What caught my eye this week.
Twas the night before the budget – give or take – and nothing was stirring, not even a mouse to move a pointer over the button to CALCULATE whether you’d be a winner or loser from the forecast tax changes to come on 26 November.
Everyone was exhausted from months of animal-spirits-sapping speculation. So they tried to rest before the shouting began.
Only Tiny Accumulator was awake. He sat by the empty fireplace in his insulated fat-suit, singing a lament:
“On the fifth day before the budget, the chancellor gave to me…
12. Salary sacrifice curbed.
11. Council tax hiked.
10. Will-she-won’t-she income tax rises.
9. Stamp duty changes.
8. A cut to the cash ISA allowance.
7. No more tax relief for bicycles.
6. Slashed tax-free pension lump sums.
5. Investors thwacked with capital gains and dividend tax rises.
4. NI on pensioner and landlord income.
3. Deeper income tax threshold freezes.
2. A mansion tax.
1. And a black hole for all to see.”
Of course nobody expected to get everything that they didn’t want in the budget. Experts had vied for months on exactly which proposals would make it.
There had been nothing else to do except to prevaricate, to cut spending, hiring, or moving house, and to generally hunker down until the faff-fest passed.
TA knew there’d be business measures in the budget too – bank levies and the like, hopefully offset by more growth initiatives for housebuilding and corporate investment – but all that was above his head.
So he just quietly said again a prayer for his tax-free pension lump sum and for a drawdown unmolested by national insurance charges.
A lump of coal
The truth was even chancellor Rachel Reeves’ own backbenchers wouldn’t be satisfied come budget day. That’s because the pips were already squeezed and squeaking:
Source: Financial Times
Of course there were two ways to read this graph. One, that the rich were hard-suffering in the UK. Another, that the average person wasn’t making enough money to move the dial anymore.
Only one thing was certain: nobody would be very happy on Thursday morning.
At best you’d be relieved. At worst relieved of more of your hard-earned.
Have a great weekend!
From Monevator
Derisking your portfolio on the run into retirement – Monevator
Using a flexible ISA as a bridging loan – Monevator
From the archive-ator: how portfolio diversification performed when Covid struck – Monevator
News
FSCS bank deposit compensation limit will rise to £120,000 from 1 December – Bank of England
UK inflation fell to 3.6% in October – BBC
Rent controls have backfired in Scotland – Property Industry Eye
Play the Chancellor on Budget day with this new interactive game – Guardian
The energy price cap will rise by 0.2% from January – Ofgem
One million relying solely on the state pension face a £1,400 shortfall – MoneyWeek
New homes earmarked near train stations to get ‘default yes’ from planners – Sky
Home repossessions are rising – BBC
Britain’s top 50 burglary hotspots revealed – This Is Money
Number of Britons leaving the UK higher than previously thought – Sky
Will your pay peak at 47? – This Is Money
Products and services
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Why your home insurance could leave you out in the cold this winter – Which
Mortgage rate war heats up – This Is Money
Which shops charge people to send things back – 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
How to save money on energy bills – Guardian
Three things to know before getting over-50s life insurance – Which
Zopa gets into the investment platform business – Zopa
Get up to £200 cashback when you open or switch to an Interactive Investor SIPP. Terms and fees apply, affiliate link. – Interactive Investor
How to get the cheapest Advance train tickets – Be Clever With Your Cash
The top-rated solar panel fitters in the UK – Independent
Mews-style homes for sale, in pictures – Guardian
Comment and opinion
DFA’s active value ETFs now trading in London – DFA [More on small cap value]
Julian Richter: why you should acknowledge your own good fortune – Guardian
Why pay more? – The Falling Knife
Freedom, democracy, and long-term returns – Abnormal Returns
The people behind Warren Buffett – Flyover Stocks
Retirement is a sprint, not a marathon – The Retirement Manifesto
The absurdity of bankers’ retirement fund targets [Paywall] – FT
Hard-working families are ‘being destroyed’ to pay for the benefits class [Not for the rhetoric, but for the eye-opening graph] – Telegraph
You have to own illiquid stuff to understand the downsides – Of Dollars and Data
Simple Living in Suffolk again, for a couple of weeks – Simple Living in Somerset
Ten lessons from Warren Buffett – Morningstar
Naughty corner: Active antics
Jeff Gundlach says almost all assets are overvalued [Podcast] – OddLots
Merger of HICL and TRIG to create largest infrastructure trust – Interactive Investor
A deep dive into the ‘total portfolio approach’ [Paywalled, free to register] – FT
Ball: the king of cans – Quartr
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
China races ahead on renewables amid a green tech boom – Observer
Trump moves to strip endangered species of automatic protections – CNN
Flooded and forgotten: the UK’s waters are rising – Guardian
Future solar power capacity by country [Infographic] – Visual Capitalist
Two-thirds of corals surveyed at Ningaloo Reef are dead, say scientists – Guardian
Brazil ‘surprised’ UK is not investing in new rainforest fund it helped design – Sky
The race to remove millions of plastic beads from Camber Sands – Guardian
Robot overlord roundup
The AI bubble that isn’t there – Forbes
Google boss says $1tn AI investment boom has ‘elements of irrationality’ – BBC
Wall Street blows past AI bubble worries – Wall Street Journal
More than half of novelists believe AI will replace their work – Guardian
Not at the dinner table
Reform plans to strip EU citizens of benefits rights – BBC
Trump’s biggest tell is the trade policy he doesn’t talk about – The Argument
Plans to remove more families from UK in asylum shakeup… – Guardian
…including potentially paying failed asylum seekers more money to leave – BBC
Off our beat
Lost Vegas – Slate
Brains that mistake strangers for friends – Guardian
Our phosphorescent world – Aeon
Ultra-processed foods linked to harm in every organ, study finds – Guardian
Nine questions towards understanding life’s great mystery: you – The Root of All
China’s people are on a treadmill – Noahpinion
Patience – We Are Gonna Get Those Bastards
And finally…
“Sometimes I lie awake at night, or I wander in the field behind my house, or I walk down the street in our local town and think I can see it all around me: the Grid. The veins and sinews of the Machine that surrounds us and pins us and provides for us and defines us now.”
– Paul Kingsnorth, Against the Machine
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> Will your pay peak at 47?
I was that guy. Well, technically a little later when I retired at the high-water mark of my earning power. Some interesting factoids for aspiring FI/RE-tards – there really aren’t that many of y’all.
The peak isn’t due to people being paid less as they age, but the higher pay end of the working population walking off the job. I had expected this effect to be higher, also because I saw early infirmity/mortality start to knock people out of the workforce in their 50s.
Many thanks for the link to my Suffolk post!
Kingsnorth’s book reminds me of a tale along similar lines, EM Forster’s The Machine Stops, surprisingly ahead of its time given it was written a little before WW1
I thought the comments section under that FT piece on retirement targets was better than the article itself. They kept me entertained on Monday, especially the one about “under-promise and deliver.” A classic.
There was one commenter, a guy in his 20s, an expat in Dubai, asking for advice. A few of the grizzled regulars tried to steer him straight. But one exchange hit a little too close to home. Someone warned him that £100k–£150k was an “income death-trap territory”, both too much and not enough. And the kid replied, more or less: don’t worry, it’ll double soon, I’m only in my 20s.
Christ. The naivety. It’s basically a time machine.
The thing is, the earnings curve in financial services in your 20s is a steep convex, and there are few things more dangerous than assuming it continues like that forever. But everyone — genuinely everyone — falls for it. The real curve, for the overwhelming majority, is convex early on but turns concave somewhere in your mid-to-late 30s. There’s an inflection point that blindsides you, and then you panic and start shovelling money into the retirement fund, wishing you’d started earlier.
I wish someone had told me that when I was 26. Then again, maybe they did and I just didn’t listen. I can’t remember.
It’s been interesting to watch Kingsnorth’s movement from green activist to a kind of ultra-conservative christian nationalist right-wing position over the past couple of decades. I view him as a more erudite version of David Icke.
Good Lord. Somebody on the internet knows what an inflection point is. Well played, sir.
Somewhere I have a book that spells it “inflexion point” in what I assume may be an Edwardian/Victorian style. It always made me grin. For avid googlers: how did Newton spell it? In Latin I suppose.
My earnings peaked at about 40. At that point with 2 very young kids and the tax cliffs beyond 100k I voluntarily took a 30% gross pay drop for less work. I’m very glad I found bogleheads, monevator and MMM early in my high earning years because I saved and invested enough into tax shelters that I’m FI now. If I wasn’t FI, my income would barely support my families middle class lifestyle (no private schooling for my kids).
One assumes the numbers on those country comparison tax charts include the equivalent of national insurance (both employee and employer)? Many of us know that the main reason no government wants to lump IT and NI together (as happens in reality) is because no government wants to be honest about the total income tax take. Or am I being rather cynical? (I would also argue that the top income tax is 60%, not 45%, for those between 100k and 125k.)
I had some very good earning years (due to a side hustle) around the age of 40. I knew they would be short lived, but used it to take the opportunity to go part-time rather than pay additional tax. As the story goes, it was easier to make cutbacks than conceive of returning to full time – and I dropped another day around five years ago.
I don’t quite follow the numbers for the high earners. If I put £120k into Reed, a salary calculator, after income tax and NI the take home is £76k or a tax rate of 37%. Presume there might be 8% student loan on top so 45% worst case, but if you’re earning that sort of money would you not just pay it off?
Sweden is a bit of an interesting conundrum for those who debate UK taxation on both sides on the coin.
For those who worry about the wealthy leaving the UK, it’s a bit awkward that Sweden seems to have a much higher number of billionaires per capita than any other developed country that isn’t a tax haven.
For those who think the wealthy should be soaked further, it’s a bit awkward that those on low / med / highish incomes are clearly taxed at a materially higher rate than in the UK. From what I can tell as a pretty high earner, my tax rate would be marginally higher in Sweden but the provision of public services would seem to be considerably better.
I’m at the conclusion that in the UK the biggest issue is housing. Govt’s can’t tax the median workers anymore because so much of the net income goes on housing in rents or mortgages.
But then Sweden’s cost of living is viewed as higher than the UK and average house prices and rents are largely the same.
Taxing the 1% anymore in the UK doesn’t seem a good idea as we seem to be bumping up near the top rates people are taxed in Europe anyway.
We’re in a jam and I continue to think in the next five – ten years the whole thing will likely implode one way or the other. Probably in France before us but who knows.
Let’s say atop 10% salary is around £80k in 2023
Tax £19.5
NI. £5
Employers NI £10
Council tax £2.5
Gives a little over 40%.
For £120k salary it’s 46%
I think the FT’s point (from the even-handed and almost always excellent John Burn-Murdoch) does reveal something about our tax system. How you choose to interpret it is a matter of opinion and perhaps politics.
It’s not a criticism as such — as a writer myself I despair at how some readers expect *everything* to be covered in *every* article — but another tack to take would be to compare a combination of income taxes and wealth taxes, as well as the ability to shelter wealth from the taxman, whether via ISAs and pensions or more arcane corners of the tax system.
With higher rates and lower allowances for dividends and capital gains the UK isn’t as generous as it was, but it’s still pretty generous. Plus many people are sitting on enormous and completely untaxed capital gains on their homes. And this is before you get into nuclear-strength proper rich person tax planning.
I’ve been talking about ‘neo-feudalism’ for 15 years on Monevator. So I’d like to see how a 30-year old looking to buy a flat in London versus Stockholm – and with or without parental assistance / an inheritance – stack off against each other.
My impression is it’s how much money your parents have that’s increasingly determining the average middle-class person’s life outcomes in the UK, not your marginal tax rate.
As for the overall tax take, I expect it all comes out a bit in the wash. The depressing thing, rather, is that the rhetoric is so polarised. The right talking about this Labour government as borderline communist (out of their depth and handling a poisoned chalice would be more my take) and the left talking as if rich or even moderately wealthy people aren’t holding up the state.
Imagine if high earners were celebrated somehow for funding schools and hospitals, and you got a social media badge showing your contribution to keeping the social safety net aloft! 🙂 That might open a few eyes.
Anyway in reality all the squabbling is pretty much over, what, £50bn give or take in the middle. Economic policies or lack of — from the economically pointless and damaging decision to leave the EU, to the years of wasted sound and fury after, to the lack of a focus on growth from a government that came in promising a 100% focus on growth — is probably going to prove more consequential for most of us in the long run.
@Investor. As a dedicated sci-fi fan. I can’t think of neo-fudalism without H Beam Piper’s stories of men on starship thrones in space armour
I find national comparisons of tax pretty confusing, since the public services delivered by government vary. Certainly if you added private medical insurance to the headline rates of US tax I am not sure they would compare so favourably for typical (median) incomes.
(In practice for those lucky Americans in good employment insurance is largely paid by employers, but that is like the employer’s NI counted by @Boltt as a charge against the employee. Not sure how you fit that in tax comparisons since in either case it isn’t a deduction from the listed gross salary).
“Retirement is a sprint, not a marathon” link is basically good stuff but can we PLEASE not talk about people “losing their battle with cancer”? As a stage 3 and 2/3 colon cancer survivor I am here to tell you that the battle is oncologist vs cancer, you are just the battlefield. Think of yourself as Agincourt and your surgeon as an English longbowman.
Some people need to careful interpreting the y-axis on the charts. The “Tax wedge” is defined as the ratio between the amount of taxes paid by an average single worker (100% of average earnings) without children and the corresponding total labour cost for the employer. It’s a metric that measures the extent to which tax on labour income discourages employment.
As the chart shows, the actual tax wedge for an average worker in the UK is relatively low. The UK is at 29, US 30, EU 41. As I mentioned this last week, UK median workers (who earn less than average) really don’t pay that much tax. It’s the slope in the UK that is the issue. The UK effectively discourages earning more.
Here is the OECD report on Taxing Wages 2025
https://www.oecd.org/content/dam/oecd/en/publications/reports/2025/04/taxing-wages-2025_20d1a01d/b3a95829-en.pdf
My salary actually peaked a couple of months after I retired at the age of 63. How so? The company salary review was nominally in April but, as usual, it dragged on past the nominal date. The year I retired (after taking voluntary redundancy), I left at the end of June. With all credit to my former employer, I was pleasantly surprised a couple of months later to receive a payslip in the post and a payment in my bank account for three months back-pay following completion of the salary review.
As there was a process of salary levelling between employees at the same grade but from different origin companies in the merged company, the review had been largely formulaic. I had come from an apparently lower-paying part of the company so was one of the substantial winners in this review and, I believe, the one the year before.
“Julian Richter: why you should acknowledge your own good fortune”
That should be Julian Richer (i.e., the founder of Richer sounds). A thought provoking article.
Talking about life chances ,children and parental wealth(feudalism) is an interesting point
There has always been a the fundamental societal “problem “that cleverer,better looking fit types will always end up on top of any chosen system as will their children -good genes ++ ?-therefore thats the main reason to tax the “rich” more
As reasonably well off (middle class?) parents ourselves-we first of all opted to have children-currently only the poor and the very rich do this as a matter of course-along with the concurrent reduction in life style this causes
Then most of our monies and time went into education of these said kids
Successfully as it turned out-lucky? or parental effort?
How do you measure success?-having kids that have jobs,get married and have kids themselves?-so the cycle repeats
This is probably the reason most totalitarian states abhor and aim to undermine the family structure
I don’t see this situation changing anytime soon -it’s hardwired into human behaviour patterns
Acknowledging this fundamental state of affairs and working with it would lead to better outcomes for us all
The better off should pay more which they seem to do in Western Societies without too many complaints unlike the rest of the world where the better off keep it all to themselves
The reasons this only happens in the West is possibly worth pursuing but thats for another time
xxd09
@TI (#11):
Re: My impression is it’s how much money your parents have that’s increasingly determining the average middle-class person’s life outcomes in the UK, not your marginal tax rate.
You may find this podcast called “A New Generational Divide: Living with(out) the Bank of Mum and Dad (Dr Eliza Filby)” from Radical with Amol Rajan interesting, see: https://www.bbc.co.uk/sounds/play/m002lfft
It is a tad long at >1hour, but it is informative and not too whingy either – which IMO is quite an achievement for that subject!
My salary peaked at age 42, having worked for a multinational for 18 years.
Now 43 and having moved home to the UK from Switzerland have taken a significant haircut – however have a significantly lower cost of living (no eye watering rent to pay for a start!). FI but not RE, have had 6 months off over the summer, looking forward to getting back into a worthwhile role!
@xxd09 #18
Capitalism hasn’t solved the problem that capital accumulates increasingly at the top. It probably hasn’t solved it because it seems to be a feature of the universe. The majority of mass is found in the minority of stars, the majority of proteins are coded in the minority of DNA etc. It appears to have something to do with marginal advantage compounding over time.
While nature doesn’t seem to mind this, consciousness finds it unfair and has agency. As Theil put it “without a stake in the capitalist system, they [Millennials] will turn against it”. Studies show that crime is driven by inequality not absolute income. If the social hierarchy is too steep with no ability to climb it, people (normally young men) turn to violence and crime to earn status instead.
Piketty suggested the only solution we have found for inequality so far is world wars. “In the ashes all men are levelled” – Seneca.
Lovely Christmas rhyme, made me chuckle & made my day. Shows that the finance newsletter doesn’t have to be boring.
platformer-rather agree but capitalism is to economics as democracy is to politics
All other systems are worse
Capitalism at least has the merit when it works of producing wealth for the countries that adopt it as their economic system-ie most of the free world
Alternatives like communism/socialism seem to be less efficient -Russia,Cuba Nicaragua etc at producing enough wealth for their citizens (China via pragmatic communism ( Chinese version of capitalism) seems to have lifted 200 million+ of its one billion population to western standards but it still leaves 800 million living at very low levels
What a population then does with the wealth that capitalism produces is another matter -democracy possibly ie spread the wealth around-but as we currently see with our lacklustre and rather hopeless leaders/ elites -if there is not enough wealth being generated ie capitalism being stifled by poor political policies then the current sad situation we find ourselves in is the result
Shooting the messenger ie capitalism probably will not be a successful technique!
xxd09
@xxd09 #23 “seems to have lifted 200 million +” / Noah Smith link: they’ve done rather better than that or Noahpinion gives credit for:
https://www.theguardian.com/us-news/2025/nov/23/china-us-poverty-income-inequality
@xxd09 #23
Agree completely – communism/socialism most definitely doesn’t have the solution either. But we need one better than world wars. Piketty’s proposed solutions were a global wealth tax and income tax as high as 80% which hardly sound like solutions either.
Delta Hedge -had a month travelling in China a few years ago-such an interesting country
The cities were modern up to date and strangely very Western copies but in the countryside it was like a Breughel painting-fields full of many people farming in very primitive hands on conditions-you could have used machinery but what would you have done with all the people put out of work?
A dramatic variation still between town and country-70 to 80% of the population still in the countryside
xxd09
Wow. “I was pleased to see nothing too destabilising for the economy.”
I’ve run a small business for more than twenty years which employee a small number people, and knowing many people like me, I can only politely suggest you are massively out of touch with the sentiments of small business owners who ultimately drive growth in the country, and employ more people than the larger companies. This will reduce growth, wages and cost jobs.
I am as sure on this as I was last year when Reeve decided to change the rules for non dorms and it was blatantly obvious what would happen, and they would start to lave and take their wealth with them. That’s what happened.
And all because she deliberately lied about a black hole which wasn’t there, to justify the huge ax grab.
I suspect this will be her last budget.
A shameful day fir the country.
@Gary – I’m literally a small business owner. The last budget had the NIC which was relatively massively destabilising. There’s nothing comparable in this budget. That doesn’t mean it didn’t have annoying measures, growth drags that offset any growth impulses, and that it doesn’t all add up to nothing much IMHO.
The many months of speculation will probably have hurt the economy more in the final accounting. Again doesn’t make this great.