Podcast Summary
IPPR proposes increasing capital gains tax to generate £120 billion: The IPPR suggests raising capital gains tax to fund significant policy changes under a potential Labor government, generating an additional £120 billion over five years.
The Institute for Public Policy Research (IPPR), a prominent and influential think tank with links to the Labor party, has proposed significant changes to capital gains tax as part of a broader agenda to increase government spending, redistribute wealth, and impose higher taxes. Capital gains tax is a levy on the profit made from selling investments, in addition to income tax on earnings and savings. The IPPR suggests increasing capital gains tax to generate an additional £120 billion over five years. This proposal is part of a larger effort to fund radical policy changes under a potential Labor government led by Jeremy Corbyn.
Capital gains tax on profits from selling assets: Capital gains tax is a lower tax on profits from selling assets like shares, funds, property, or businesses, but the tax system is complex with varying rates and income levels, and capital gains are added to income for tax calculation.
Capital gains tax is levied on the profit made from selling an asset, such as shares, funds, property, or a business. The tax rate is generally lower than income tax due to the risk taken and the productive nature of the investment. For instance, buying shares helps grow a company, and starting a business or buying a property for rental are also considered productive activities. However, the tax system can be complex, with different rates for various types of assets and income levels. Moreover, capital gains are added to income to determine the tax rate, resulting in a combined tax payment. Despite common misconceptions, many investors and business owners may not make a profit and instead pay no capital gains tax. The Institute for Public Policy Research recently suggested increasing capital gains tax to fund public services, but its feasibility and potential impact on investment and economic growth remain debated.
Proposal to Equalize Income and Capital Gains Taxes: The debate over equalizing income and capital gains taxes centers around fairness and economic growth. While some argue it's unfair for those with capital to pay lower taxes, others caution that it could discourage investment and entrepreneurship.
There is a proposal to level out income tax and capital gains tax, making investors and entrepreneurs pay the same amount in tax as regular income earners. The proponents of this idea argue that it's unfair for those with capital to pay lower taxes, and that it would raise significant revenue for public spending and infrastructure. However, critics argue that this proposal overlooks the importance of risk-taking in investment and entrepreneurship, and could discourage people from putting their money to productive use. Ultimately, the debate centers around the balance between fairness and encouraging economic growth.
Considering Capital Gains Tax Simplification and Investing in a Pension for Newborns: Simplifying capital gains tax with a flat rate for all and investing in a pension for newborns can lead to substantial financial gains
The current capital gains tax system in the UK is complex and could benefit from simplification. A flat rate capital gains tax of 25% for everyone, with a decent allowance, could be a more straightforward solution. When it comes to gifts for newborns, investing in a pension for them could be a financially savvy move, as it offers tax benefits and can result in a substantial sum by the time they reach retirement age. For example, contributing the maximum amount annually for a newborn could result in a pension pot worth over £100,000 by their mid-thirties, and potentially over £600,000 by age 65. While it may not be the first thing that comes to mind, this investment strategy could provide significant long-term financial benefits for children.
Investing in a child's future: Any contribution to a child's investment account, no matter how small, can grow over time and provide significant benefits for their future.
Investing in a child's future, even if it seems out of reach financially, can have significant benefits. While setting aside a large amount of money each month for investments may not be feasible for everyone, any contribution, no matter how small, can add up over time. Regular investments into a junior ISA or other investment accounts can help build a substantial fund for children or grandchildren, which can be a valuable resource for them in the future. It's important to have open conversations about the benefits of investing and to set up the arrangements properly. However, it's crucial to ensure that any investments are made through authorized financial institutions to avoid potential scams or misleading offers.
Investigating Misleading Investment Opportunities: Be cautious of high fixed rate investments, thoroughly investigate before deciding, and understand the risks involved as all investments carry some level of risk.
While a website may present attractive investment opportunities with high fixed rates, it's crucial to be cautious and thoroughly investigate before making any decisions. The discussion revolved around a lead generation site that offers ISAs, but it's not clear what the investment is in. The site uses language reminiscent of savings accounts, but the returns are significantly higher, which may be misleading to less savvy investors. The company clarified that they offer publicly listed retail bonds, but these investments come with high risks, and the FCA advises against them for retail investors. Previous experiences with similar schemes have resulted in significant losses for investors, but there have also been cases where investors have received their money back after a long wait. It's essential to remember that all investments carry risk, and it's important to understand the nature of the investment and the risks involved before putting your money at stake.
Investing a large proportion of savings into one investment is risky: Avoid putting all your eggs in one basket when investing, diversify across different types and sectors to minimize risk.
Investing a large proportion of your savings into one investment, such as mini bonds or alternative investments, is risky and could result in significant losses if the investment fails. The recent case of the secured energy bonds, which promised 6.5% returns on solar panel installations but resulted in losses for investors, serves as a reminder. This type of investment is not covered by the Financial Services Compensation Scheme, and investors lost their money without any compensation. Instead, it is recommended to diversify investments across different types and sectors to minimize risk. Another ongoing issue is the case of Woodford's investment fund, where investors have had their money locked up for over 100 days while Woodford tries to reposition the fund. Some argue that Woodford should be cutting or waiving the fees he continues to collect during this time. However, there has been little transparency regarding this issue. Overall, the key takeaway is to avoid putting all your eggs in one basket when it comes to investing and to ensure that you are diversified across different types and sectors to minimize risk.
Transparency in uncertain times: Investors need clear communication and transparency during uncertain times. No investment is guaranteed, understand risks and potential returns.
Transparency is crucial in investing, especially during uncertain times. Woodford's decision to stop publishing a full list of his fund's holdings has left investors in the dark, causing anxiety and uncertainty. Some investors, who have a significant portion of their retirement savings in the fund, are facing material problems due to its closure. While the fund's manager may have his reasons for not being interviewed, it is essential to address investors' concerns and provide clear communication. Additionally, the market for new cars presents an opportunity for savings, but it's important to remember that cars, whether new or used, have a tendency to depreciate in value. It's essential to understand the risks involved in any investment and to consider the timing and the potential returns. The Woodford situation serves as a reminder that no investment is guaranteed to make money, and investors should be aware of the risks involved. Transparency, clear communication, and a solid understanding of the market are key to making informed investment decisions.
Pre-registered cars: New deals on nearly new vehicles: Buy nearly new cars at significant discounts as dealers pre-register them to comply with new emission standards
Due to new emission standards and regulations, dealers can no longer sell non-compliant cars as new. Instead, they have pre-registered these nearly new cars, making them used vehicles. This means significant discounts for buyers, with some cars offering savings up to 40%. For instance, an Audi A8 50 TDI Quattro s line, which usually costs £76,000, can be bought for £45,990 with just 11 miles on the clock. Even on smaller cars, such as the Audi A3 Sportback 30 TDI 116 Sport, buyers can save up to 26% by purchasing a pre-registered vehicle. If you're in the market for a new car, it's worth considering these pre-registered deals instead to save a substantial amount of money. Keep in mind, however, that these discounts might tempt some buyers to overlook the fact that they will still lose money on the car over time. It ultimately depends on personal preferences and priorities.
Affordable Tesla Model 3 financing deals make it a top seller: The Tesla Model 3's competitive financing deals, including £10,000 down payment and 36-month PCP, make it an affordable option for many consumers, potentially costing around £350 a month. Tesla claims fuel savings from home charging can bring the cost down to £250 a month.
The Tesla Model 3, which became one of the top 10 selling cars last month, is an affordable option for many consumers due to its competitive financing deals. With a £10,000 down payment and a 36-month PCP deal, the Model 3 can cost around £350 a month. Additionally, Tesla claims that the fuel savings from charging at home can bring the cost down to approximately £250 a month. While some people may prefer to buy a car outright, for others, financing can make the purchase more feasible. Car manufacturers often offer incentives like deposit contributions and discounts to encourage sales, making it cheaper to buy a new car on finance than outright for some individuals. If you have any experiences or stories related to car financing, feel free to contact Simon and the team at editor@thisismoney.co.uk, tweet @thisismoney, or visit thisismoney.co.uk/podcast. Share your savings and join the conversation. Don't forget to check out the latest money news at thisisMoney.co.uk or download the app. If you enjoy our podcast, please rate us on iTunes to help others discover it.
