everyone predicted it would on youth employment, and on the health of the hospitality sector too.
If a bandaid was going to be ripped off then 2024 was surely the better time to go for it.
Rumour treadmill
Here’s a flavour of this week’s speculation:
- Chancellor refuses to rule out manifesto-breaking tax hikes – Sky
- NIESR: hike income tax by 2-10p in the pound – This Is Money
- How much would a 2p income tax rise cost you? – Which
- Reeves also reportedly considering a 20% exit tax on UK leavers – Guardian
- Stand down! Reeves said to cool on big cash ISA reforms – City AM
- A 5% VAT cut on electricity bills in Budget will backfire, experts say – Guardian
- How wealthy is ‘wealthy’, exactly? [Paywall] – FT
But that’s just a taste. I’ve run batches of budget speculation in these links for weeks, so thick and fast and indiscriminate have they come.
Of course what’s notably missing from most of the rumour-mongering is anything about spending cuts. I’ve probably read more about the two-child benefit cap being lifted – which will obviously cost yet more money – than on any mooted plans to curb spending.
It’s true the last round of so-called austerity under George Osborne didn’t do much for the UK. And perhaps it’s senseless to look to downsize government – or at least to stop it growing further – while the economy is only limping along.
But is this a different era? Rates are taking their time to fall, and we’ve borrowed much more money. There’s a growing feeling that we’re sleepwalking into a self-fulfilling prophecy.
I used to look forward to budgets. But I honestly just want this one to be over.
Have a great weekend!
From Monevator
Defensive asset allocation beyond the 60/40 portfolio – Monevator
Yes, you can eat risk-adjusted returns – Monevator [Mogul members]
From the archive-ator: How to choose a bond fund – Monevator
News
Bank of England holds its key rate at 4% – BBC
UK economic growth forecast downgraded for 2025 – Yahoo Finance
Construction sector suffers worst downturn since 2020 – This Is Money
Fixing Britain’s ‘worklessness’ crisis would cost business £6bn a year – Guardian
Motor finance backlash mounts, with calls to pull £4bn from lenders – City AM
UK children to get mortgage and budgeting lessons in school – This Is Money
Savills’ five-year forecast for house prices – This Is Money
AI-washing and the massive job cuts hitting the US economy – CNBC
Firm founded by winner of The Apprentice Harpreet Kaur collapses – City AM
The rise of a new American oligarchy – Oxfam
Products and services
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Nationwide cuts mortgage rates to 3.64%, cheapest since 2022 – This Is Money
HSBC increase mortgage limit to 6.5x income for richest customers – This Is Money
A review of Chip’s £500,000 prize savings account – Be Clever With Your Cash
Get up to £1,500 cashback when you transfer your cash and/or investments to Charles Stanley Direct through this affiliate link. Terms apply – Charles Stanley
Nationwide offers interest-only mortgages to first-time buyers – What Mortgage
Why are workers abandoning their Nest pensions? – MoneyWeek
Where to price match when you purchase to save cash – Be Clever With Your Cash
Get up to £200 cashback when you open or switch to an Interactive Investor SIPP. Terms and fees apply, affiliate link. – Interactive Investor
How Experian has rejigged its credit scoring system – Which
Enjoy Apple CarPlay while you still can – The Atlantic
Homes for sale near a cycle route, in pictures – Guardian
Comment and opinion
A wistful farewell to Warren Buffett’s annual letters… – FA Mag
…and literacy as your investing edge – A Teachable Moment
How to fix wealth taxes [Podcast] – IFS
Should you buy at all-time highs? – Of Dollars and Data
A history of private equity [Podcast] – A Long Time In Finance via Spotify
Zen and the art of moat maintenance – 3652 Days
“Can I make more money working for myself?” [Paywall] – FT
The benefits of bubbles – Stratechery
Is now the time to go all-in on tech stocks? – A Wealth of Common Sense
Funds-of-funds really layer up those fees – Basis Pointing
Just buy stocks until you die? – Wall Street Journal [h/t Abnormal Returns]
Howard Mark’s famous memos anthologised [PDF] – Oaktree Capital
Deutsche Bank long-term asset study / data dump – DB Research
Naughty corner: Active antics
Cockroaches in the coal mine – Howard Marks
Cash hoarded by Buffett’s Berkshire Hathaway hits $381bn – CNBC
Growth stocks aren’t the only route to riches – Morningstar
Currency valuations – Verdad
Which Trump trades paid off? – Morningstar
Kindle book bargains
Poor Charlie’s Almanack by Charlie Munger – £0.99 on Kindle
The Man Who Solved the Market by Gregory Zuckerman – £0.99 on Kindle
Chip War by Chris Miller – £0.99 on Kindle
Meltdown: The Collapse of Credit Suisse by Duncan Mavin – £0.99 on Kindle
Or pick up one of the all-time great investing classics – Monevator shop
Environmental factors
Climate models show the 1.5°C goal is dead… [Paywall] – The Economist
…with three hottest years in a row putting the nail in the coffin – Guardian
Does installing a heat pump deliver savings after one year? – MoneyWeek
Climate action is the best way to ensure long-term growth – Observer
Government touts new forests from £1bn tree-planting programme – GOV.UK
How bird flu has decimated the elephant seal population – BBC
Pearls of the ocean that might return to British shores – Guardian
A pumping station and WW2 pillbox converted for bats – BBC
Robot overlord roundup
OpenAI’s planned $1 trillion infrastructure spend – Tom Tunguz
The double bind of the AI bubble means we’re screwed either way – Vanity Fair
Google plans to put data centres in space to meet AI demand – BBC
French philosopher Baudrillard predicted AI 30 years ago – The Conversation
AI’s exciting until companies want to use it: Rightmove edition [Paywall] – FT
Why do people love or hate AI? The answer is in our brains – The Conversation
Too much social media gives AI chatbots ‘brain rot’ [Research] – Nature
Not at the dinner table
Will Rachel Reeves repeat Denis Healey’s nightmare 1975 budget? – Sky
What a UK government led by Reform would really look like – BBC
Britain’s fiscal reality check – New Statesman
Stupidology – N+1
BBC has questions to answer over edited Trump speech, MPs say – BBC
Trump says he has “no idea” who he just pardoned – Citation Needed
Tensions rise in UK’s asylum and refuge hotspot – Guardian
Off our beat
Why is Argentina poor? – Uncharted Territories
The world’s most militarised economies by three metrics – Visual Capitalist
Everyone is a strategist. No one is a writer – Gen Zero
Scientists excited by gel to repair tooth enamel – BBC
Adaptability – We Are Gonna Get Those Bastards
This physicist says we don’t take Covid seriously enough – The Tyee
Celebrity chefs urge Britons to bang in some beans – Guardian
The lucrative economics of being an expert witness – The Hustle
Tails, things, and stuff – Permanent Equity
And finally…
“When you sell in desperation, you always sell cheap.”
– Peter Lynch, One Up On Wall Street
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Fully agree with this take on both the tax and spending side. It’s the uncertainty that’s the killer. Just get it over and done with.
The most depressing thing is how bad politicians seem to have become at being politicians.
What a drab uninspiring crew.
No wonder the door is open for ‘big personality’ types like Johnson.
Re: robot overlords, I found this article rather informative (and balanced):
https://www.deloitte.com/uk/en/blogs/monday-briefing/bubbles-good-and-bad.html
I enjoy reading the links to previous budget write ups. It’s worth remembering that Govt debt to GDP in 2008 was a mere 48%. It’s now double that. We’re still living with that seismic event and the Covid lockdown and their policy responses.
Globalisation has resulted in a concentration of wealth in developed democracies where the vast majority of voters have no real skin in the tax game. Where this goes I have no idea….but I’m happy with my gold investments.
People blame the press for 6 months of speculation but these policies are being deliberately leaked. The income tax hike details released in the last few days do seem specific enough to be something they might actually go through with given how close we are to budget day.
2% added to basic, higher and additional rates. 2% employee NI reduction to sell it to Labours definition of “working people”. The problem here, as TI states, is that corresponding NI drop negates much of the additional potential revenue and discriminates against pensioners.
A pensioner on £50k pa income would be hit for an extra £750 pa, or an extra £500 pa if on a £36k income.
For those still working, anyone on over £50k will notice as there will be no employee NI reduction for any earnings over £50k.
A marginal tax rate of 44% inc employee NI for these strivers.
As for those on £100k+ the marginal tax rate will be 64%.
Meanwhile the super rich will side step it all.
The doubling of council tax on band G and H also seems very specific and easily implemented.
The combined effects would hammer some affluent boomers, and possibly compress house prices into a narrower range.
I can see nice band F and under houses going up in value as multiple generations (upsizers and downsizers) compete for them while houses in higher bands drop.
I just hope they don’t meddle with salary sacrifice pensions, the only thing making decently paid work worthwhile.
“I used to look forward to budgets. But I honestly just want this one to be over.” – Me too! – if I read one more speculative headline of Reeves says this or that, I just might explode. And it’s another THREE weeks 🙁 🙁
Labour really do not seem to know how to do politics – perhaps all those years of watching crap Tories do it – no good example to learn from.
Re – the literacy article. I do feel sorry for children and young people now. I love reading, it’s always been my main hobby – but even I struggle to put down the mobile and the distractions of YouTube to pick up a book. And I have the maturity to know that it’s not good for me and I will be happier after the book than the YT video. It’s hard. So how are those who have never had a chance to form a reading habit going to do it?
Couldn’t agree more with the comment on income tax – just do it, it’s the least worst option.
The Times is reporting that Reeves is considering applying employee and employer NI to pension contributions.
Way to blow up pensions.
Income tax rising by 2p is political suicide and so unlikely. 1p a possibility. More likely withdrawal of more the various generous pension reliefs and tinkering…bank reserve income, gambling, extra council tax bands etc
My sense is that RR will want a bond market friendly budget. The problem is that much of that will counter growth. But future lower borrowing costs will trump growth.
Expect a hung parliament in 3 years.
Not to be a bore but, as a Scottish taxpayer, I feel the need to point out the anomaly that Income Tax rates and bands in Scotland (other than the Personal Allowance) are devolved i.e. decided by the Scottish Government and not Rachel Reeves. However, National Insurance rates and bands are decided by the UK Treasury. Therefore, Scottish taxpayers (who already pay higher rates at lower thresholds) would not be penalised by a rise in UK Income Tax but would benefit from a cut in NIC. The block grant paid to Scotland by the Treasury would be cut however so not all good news north of the border were this to come to pass. I may say that I have long favoured moving to a federal system where we could have state and federal taxes on a sensible basis.
They could address the issue of any rise in income tax hitting pensioners hard by moving the state pension out of the tax regime. This would address the issue of triple lock moving basic SP towards the personal allowance, and maybe also provide a way to unwind triple lock. The other big advantage is that basic rate tax payers (fewer of those all the time thanks to tax bands being frozen!) would be incentivised to save into pensions as they would know that they would be unlikely to pay tax on the way out.
In fact, this is all so jolly sensible that we know for sure that it won’t happen.
To be honest, this may be the straw that breaks the camel’s back for people such as myself. I look around the floor and it gets emptier every week as people move to the UAE, Switzerland, Singapore, or Florida.
We’ve already seen our compensation hit by higher employer NI. Fees are pass through so that change 100% hit employees’ pay. VAT on school fees. Medical insurance is a benefit in kind but as £11k for 25/26, it feel not that beneficial. I think an extra 2% on the additional rate may be too much.
I could understand if govt expenditure had already been slashed in an austerity drive. The triple lock unwound. Public sector wage increases linked to productivity. The rules on infrastruture investment changed. None of that has happened. They couldn’t even get a negligible winter fuel allowance cut.
With a 2% additional rate increase, I’ll see about 43p post tax of every £1 compensation (15% employer NI, 0.5% AA, 47% IT, 2% NI). It really begs the question why bother. In Dubai that is 100p per £1. In Switzerland, it’s 74p marginal. The gap is just becoming too wide.
Being very very charitable, you can argue that RR and KS had the right idea post election with their modest attempts to cut elements of expenditure. Now that’s been shown to be politically and electorally unacceptable the only option is tax rises.
The UK still has a significantly lower tax take as a % of GDP than other European Countries so over a number of years, we should expect that to rise predominately through fiscal drag.
The interesting angle is when does it all go pop and who goes first. France or the UK. What feels pretty certain, giving the aging population is that in 15 years times either (a) taxes will be much much higher (b) the state provision will have radically changed or (c) there will need to be mass immigration to make up the difference.
Presumably during that period the bond market will have intervened to force action.
I’m as equally unimpressed with those arguing for mass spending cuts as those who argue for large tax rises – as soon as you try to unpick the detail its all incoherent. Either increase basic rate a lot or lower welfare spending a lot – nothing else will make much difference.
I see a lot of malaise amongst my brethren. Most people are stuck here regardless of the chuntering about moving to Dubai. Families are sticky and the world is competitive. Unless you are the top 1 – 2% – a move to the US is tough to engineer. They’ve got enough media digital upskill marketeers :). People do not seem optimistic about the future and it plays into everything.
If the tax rises go through it will mean someone earning >£100k when factoring in employers NI is taking materially less than 50%. That’s just not motivating.
The devil take the hindmost – No man’s an island but I’m going to give it a good go. A difficult decade ahead. Relatively though we’re in a better place to much of the world – but our end of the boat is definitely going down.
I spend a large amount of time figuring out how to avoid paying tax on investments – it’s such a waste compared to a flat tax without any exemptions.
Average pensioners are better off than an average household. So reducing the number of benefits for them, like winter fuel payments or national insurance evasion makes perfect sense. Removing the state pension from income tax is definitely not going to happen – state pension is effectively means tested with income tax, with people on higher non-state pension receiving less state pension. This is much simpler to administer than a separate state pension means testing framework.
Tax simplification is why NI needs to go – it’s an unnecessary complication to the tax system that penalises working over other forms of income. I’m hoping all NI gets rolled into income tax, not just 2% across the bands. Raising base rate of income tax to 26% would result in a simpler tax system and remove a tax advantage for salary sacrifice pension contributions compared to post-tax pension contributions. For pension contributions outside salary sacrifice you get income tax back, but you don’t get NI back, which penalises self employed people.
Agree… scrap NI, and roll it into Income Tax.
Take the opportunity to rethink the tax rates and bands – including ditching the utterly crazy 100k tax trap marginal rate with the personal allowance clawback. Here in Scotland, that’s a 69.5% tax rate for net adj income 100-125k. [advanced rate 45%*1.5 + 2% NI]
Assuming an unsterilised IT rise above the BR/HR threshold (i e. no commensurate reduction in employee NI for income chargeable at HR and AR), would the rumoured 20% exit charge (covered today for instance here):
https://www.telegraph.co.uk/business/2025/11/08/reevess-exit-tax-sparks-fears-of-tech-exodus/
not make a significant difference to your decision making @ZX #12 (?)
Assuming ~£40 mn chargeable assets and USD 5 mn / ~£4 mn total gross earnings p.a., the payback time with Dubai would still be nearly 4 years (i.e. a £8 mn one off charge v ((100/115 for employer NI) x (100 – (47 IT + 2 employee NI)/100) x ~£4 mn p.a.) = ~ £8 mn single exit tax hit v a ~£2.2 mn p.a. difference.
And, although I’ve never been there myself, I am assured by someone who grew up there that Dubai is unbelievably hot (in summer it’s literally unlivable outside).
@ seeking fire
I think there’s huge electoral support for cutting spending. Certainly agree that Labour MPs have zero appetite for it, but the public want to see fairness.
Fairness means that non-claimants aren’t taken advantage of. Currently I’d be very surprised if there wasn’t huge support for a total restructure of the welfare state. Money for nothing, living in the capital at min wage workers expense, over medicalising the human condition to increase income etc it’s just not right
Let’s have a referendum..
I’m totally behind you with a flat tax and no exemptions. And prison loans, welfare loans to equalise the situation with student loans
The Heat Pump article unintentionally shone a light on the mess we’re in due to government meddling in economic activity. TLDR: £13.5k spent between the taxpayer and the house owner for a grand saving of… drum room please…£125/year.
We are truly governed by idiots with agendas (Elected and civil service) and have been for decades now – almost everything else is downstream of this fact.
I don’t think they would even understand the concept of second or third order effects never mind factor them in to policy developer. Case in point this weeks idea that Pension contributions are something to be punished and discouraged.
I truly despair as to what state the nation will be in by 2029.
This is the most depressing budget build up I can remember. I agree with the comment above (#17) that there should be plenty of public appetite for cutting public spending on all sorts of things, including the welfare state (which doesn’t even provide much of a net to the prudent since universal credit applies only to those with under 16k of savings and investments – the NHS and public education is about the only thing I really value here). Unfortunately there is a large constituency of voters who are very happy to vote to be given lots of support by “the state” aka those with supposedly broad shoulders. If I had a lot of assets (say at least a million investable) or was a genuinely high earner (say at least 200k p.a.), I’d already be gone. As it is, I’m not on the cusp of leaving right now, but starting to consider it more seriously than ever. Things like salary sacrifice and ISA are the only things that make staying in the UK tolerable. If they mess with that, I really do think there’s a more than 50% chance I’d leave the country in the next few years.
I agree with all the comments on simplification of the tax system, and that NI should be rolled into income tax, making it payable by pensioners who have more than the state pension coming in.
I was trying to find out how much tax I paid in my first proper job in 1984, looks like it was 30% income tax and 9% NI. The income tax allowance seems to have been about £1.8k or £6k in today’s money, so I suspect that a low paid worker (which I definitely was!) would have been more exposed to tax than the equivalent person now.
Salary sacrifice now
I’m grateful every week for the weekend roundup and the effort it must take to produce it, but have noticed lately the list of links and topics is expanding.
Are stories on ‘celebrity chefs’ and ‘Trump’s edited speech’ relevant to finance/investing? Or am I missing the connection?
Thanks for the DB link that was an interesting read especially on currencies which I didn’t know about. Always thought chf was strong but missed out Singapore and Netherlands. The report is a great example of buy when cheap and wait but as they say with AI maybe this time it’s different! Based on the report it’s interesting to see some countries looking cheap but I think migration and environmental change are also big calls over the next 20 years not just technology.
God, I’m enjoying the 3652 posts, the collector post from a few weeks ago resonated, as did todays.
Update, I’m a few million richer. I’ve got private memberships to here there and everywhere. And I relish the flex. I do.
But there has been no greater flex (or satisfaction) than walking away from employers who believed they held my leash even when I was considerably poorer.
PS, @Hosimpson, beautiful writing: it’s at least 48 (readers)!
@Steve B but they do say “But, it’s not really a like-for-like comparison as our house is so much warmer now and we don’t worry about how much it costs to have the heating on.”. So like for like the annual savings are certainly more than £124.
@Ducknald Don Yes I saw that, but the numbers are clear and the rest is perception – plus note they described the insulation and larger radiators added so again muddying the waters.
I just can’t accept £7.5k of direct taxpayer subsidy to a middle class London household is an appropriate allocation of resources when we are running a deficit. Add in the Net Zero costs loaded onto electricity charges and the logic is even harder to follow – as I say it’s just market and pricing manipulation all the way down.
No one doubts heat pumps work-here in a remote windy part of Scotland that is the case but……….
In order for the pump to work the house must be insulated to a very high standard -that costs especially in an old house
It will involve a large capital outlay plus the continual maintenance to a high standard
The price of electricity is starting to trouble even those in the happy position of being in a fully insulated house -usually a new build
Interesting times and no easy answers
xxd09
The cost of the insulation and larger radiators was not mentioned either. But this would also help a condensing gas boiler be cheaper and more efficient to run .. the larger radiators would allow a gas boiler to run at a lower flow temperature.. and of course the better insulation would prevent heat loss just as it does for the heat pump.
So I agree it is not a good use of taxpayers money to subsidise heat pumps … may be subsidise larger radiators and insulation. Just as subsidising EVs doesn’t make sense to me … subsidise clean mass transport to reduce car use overall yes .. not expensive brand new EVs.
@dekkard — Thanks for the nice words.
On the links you don’t like, I’ve always included non-money and investing stuff in the Off Our Beat section (at least for a decade, probably more like 15 years). Some of the other sections come and go.
I happen to believe it’s a Defcon 2 situation in Western politics at the moment, which is why I introduced that section with Trump’s second victory. If things (hopefully!) revert to something closer to the usual grubby normal then I’ll not feel the need. If readers disagree with either my concern about politics or my particular slant then they can easily skip it.
Anyway they are in sections for this reason — to make it easier to pick and choose.
If you just want the money and investing stuff, just read links from News, Products and Services, Comment and Opinion, Active Investing, and the occasional ‘mini-special’.
Cheers!
@Steve @DD @Kwaker — On heat pumps, agreed, I thought the same thing when I read the article re: insulation would have helped with an old-fashioned boiler too.
But as has been said, this is hardly a scientific bomb calorimeter-style assessment of the thermodynamic cost/benefit of moving to a heat pump. More ‘vibes’! 😉
I’m in favour of green technologies and trying to push towards net zero, as is presumably obvious from the links I include, or even just the fact I have this section at all.
We’ve just had the three warmest years in a row which is (a) anecdote (b) potentially coincidental (within the realms of an understood backdrop of human-caused global warming I stress) but (c) overwhelmingly something you’d hope would focus the minds of those who deny what is plain in the data and as assessed by experts, and has been for decades.
But today’s politics makes everything unpalatable. The cost of shifting to green technology has been both under and over-sold (there was bound to be high upfront costs, I’d say they pale versus the long-term savings of climate change mitigation — see the Stern report et al) and nowadays by the lamentable anti-science push from the right here and abroad.
Like with most populist movements it takes elements of truth and the inflates them into untruths.
In reality, lifetime costs of generating electricity from most new mainstream renewable installations are now pretty much cheaper than fossil fuels. That doesn’t mean this or that specific installation or use case is. And it doesn’t mean it might not take a long time for the cost to pay/play out versus running on the vast existing infrastructure that is currently remorselessly heating the planet.
So yes there is an upfront cost for a long-term gain (perhaps a truly existential gain). As investors we should understand that mathematics.
Re: heat pump subsidies and the like, I’m not informed enough to die on a hill for the details of this particular scheme, but the idea of state support for newer technologies is additionally to catalyse a widespread movement / a reduction in costs across society. There are various instances of this working around the world, both with renewables and with other technologies.
This externality isn’t captured when looking at the economics of just one house that got a grant, still early in the process, or even an EV car grant whilst we’re still trying to incentivise petrol stations to include electric charging or battery switch out etc.
Among the many problems with the anti-scientific political backlash is it works directly against this wider attempt to shift the direction and reshape the infrastructure. It’s hard to invest when you think people who call a scientific consensus a fraud might come into power and turnover the game board (which has, incredibly, already happened in the US). Even if you decide to go ahead, it’s more costly than it otherwise would have been because (a) people fear such a thing happening, so there’s extra risk premium in the equity or a higher cost of debt to fund your projects and (b) it takes longer to reach the mass market effects that collapse the cost curves.
I don’t think it’s any surprise that it is the same people decrying the climate science who are mostly those who said leaving the EU would be an economic boom for the UK, with a revitalised NHS and a resurgent industrial north selling ships to SE Asia and all the rest of it. Even as today the UK lurches in and out of stagnation, and we’re all here debating yet higher tax rises because the country has been made poorer by their economically witless decision.
These people should be nowhere near power. They are currently leading the polls. I’ll keep including political links.
Oh, and to the conspiracy theorists, the idea that the once-fringe environmental movement was able to out-propaganda the vast and one-time most valuable industry in the world (big oil, which has been proven incidentally to have directly funded attempts to muddy the science) is laughable.
Sure there are environmental nutters and extremists a-plenty, but the reason that direction of travel has/had won is because ultimately the science proved it out.
P.s. Apols, I’ve started talking about electricity generation and we were discussing heat pumps, but anyway the heat pump approach is proven as viable provided, as you’ve all stated, very good insulation is in place, which I accept is a non trivial issue here in the UK.
@delta hedge- the other alternative is just to retire early or to take less stressful or all encompassing job. There is no exit tax for leaving the workforce that way.
Atlas shrugged
@DH. I’m not sure this is really about me. The bulk of my money is already offshore, mostly by the accident of my offshore investment returns being higher than my onshore ones. From a tax perspective, it’s always been very advantageous to lose residency before taking distributions from them. A 20% exit charge on gains would reduce that but leaving would still in my favour. Nonetheless, I have children about to take exams. A parent who needs to be looked after. I’m over 50. I can just leave the workforce.
It’s more the junior people on the floor. Typically PhD educated, single, say 30. The ties that bind them to the UK are weaker. Moreover, as the critical mass of companies such a mine swings toward places like Switzerland, UAE, Singapore etc, they want to closer to those places. It’s not just about tax. Of course, most see this as a temporary move. I suspect many will never return.
Plus, Trump’s authoritarian moves are causing many highly educated immigrants to the US in science, finance and tech to look abroad. Look what is happening with H-1B visas. We would be the ideal country to pick these people up. Instead, we are becoming more anti-immigrant, more anti-science, ever worse from a tax perspective.
In the last fifteen years or so, as a country, we seem to have developed some pathological desire to promote policies that will make us poorer.
Surely the easiest option here @ZX is also the best. Just stop working!
Seriously, what’s the point anymore?
Each year of net earnings is only a <5% increment to net assets.
Not worth it.
If you're 50 to 55 then, statistically, each year working is ~3% of remaining expected lifespan.
And the quality of years now is better than when you'll be in your 70s or 80s.
I'd wait to see if Reform get in and what they do on IHT and lifetime gifting and, if its advantageous, use it to pass on what you want to now to your heirs hopefully free of IHT IDC and then just spend down the rest with a 30-40 year window. It'll buy a heck of lot of nice holidays!
One thing that I do know for sure is that you'll never get the time back.
You can keep working hard just to pay taxes and accumulate a sliver more each year, or accept that no one can beat the third law of thermodynamics and just chill and enjoy the time you've got left, and the resources to take advantage of it.
I've had to go to 3 family funerals this month, so indulge me here, as I'm feeling philosophical!
Unfortunately, I’m not quite where I want to be on financials just yet at 50, but I’m hoping to call it quits in 5 years, take up to the £50k p.a. BR/HR threshold in DB and SIPP income (using a 3%-3.5% SWR, and, hopefully, still have enough left to have something as a tax free lump sum out of the SIPP), after which, the only paid activity that I’ll be doing will be something worthy, like planting trees for a woodland trust.
@ZX, same situation for me, in a different industry. Centre of gravity of the company is in Switzerland – my employer would be very happy if I finally agreed to move, I’d get paid more and get to keep more, more than offsetting the cost of living. I’d be closer to where decisions are made, be in line for a promotion and so on.
If it weren’t for family ties I’d be gone already – wouldn’t intend for it to be permanent, but who knows? I’m far from the only one in that situation, and people with weaker ties are already going. It’s not going to show up as a dramatic move, just a slow bleed of talent and revenue – but the UK has so many slow bleeds, it all adds up!
(Not to get too down on the UK, I mostly love living here and we do have a lot of good things going on- just a lot to overcome, too)
#34 erratum – should be the second law of thermodynamics, not the third law 😉 Looks like the third law’s pretty similar idea though.
I don’t really buy into the ‘I’ll just leave…’ argument from the masses.
For many people, when you probe a little further and ask where, it’s clear they’ve not given it much thought, their skills aren’t that transferable and language is a problem.
Family ties, children settled in school, way of life or just property with a big mortgage and the fear of the unknown keeps them here.
Plus the cold fact is a large part of the world still has living standards considerably lower than most of the population here.
So frankly successive governments can do what they want with taxation to a greater or lesser degree and the bulk of the UK population on PAYE is going to suck it up, post blue murder on reddit and be more miserable. Tough luck.
Doesn’t stop people thinking, I can’t be bothered to chase that promotion, start that business or go early retirement though…
The bigger issue is the top 1-2% – if you are elite and in your 20’s, 30’s, 40’s – either on the first rung, or running that mega corporate division – there are just much better options to build wealth than the UK. These people often have less fixed ties by who they are – they may have studied internationally, their parents have moved around etc. It is getting near impossible (almost) now in a corporate to build real wealth in the UK. So why would stick around and try?
Doesn’t the top 1% pay circa 30% of all tax….
I still believe the US, not withstanding the unfortunate jiggery pokery going on, is an attractive place to be. Perhaps Switzerland, Australia or Middle East for more edge cases. But the majority of people in the UK just aren’t going to be smart or motivated enough for that to be a realistic option for them.
Grass is also always greener – all those places have downsides to them versus the UK clearly apart from probably wealth building too.
@TI #30
“still trying to incentivise petrol stations to include electric charging or battery switch out etc.”
I just think we shouldn’t be using tax payers today because subsidise this either as well as heat pumps and new EV cars…
As I mentioned my view it is much simpler and probably much more cost effective to subsidise mass transport and make it clean this also helps reduce cars as a whole.
So instead of incentivising petrol stations to have electric chargers use the tax payers money to first have electric chargers in bus depots and make using a bus essentially free to use and easy and convenient to as many people as possible first before any other subsidising of EVs. The same with heat pumps , fine mandate (not subsidise) the extra insulation and heat pumps on new builds… but for existing homes maybe ( often these retrofit grant schemes get abused and dont work very well) subsidise insulation larger radiators etc. as a first step to help people less well off benefit as well.
All of this seems a bit moot though since the UK appears to have no money for other more immediate essentials and the likes of India, China and the US don’t even attend the COP summit…making whatever the UK tries to do seem a bit pointless.
@Pikolo #14 included “Average pensioners are better off than an average household. …”
What is the source for this?
FYI a quick search found:
“In FYE 2023, 49% of pensioners were in the top half of the overall income distribution. …”
https://www.gov.uk/government/statistics/pensioners-incomes-financial-years-ending-1995-to-2023/pensioners-incomes-financial-years-ending-1995-to-2023
Note this figure is based on equivalised income that I don’t fully understand.
Also interestingly “Pensioners in receipt of earnings in FYE 2023 was 15% …”.
Ref seeking fire #37, it’s true that most of us who complain about getting squeezed may not in the end leave. But there are already few enough net contributors to the public purse that I don’t think Rachel Reeves can afford to be careless about losing even small numbers. I’m not in the ultra mobile ‘elite’ tier you mentioned, but like many people in the UK these days, I have more close family living abroad than in the UK. We’re a much more ‘international’ population than we were a few decades ago (not just talking about direct immigration) and plenty of us in the ‘squeezed middle’ are already multi-lingual dual-nationals, for whom the question of where else to go really isn’t so tricky or uncomfortable as you might imagine.
@wireless (39) rephrasing: “In FYE 2023, over half of pensioners were in the bottom half of the overall income distribution. …”
Putting it another way, income distribution of pensioners matches the overall income distribution.
“Or maybe Labour thinks they might as well be hung for a sheep as a lamb, …”
You mean “hanged for a sheep”.
It’s a different verb, with a different part participle.
@JtE — I don’t actually know what a part participle is (comp school boy here!) but I take your point. Interestingly Cambridge dictionary says both are fine in idiomatic terms, but I can see yours is more accurate and the original too.
@TI (#31)
There is a (largely) quantitative report on the case for insulation at https://media.nesta.org.uk/documents/Insulation_impact__how_much_do_UK_houses_really_need___1.pdf (pages 5 to 9 refer to heat pumps)
A quote from that report “The concept of heat pumps requiring high levels of insulation may have arisen party due to the previously high (i.e., prior to 2022) ratio of electricity-to-gas prices. If electricity prices are decoupled from gas prices, resulting in an even smaller ratio, the need for high levels of insulation also drops.”
It is also interesting to note that the increase in electricity costs in 2022 was almost entirely driven by fossil fuel generation (e.g., see https://ember-energy.org/latest-updates/fossil-gas-responsible-for-80-of-uk-electricity-price-increase-over-the-last-12-months/ ). I assume the unjustifiable approach to wholesale pricing (i.e., if one gas turbine is switched on all electricty is priced as though it was generated by gas) was also responsible.
@ZX (#12)
Switzerland. My limited understanding is that there is an interesting(!) tax system in Switzerland since income tax is levied at both federal and canton levels (and, IIRC, varies from 8 to 30%!), while there are also property taxes (imputed rent, ~0.5% of value – again it varies by canton and in September there was a vote to replace this with another system) and wealth taxes. AFAIK, all employees have to pay 5% of income as social security. Finally, there is no public health care provision, so compulsory medical premiums are also levied (£350-500 per month per person). In 2021, at 28% of GDP the tax take in Switzerland was lower than that of the UK (33.5%), but since just under 20% of government spending in the UK is spent by the DHSC (i.e., on the NHS and social care) the residual spend is similar.
https://www.ft.com/content/a00f9bad-22de-4af7-adbf-184ec6bdf8ea Great piece about the proposed salary sacrifice changes. Makes a very good point about the loss of student loan savings too.
@Alan S. I thought a big issue with heat pumps was the relatively low output temperature dictated by the working fluid, hence the need for large radiators and insulation ( temperature recovery time). I thought I read that a better working fluid was on the horizon.
I live in a 16th century thatched cottage without central heating so they will never catch on here.
Then there are all the houses in the UK with 9 inch brick walls, terraced houses etc. A hard sell until technology improves I reckon.
My prediction…..a new battlefront opens up against wood burning stove pollution in urban smoke controlled areas. Buy your popcorn now.