Coalition government: UK middle classes to pay to fund cuts

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Coalition government: middle classes to pay to fund cuts

Middle-class Britons face sharp increases in tax under the compromise deal agreed by David Cameron to secure Liberal Democrat support.



By Robert Winnett, Deputy Political Editor
Published: 11:57PM BST 12 May 2010

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New taxes for higher earners introduced by Labour now look set to become permanent Photo: REUTERS


Within weeks, George Osborne, the new Chancellor, is expected to set out plans for a rise in capital gains tax on the sale of second homes, buy-to-let properties, shares and other investments. Many people rely on these to fund their retirements.
The tax could more than double from the current 18 per cent in a move that will affect hundreds of thousands of Britons. Last night, estate agents reported a surge in people seeking to sell properties as details emerged.

The Conservatives have also been forced to abandon plans to scrap inheritance tax for everyone except millionaires. It now has little chance of being introduced before 2015.
The Lib Dems will not be forced to support Tory plans to offer tax breaks to married couples. Although the policy can still be introduced by Mr Cameron, it was not clear whether it will still happen next year.
New taxes for higher earners introduced by Labour — including the 50p higher rate of income tax — now look set to become permanent.
They are necessary to fund a key Lib Dem policy to ensure no one earning less than £10,000 pays income tax. This policy – now a long-term commitment – will cost £17 billion a year.
There will be rises in the allowance at which income tax becomes payable. The Government will also push ahead with plans to increase National Insurance contributions for workers, but not employers.
However, the Treasury insisted that basic-rate taxpayers will not be worse off as they would be compensated with income tax cuts.
There are an estimated one million buy-to-let properties and more than 200,000 second homes that will attract the new capital gains tax rate.
 
Tax winners and losers under coalition government



By Ian Cowie Your Money Last updated: May 12th, 2010
51 Comments Comment on this article

This summer’s budget could contain the most dramatic tax changes seen in decade Photo: Alamy

Tax is the point at which politics condenses into something more substantial than hot air and hits you in the pocket. Early indications from the new coalition government suggest this summer’s budget will contain the most dramatic tax changes seen in decades.
Millions of low-paid people will be freed from paying any income tax by the Conservative and Lib Dem coalition but high earners may lose pension taxbreaks and Tory plans to ease inheritance tax will be put on hold for this Parliament.
Investors and others with assets worth substantially more than they paid for them should consider taking profits now because Capital Gains Tax (CGT) will more than double from its current rate of 18 per cent.
One in five families who fail to allocate their Child Trust Fund vouchers when they are issued after the birth of a child should now do so without delay. These payments of between £250 and £500 per child could be withdrawn without notice, if Lib Dem manifesto proposals are put into effect.
However, married couples will receive additional tax reliefs under Conservative manifesto commitments which the Lib Dems have said they will not oppose – and the Tories will reverse planned increases in National Insurance Contributions. NICs are paid by employees and employers and so freezing the tax on jobs will avoid unnecessary increases in unemployment and shrinking pay packets.
The first casualty of the new coalition is the Conservative plan to raise the threshold for inheritance tax (IHT) from its current level of £325,000 per person to £1m. This will not now proceed in the current Parliament. However, it is understood that Tory plans to cut government spending by £6 billion this year will be put into effect.
While the horse-trading continues between the members of the new coalition, more details of how their fiscal strategies will be merged to form a coherent new tax policy are emerging.
The Lib Dems proposed the most dramatic tax policy of any party during the 2010 general election when they said the threshold for income tax should be increased from its current level of £6,475 to £10,000. That would free 3.6m people from having to pay any income tax and reduce government revenue by £17 billion.
Such a large tax cut seems improbable after Labour ran a deficit of £163 billion last year and now a less dramatic increase in personal thresholds seems likely. Even so, millions of low-paid people – including many pensioners on modest incomes – may be spared the need to pay any income tax. That will be a blessed relief after the dismal paperchase of means-tested tax credits imposed on the poor by Labour.
As a result, the first big surprise of the new Parliament will be that a coalition with the Lib Dems, which was much derided in prospect by many Conservatives, could prompt the biggest tax cut seen in decades. Less tax and more take-home pay, less government spending and more individual choice, should please many grass roots Tories who feared their own party’s fiscal proposals were too timid.
 
....and the corporations? Shouldn't they be responsible, as well?
 
Tax the rich and give to the poor ,Robin Hood popular polices to fool the working class,give it 6 months and nobody will be laughing!!!!:ShitHappens1:
 
tory tax

I am now in a new category from poor - POORER !! :Hate_Computer::ShitHappens1::Cry3:
 
Is that from when they increased lowest rate tax from 10% to 22%?
I'm the same
 
All thing that both parties promised the voters that would happen if they got into power and now don't or won't happen can now be blamed on the coalition, a get out clause for both parties :GrinNod1:
 
Coalition government: tax cuts of £140 for workers on basic rate

All basic rate taxpayers are to be offered an income tax cut worth at least £140 in this summer’s emergency Budget, The Daily Telegraph can disclose.



By Robert Winnett, Deputy Political Editor
Published: 10:32PM BST 13 May 2010

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George Osborne, the Chancellor of the Exchequer. Photo: HEATHCLIFF O'MALLEY


The tax-free personal allowance will be raised by at least £700 to more than £7,000 under plans by the Liberal-Conservative coalition — a move that will benefit an estimated 25 million lower-paid workers and pensioners.
Anyone earning more than £35,400 will be worse off due to the planned rise in National Insurance contributions.

The disclosure that tax cuts will be on offer in the first Budget may surprise voters because the Government is struggling to find public sector cuts to help clear Britain’s record debt. However, it reflects the Liberal Democrats’ policy to help lower-paid workers.
The income tax cut, likely to be announced in July, is to be introduced from next April. The personal allowance could rise by even more if extra money is collected from an increase in capital gains tax.
However, the Treasury is expected to alter the tax thresholds to ensure that higher-rate taxpayers — those earning more than about £40,000 — will not benefit from the increased allowance.
In addition, National Insurance will rise by 1p in the pound for workers earning more than £20,000 under the terms of the coalition agreement between the Conservatives and Liberal Democrats.
Taking the income tax cut and National Insurance rise together, someone earning £10,000 will be £254 better off while someone earning £20,000 will save £154 in tax. But someone earning £50,000 will pay £286 more in tax from next year and someone on £100,000 will pay an extra £786.
David Cameron and George Osborne both previously pledged to abandon the National Insurance rise for basic rate taxpayers.
The increase for employer contributions will still be abandoned. But, under the terms of the coalition deal, the Tories have agreed to allow the increase for employee contributions, which they had pledged to part-reverse in their manifesto. And they have had to agree to the Lib Dem manifesto pledge to raise the tax-free threshold to £10,000 over the course of the Parliament.
The move will eventually cost £17 billion a year. During the election campaign, the Lib Dems said they intended to pay for it through higher taxes for middle and high-earners and clamping down on tax avoidance. The decision to cut income tax — rather than freeze National Insurance — means that only workers earning less than £35,400 will be better off.
The income tax cut will also benefit pensioners or others living off their savings as they do not pay National Insurance but are liable for income tax.
The expected announcement will be the first sign of the more redistributive financial policies agreed with the Liberal Democrats.
Mike Warburton, a tax partner at the accountants Grant Thornton, said: “We can already see in these proposals the influence of the Lib Dems on policy, with money being moved from middle and higher income earners to help those on lower salaries.”
Yesterday, Mr Cameron held his first Cabinet meeting which was attended by five Lib Dems, including Nick Clegg, his
deputy. The new Government also made its first official policy announcement — that the pay of ministers would immediately be cut by five per cent and then frozen for the entirety of the next Parliament.
Mr Cameron visited several government departments and began appointing junior ministers. Chris Grayling, who was previously shadow home secretary, was demoted to pensions minister.
Samantha Cameron announced that she would be scaling down her work at Smythson, the upmarket stationers, to concentrate on her role as a mother and the Prime Minister’s wife. The couple are expected to move in to Downing Street in the summer.
Yesterday, Mr Cameron insisted that he was increasingly optimistic that the coalition would prove successful.
He said: “The more I think about this endeavour on which we have embarked, the more excited I become because this coalition government, if we can make it work — and I believe we can — is a five-year government.”
William Hague, the Foreign Secretary, will travel to Washington today for talks with Hillary Clinton, the US Secretary of State, and Hamid Karzai, the Afghan president.
However, away from the optimism surrounding the establishment of the first coalition government in 70 years, there is growing alarm among accountants and financial experts over the new administration’s tax plans.
Treasury officials are currently working on radical proposals to increase capital gains tax in line with income tax. This will mean that the profits made when selling second homes, buy-to-let properties, shares and other investments could more than double.
Capital gains made on so-called “non-business assets” are currently taxed at 18 per cent but this is expected to rise to close to 40 per cent. The Lib Dems also want to bring down the level at which capital gains tax is payable from £10,000 to less than £5,000.
The Conservatives are understood to be resistant to that idea and negotiations are continuing.
George Osborne, the Chancellor, has also been forced to abandon his principal policy to scrap inheritance tax for anyone who is not a millionaire.
Yesterday, a survey found that the majority of city economists are expecting an increase in VAT.
A BBC poll of 28 independent economists found that 24 expected a rise.
The majority predicted a rise from the current 17.5 per cent to 20 per cent before the end of 2011. This would raise an estimated £11.5 billion a year.
 
All those people who voted in the Cons have short memories’ a while back some cow called M.Thatcher got in said they would not touch the VAT rate and promptly doubled it, and then sold all the companies the British people owned back to them.
''Oh what a tangled web we weave when first we practice to deceive''

The spider and the fly , and the list goe's on
 
not forgetting comrade Billy Bragg ,i have a good album by him called
talking to the taxman about poetry, lets keep the red flag flying high ,also he Blue flag as long as its over Stamford Bridge
 
People listened to them that's where it all went wrong!!!!!!!!!!!!! :GrinNod1:
 
alan crisp said:
You must be a working class lad that bought his council house Baz.:Beer1::D
Click to expand...

My dad was working class and was stupid NOT to buy his council house. :Cry3:

I am working class and bought 3 properties (not council), but lost them all to the 3 wives in settlements :GrinNod1:. :ShitHappens1: :GiveBeer1: :Beer1: What a wonderful life :D
 
Baz said:
My dad was working class and was stupid NOT to buy his council house. :Cry3:
Click to expand...
We got £13,500 to move out of our Housing Association House to buy a house on the open market ( a nice little deposit ).Good old Maggie,my conscience was clear knowing some homeless family was going to have a nice house to live in.:D

PS Hope number 4 is a gooden, BTW your middle name isn't lucky like mine :LMAO1:
Big Ol' Lucky Ol' Al :D
 
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