Protecting mums finances

[chrisdee]

I missed out those who have worked hard

Ref Post 41.
You missed out those who had worked hard!

I'm the first to admit to not being up to speed with the new arrangements but wasn't the whole idea of first party top-ups not being allowed because it would lower the remaining assets, thereby making the LA's contribution higher than it would otherwise have been?

p.s. I don't live in a mansion!

Yes I did, Saffie, criticism accepted.
Also should mention that I'm a lucky boomer too. Especially as we sold a house in North London to move to Yorkshire . . . then Mum developed Alzheimers, then I found out the real meaning of hard work!! I am aware however that for many ordinary homeowners, a proposed tax on hard-earned homes whose values have rocketed, might have been seen as a threat.

 

[Saffie]

No criticism, just thought you'd overlooked them!
The tax is no threat to me, value of house has increased but then inflation has risen too! Definitely nowhere near even approaching that bracket!

 

[katek]

Yes I did, Saffie, criticism accepted.
Also should mention that I'm a lucky boomer too. Especially as we sold a house in North London to move to Yorkshire . . . then Mum developed Alzheimers, then I found out the real meaning of hard work!! I am aware however that for many ordinary homeowners, a proposed tax on hard-earned homes whose values have rocketed, might have been seen as a threat.

Yes, I think the proposed mansion tax should have been on income instead, as that would have targeted those on very high incomes, not those whose money is tied up in a property whose value has spiralled out of control because they happen to live somewhere like London. They would not necessarily have any more disposable income than someone living in a similar house in another part of the country worth quarter the amount.

 

[Saffie]

Yes, I think the proposed mansion tax should have been on income instead, as that would have targeted those on very high incomes, not those whose money is tied up in a property whose value has spiralled out of control because they happen to live somewhere like London. They would not necessarily have any more disposable income than someone living in a similar house in another part of the country worth quarter the amount.

Well there already is income tax!

 

[Witzend]

Yes, I think the proposed mansion tax should have been on income instead, as that would have targeted those on very high incomes, not those whose money is tied up in a property whose value has spiralled out of control because they happen to live somewhere like London. They would not necessarily have any more disposable income than someone living in a similar house in another part of the country worth quarter the amount.

What I think they need to do urgently, is to sort out council tax banding. Particularly in London you have a situation where someone in a very modest property is paying only a little less in today's terms than someone in a house costing £2 or £3 million, or more.

And anywhere around here, there are many such properties that should IMO be charged quite a bit more, including a lot of new builds. The cash-strapped councils could surely do with the extra.

 

[Pickles53]

What I think they need to do urgently, is to sort out council tax banding. Particularly in London you have a situation where someone in a very modest property is paying only a little less in today's terms than someone in a house costing £2 or £3 million, or more.

And anywhere around here, there are many such properties that should IMO be charged quite a bit more, including a lot of new builds. The cash-strapped councils could surely do with the extra.

I was thinking the same thing Witzend. I would also say that, when you look at what those London house prices were 30 or more years ago, they were already very expensive by the standards of the rest of the country so out of the financial reach of most people. I remember my husband being offered a job near to London in the early 70's but we simply couldn't afford a mortgage there even with a much higher salary.

If there are people on very low incomes living in expensive houses, that is their choice, but it shouldn't be used as a reason for not looking at council tax bands. If necessary, there could be a deferred payment scheme which could be repaid by putting a charge on the house. This works pretty well for repaying legal aid costs via the 'statutory charge' system.

 

[katek]

Well there already is income tax!

I realise that! And there is also stamp duty, which goes up in line with property prices.

In order to target the really high earners, these taxes could have been raised rather than introduce the new mansion tax. Someone buying a 2 million property can obviously afford it (or they wouldn't be buying it!) whereas someone living in one does not necessarily have much disposable income, if they bought it say 40 years ago when prices were more in line with salaries, even with the north/south divide.

When we first bought a property, in London, it was a struggle but was at least doable. Our contemporaries from college, on the same salary but with jobs outside London could, with a smaller mortgage, afford three bedroom houses compared to our one bedroom flat in a grotty area. We then managed to progress 'up the ladder'. Because of this regional difference, plus the relatively recent astronomical rise in London house prices, our current 4-bed semi with a tiny garden is worth over a million, but that is just 'on paper' and in no way reflects our income. There is absolutely no way we would be able to afford to buy it now. I am happy to pay tax on what I earn but it is this anomaly that made many people consider the proposed mansion tax unfair. I voted Labour although I did not particularly agree with it, but not enough people did, and I think it is one of the things that cost them the election.

 

[Witzend]

I was thinking the same thing Witzend. I would also say that, when you look at what those London house prices were 30 or more years ago, they were already very expensive by the standards of the rest of the country so out of the financial reach of most people. I remember my husband being offered a job near to London in the early 70's but we simply couldn't afford a mortgage there even with a much higher salary.

If there are people on very low incomes living in expensive houses, that is their choice, but it shouldn't be used as a reason for not looking at council tax bands. If necessary, there could be a deferred payment scheme which could be repaid by putting a charge on the house. This works pretty well for repaying legal aid costs via the 'statutory charge' system.

Yes, and another factor is that the relative value of different types of houses has changed quite a lot since the tax bands were worked out. Back in the late 80s we and my in-laws put our houses - just a few miles apart - on the market at around the same time. Ours dates from the 60s, theirs was a good sized Edwardian semi. At the time the values were almost exactly equal, but those period houses have since become fashionable and 'sort-after' ;-) - as estate agents so often put it - and the value of theirs - long sold anyway - would now probably be 40-50% more than ours, which we never did sell in the end.

Similarly the relative value of small Victorian terraced houses has shot up, compared with small houses built a lot later.
The bandings have simply not remotely kept pace with what has happened in the markets.

 

[Delphie]

I realise that! And there is also stamp duty, which goes up in line with property prices.

In order to target the really high earners, these taxes could have been raised rather than introduce the new mansion tax. Someone buying a 2 million property can obviously afford it (or they wouldn't be buying it!) whereas someone living in one does not necessarily have much disposable income, if they bought it say 40 years ago when prices were more in line with salaries, even with the north/south divide.

When we first bought a property, in London, it was a struggle but was at least doable. Our contemporaries from college, on the same salary but with jobs outside London could, with a smaller mortgage, afford three bedroom houses compared to our one bedroom flat in a grotty area. We then managed to progress 'up the ladder'. Because of this regional difference, plus the relatively recent astronomical rise in London house prices, our current 4-bed semi with a tiny garden is worth over a million, but that is just 'on paper' and in no way reflects our income. There is absolutely no way we would be able to afford to buy it now. I am happy to pay tax on what I earn but it is this anomaly that made many people consider the proposed mansion tax unfair. I voted Labour although I did not particularly agree with it, but not enough people did, and I think it is one of the things that cost them the election.

I completely agree.

I know several people in London who now find their family homes worth a million plus. Often, they bought run down properties in run down areas (look at how Brixton's changed over the years for example) because that was all they could afford, then found a combination of home improvements and the neighbourhood becoming 'up and coming' reflecting favourably in the value of their property.

So I really don't think it's right to ask a widow in a nice semi, for example, to sell up and leave a lifetime of memories and a garden full of buried family pets, the familiarity of the street and the people in it, just because she can't now afford to pay a 'millionaire's tax' out of what is often no more than a modest standard of living pension. Sometimes not even that. There are lots of tax loopholes that could be closed to stop the really rich exploiting the system, without slapping a tax on people who often simply won't have the cash to cough up.

 

[katek]

I completely agree.

I know several people in London who now find their family homes worth a million plus. Often, they bought run down properties in run down areas (look at how Brixton's changed over the years for example) because that was all they could afford, then found a combination of home improvements and the neighbourhood becoming 'up and coming' reflecting favourably in the value of their property.

So I really don't think it's right to ask a widow in a nice semi, for example, to sell up and leave a lifetime of memories and a garden full of buried family pets, the familiarity of the street and the people in it, just because she can't now afford to pay a 'millionaire's tax' out of what is often no more than a modest standard of living pension. Sometimes not even that. There are lots of tax loopholes that could be closed to stop the really rich exploiting the system, without slapping a tax on people who often simply won't have the cash to cough up.

Absolutely! And people in these properties already pay a higher band council tax.

Additionally, older people in these houses could also be facing the prospect of paying hefty care home fees - when they will be not only be funding themselves but, as a self-funder, subsidising others.

People should not be unduly 'punished' financially for a house price rise which is not within their control. I think most people are happy to pay taxes if they see them as fair. I am just wondering how the current government are going to raise the 8bn they have promised for health.

 

[Kevinl]

A person who lives in a band D property in Brixton (Lambeth council) pays £1,238 a year in council tax, a band D house in Salford costs £1,536.25 I've no idea what the relative values of the 2 houses would be but my best guess is the Brixton one would be 4 to 6 times the one in Salford, yet the one in Salford pays substantially more council tax where's the logic in that?
K

 

[Witzend]

A person who lives in a band D property in Brixton (Lambeth council) pays £1,238 a year in council tax, a band D house in Salford costs £1,536.25 I've no idea what the relative values of the 2 houses would be but my best guess is the Brixton one would be 4 to 6 times the one in Salford, yet the one in Salford pays substantially more council tax where's the logic in that?
K

CT charging can vary so much anyway. We live in Kingston, which has, or certainly did have, the highest CT in London, if not in the whole country. Just up the road is Wandsworth borough, which has the lowest, at least in London. If we lived in Wandsworth our CT would be about half.

 

[katek]

A person who lives in a band D property in Brixton (Lambeth council) pays £1,238 a year in council tax, a band D house in Salford costs £1,536.25 I've no idea what the relative values of the 2 houses would be but my best guess is the Brixton one would be 4 to 6 times the one in Salford, yet the one in Salford pays substantially more council tax where's the logic in that?
K

I agree, but the 'value' of a property is just on paper and not actually realised until such time as you come to sell it, so is, in a sense, irrelevant. A fairer alternative to council tax would be something more based on individual income, but then the poll tax was unpopular, wasn't it?

 

[Pickles53]

CT charging can vary so much anyway. We live in Kingston, which has, or certainly did have, the highest CT in London, if not in the whole country. Just up the road is Wandsworth borough, which has the lowest, at least in London. If we lived in Wandsworth our CT would be about half.

I guess my question then would be how do the services compare? When I was working in London not too long ago, a lot of our work was based around different boroughs and there were incredible differences in the services provided especially to the poorest and most vulnerable residents. Some councils are very proud of having low council taxes but not so keen to admit how they achieve that.

 

[Pickles53]

I agree, but the 'value' of a property is just on paper and not actually realised until such time as you come to sell it, so is, in a sense, irrelevant. A fairer alternative to council tax would be something more based on individual income, but then the poll tax was unpopular, wasn't it?

Trying to remember how the poll tax worked but failing! Can someone help? Wasn't there an issue about very wealthy individuals paying the same as average earners hence the apparent unfairness?

Trouble is, in almost every system there will be some individuals where their particular circumstances make things seem unfair. I would personally prefer higher levels of income tax and fewer exemptions, but sadly it is not going to happen anytime soon.

 

[katek]

I guess my question then would be how do the services compare? When I was working in London not too long ago, a lot of our work was based around different boroughs and there were incredible differences in the services provided especially to the poorest and most vulnerable residents. Some councils are very proud of having low council taxes but not so keen to admit how they achieve that.

That is a very good point, especially when LAs are having to fund an increasing number of people with quite significant health needs, for example those who have been wrongly denied CHC and can't self-fund.

 

[Pete R]

Trying to remember how the poll tax worked but failing! Can someone help? Wasn't there an issue about very wealthy individuals paying the same as average earners hence the apparent unfairness?

Every working person in a household paid 100% of the local rate. If a student or unemployed it was 20%.
The main issue was around enforcement of those that refused to pay. I think Yorkshire Police said they would refuse to obey court orders to arrest defaulters due to the number of people involved.

 

[katek]

Trying to remember how the poll tax worked but failing! Can someone help? Wasn't there an issue about very wealthy individuals paying the same as average earners hence the apparent unfairness?

Trouble is, in almost every system there will be some individuals where their particular circumstances make things seem unfair. I would personally prefer higher levels of income tax and fewer exemptions, but sadly it is not going to happen anytime soon.

I think it was based on the number of people in a household, and didn't take into account their income, so a family with several grown up children at home and not earning much would have paid a lot more than a single millionaire!

Council tax assumes those in bigger houses are generally richer than those in poorer houses, which is true to some extent but, as we know, isn't always the case. There could also be richer people who might choose to live in a cheaper property to give themselves more disposable income, who are then contributing less council tax than they could afford.

I am with you on just having higher levels of income tax. A proportion could go to LAs to allow them to fund all the various services they provide, (and a sufficient amount to the NHS to allow them not to have to shunt healthcare onto social services). But, as you say, it is not likely to happen, unfortunately.

 

[Delphie]

A person who lives in a band D property in Brixton (Lambeth council) pays £1,238 a year in council tax, a band D house in Salford costs £1,536.25 I've no idea what the relative values of the 2 houses would be but my best guess is the Brixton one would be 4 to 6 times the one in Salford, yet the one in Salford pays substantially more council tax where's the logic in that?
K

Oh don't get me started! My four bedroom detached house costs us substantially more in CT than Buckingham Palace costs the queen. I try not to think about it!

 

[Witzend]

I guess my question then would be how do the services compare? When I was working in London not too long ago, a lot of our work was based around different boroughs and there were incredible differences in the services provided especially to the poorest and most vulnerable residents. Some councils are very proud of having low council taxes but not so keen to admit how they achieve that.

Yes, I am sure you are right, but I did work for our council, on the front line, for several years, and I saw an an awful lot of waste - e.g. what I would call 'frills' or just PR, shiny magazines printed by the many-thousand on expensive paper to tell everyone how wonderful the council was, among other things.
None of these had anything to do with basic front line services, but when they sent out questionnaires, pretending to consult residents, they would ask e.g., Would you prefer us to cut children's services, or old people's services, or libraries? Never a mention of the frills I suspect few would ever miss.