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Wealth Tax


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How long before we start hearing about a wealth tax? The Government has been able to arbitrarily smash the value of some of my individual holdings (Polymetal, Serica Energy). Why will it stop there?

We seem to be moving into a phase where return of capital is going to be far more important than returns on capital.

What approaches do people think would be best to employ now? I'm thinking of removing all of the cash from my ISAs and other other brokers and finding somewhere to park it in another country. The entire Western world seems to have been overtaken by madness, but surely somewhere like Switzerland would be relatively safe. I've seen Swissquote suggested elsewhere. I don't see the point in getting an account where it is regulated by the FCA. But it looks straightforward to apply for a Swiss account. It also looks like referrals get 100CHF trading credits. Has anybody gone down this route?

Emptying the ISAs and trading accounts and moving this offshore is straightforward. I assume my SIPP monies are stranded and ripe for being hit with a wealth tax. In the medium term my wife and I plan to be off to the States once the kids education is finished (3 years time). The US might find a wealth tax harder to bring in than other countries, but I'm not convinced they won't try. But a US account might also be an option.

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Axeman123
Posted (edited)

If I really feared that scenario (which I think is probably at least five years away) and had enough wealth to make it worthwhile, here is what I would look into:

Offshore my assets in establishment tax/privacy havens, Jersey/Guernsey/BVI etc. I would not consider any "dodgy" or unstable ones like Panama. If you think the UK could swoop on your assets, imagine what could happen to a foreigner in Latin America or the Carribean under a Maduro figure!

Obtain tax priviledged resident status overseas, Portugal NHR scheme is probably top of that list for accesibility. Interestingly you only need to spend one week a year in country to keep this status if you have a home there, and the residence permit gives you visa free travel within the EU. My only asset in country would be a private residence/vehicle and assorted chatels/trinkets. My only income would be remittances for lifestyle spending. 

Keep the UK passport, but ensure I have no other links to the country that could make me subject to tax here in future. The basic premise would be to have my money/residence/nationality in three different jurisdictions, ideally with each chosen for advantage. Assuming you don't live or pay tax here, the UK passport is actually pretty damn good.

If I had enough assets, and the UK switched to a US style tax on worldwide income for all citizens or a "one off" wealth tax, then I would have to look at buying a Carribean Citzenship by investment and renouncing UK citizenship. A donation of 100k USD would be required in Dominica for example. This would be the nuclear option however, and in a world of tax hungry governments an obvious tax-efficiency passport-holder might find themsleves as internationally welcome as Diarrhoea in a wet-suit.

I have actually been looking into this, even though a lot of it is unlikely to apply to me, and can suggest this link:

https://nomadcapitalist.com/global-citizen/second-passport/dominica-citizenship-by-investment/

Edited by Axeman123
can't type for shit
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9 minutes ago, Axeman123 said:

If I really feared that scenario (which I think is probably at least five years away) and had enough wealth to make it worthwhile, here is what I would look into:

It's a small step from stealing the value from individual shareholdings to just stealing from brokerage accounts directly. The "windfall tax" doesn't even begin to touch the sides of what was promised yesterday.

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Axeman123
3 minutes ago, GTM said:

It's a small step from stealing the value from individual shareholdings to just stealing from brokerage accounts directly. The "windfall tax" doesn't even begin to touch the sides of what was promised yesterday.

Yes, but I suspect stealing shareholder value at source via a "windfall tax" is a lot more palatable than actually seizing shares from individuals. ESG redirecting company investments is a comparable alternative to outright nationalization. I personally think we will see appropriation, but by stealth rather than overtly.

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Frank Hovis

If you look at what is currently extant in Europe I'd actually welcome the Fench one.

Norway's is set very low but that's been there for over a century.

Spain's may hurt depending upon how it's progressive.

Italy actually targets assets held abroad.

Such a tax is probably only going to have a material hit if you have £10m or more like £100m.

 

Net Wealth Taxes

Norway levies a net wealth tax of 0.85 percent on individuals’ wealth stocks exceeding NOK1.5 million (€152,000 or US $170,000), with 0.7 percent going to municipalities and 0.15 percent to the central government. Norway’s net wealth tax dates to 1892. Under COVID-19-related measures, individual business owners and shareholders who realize a loss in 2020 are eligible for a one-year deferred payment of the wealth tax.

Spain’s net wealth tax is a progressive tax ranging from 0.2 percent to 3.75 percent on wealth stocks above €700,000 ($784,000; lower in some regions), with rates varying substantially across Spain’s autonomous regions (Madrid offers a 100 percent relief). Spanish residents are subject to the tax on a worldwide basis while nonresidents pay the tax only on assets located in Spain.

Switzerland levies its net wealth tax at the cantonal level and covers worldwide assets (except real estate and permanent establishments located abroad). The tax rates and allowances vary significantly across cantons. The Swiss net wealth tax was first implemented in 1840.

Wealth Taxes on Selected Assets

France abolished its net wealth tax in 2018 and replaced it that year with a real estate wealth tax. French tax residents whose net worldwide real estate assets are valued at or above €1.3 million ($1.5 million) are subject to the tax, as well as non-French tax residents whose net real estate assets located in France are valued at or above €1.3 million. Depending on the net value of the real estate assets, the tax rate is as much as 1.5 percent.

Italy taxes financial assets held abroad without Italian intermediaries by individual resident taxpayers at 0.2 percent. In addition, real estate properties held abroad by Italian tax residents are taxed at 0.76 percent.

https://taxfoundation.org/wealth-taxes-in-europe-2020/

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reformed nice guy

The problem with living internationally between jurisdictions, assuming no kids or job, is that you need a lot of money.

Every single loop, border crossing or other barrier has a cost. Often they try for a percentage rather than a fee.

Unless you are a multi millionaire then diversification is probably best.

Property, land, forestry, physical gold, vaulted gold outside the UK, some physical cash in pounds (maybe some dollars too?), a profitable small business that doesnt take up all your time, good health, family, getting to know your neighbours and community, well maintained car, good quality furniture that will outlast you, insulation, skills, firearms, tools, a vegetable patch, fruit trees, berry bushes, solar panels, battery system.

Most of that is harder for them to take away. ISAs + SIPPs are easier for them to harvest.

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12 minutes ago, Axeman123 said:

Yes, but I suspect stealing shareholder value at source via a "windfall tax" is a lot more palatable than actually seizing shares from individuals. ESG redirecting company investments is a comparable alternative to outright nationalization. I personally think we will see appropriation, but by stealth rather than overtly.

I suppose that is the other thing behind my thinking. My Polymetal shares that I've held for a few years have been absolutely smashed in value, with no indication what value will remain once everything shakes out. Ferrexpo narrowly avoided joining them. I'm sure others have their own wounds that they are licking from the Russia/Ukraine situation.

The risks of holding most of my wealth in the UK right now seems incredibly high.

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TBF uncertain jurisdiction risk has always cut into valuations of equities, shares operating in countries with uncertain governments have a discount reflecting there is a slight chance that one day they could be rug pulled. For instance Tharisa/Sylvania Platinum are decent companies with some clear tailwinds but they are priced on absurdly low P/E compared to things here. But, there is a reason for that.

I do believe a blatant theft of wealth is a last resort and the government prefers sly ones, such as getting lots of inflation but not moving the tax bands.

Rather than an outright wealth tax I could see other things happening first, for instance capital gains on primary residence tapered out.

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belfastchild

Ireland charged a one off 100 euro household charge in 2012 to everyone who owned a residential property. It was per property.
They have now put in second home and empty property charges.

Just like that, whack, new charge, givus your money.

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Axeman123
49 minutes ago, belfastchild said:

Ireland charged a one off 100 euro household charge in 2012 to everyone who owned a residential property. It was per property.
They have now put in second home and empty property charges.

Just like that, whack, new charge, givus your money.

Did they already have council tax or similar?

At least it was owners and not renters/occupiers, unlike CT.

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Libspero
3 hours ago, Frank Hovis said:

If you look at what is currently extant in Europe I'd actually welcome the Fench one.

Norway's is set very low but that's been there for over a century.

Spain's may hurt depending upon how it's progressive.

 

They all seem to target "wealth stocks",   does that mean they exclude residential property and only count share holdings ?

Seems like that should cause anyone in stocks to immediately liquidate and purchase property either locally or abroad :/

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Frank Hovis
48 minutes ago, Libspero said:

 

They all seem to target "wealth stocks",   does that mean they exclude residential property and only count share holdings ?

Seems like that should cause anyone in stocks to immediately liquidate and purchase property either locally or abroad :/

 

France is exclusively taxing property and Italy property held abroad.

I don't see any set strategy to take to prepare for a possible one here bar having some off grid wealth.

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belfastchild
1 hour ago, Axeman123 said:

Did they already have council tax or similar?

At least it was owners and not renters/occupiers, unlike CT.

Dont know to be honest, I know they brought in a levy or local taxes or the equivalent after and rolled it all up into one.
One of my mates pays less in that plus water, plus bins for a mansion than I do in just rates.

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With a crooked smile
5 hours ago, Axeman123 said:

Offshore my assets in establishment tax/privacy havens, Jersey/Guernsey/BVI etc. I would not consider any "dodgy" or unstable ones like Panama. If you think the UK could swoop on your assets, imagine what could happen to a foreigner in Latin America or the Carribean under a Maduro figure!

I'm old man works with very HMW individuals. He does tax planning and works as works as a fixer (buying debt for penny's in the pound and using it for tax advantages helping people get passports for Monaco ect).

Although i know someone from the UK who does IT support in fianace in Panama when ever I mention it to the old man he always refers to the place as 'the wild west'.

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Democorruptcy
On 27/05/2022 at 10:02, GTM said:

How long before we start hearing about a wealth tax? The Government has been able to arbitrarily smash the value of some of my individual holdings (Polymetal, Serica Energy). Why will it stop there?

We seem to be moving into a phase where return of capital is going to be far more important than returns on capital.

What approaches do people think would be best to employ now? I'm thinking of removing all of the cash from my ISAs and other other brokers and finding somewhere to park it in another country. The entire Western world seems to have been overtaken by madness, but surely somewhere like Switzerland would be relatively safe. I've seen Swissquote suggested elsewhere. I don't see the point in getting an account where it is regulated by the FCA. But it looks straightforward to apply for a Swiss account. It also looks like referrals get 100CHF trading credits. Has anybody gone down this route?

Emptying the ISAs and trading accounts and moving this offshore is straightforward. I assume my SIPP monies are stranded and ripe for being hit with a wealth tax. In the medium term my wife and I plan to be off to the States once the kids education is finished (3 years time). The US might find a wealth tax harder to bring in than other countries, but I'm not convinced they won't try. But a US account might also be an option.

Wealth Tax was discussed on GB News this week and I think we will hear a lot more about it this summer.

I'd read up on the HMRC stuff about assets overseas, to make sure you don't get hit with the Requirement to Correct  higher penalties they brought in 2018

https://www.gov.uk/guidance/worldwide-disclosure-facility-make-a-disclosure

Re your SIPP this might be of interest:

https://www.pensionsforexpats.co.uk/pension-planning/qrops-sipp-rules-tax-withdrawal-rules/

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Pensions will be an obvious target. I can see eventual nationalisation of all Pensions - i.e. the Government in an emergency takes all pensions and puts them into one fund before handing out the same pension to everyone.

People who think Pensions, SIPPs or any other form of Government wrapper or product are safe are in for a shock.

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Axeman123
12 minutes ago, Errol said:

Pensions will be an obvious target. I can see eventual nationalisation of all Pensions - i.e. the Government in an emergency takes all pensions and puts them into one fund before handing out the same pension to everyone.

People who think Pensions, SIPPs or any other form of Government wrapper or product are safe are in for a shock.

The city of London does well off private pension provision. I would think a covert partial nationalisation would be more likely, just requiring SIPPS to hold a fixed % of Gilts with a negative real yield (to "protect" savers) would be far more palatable. Even countries that have seized some private pension assets have generally tended to favour a haircut.

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Chewing Grass
1 minute ago, Axeman123 said:

The city of London does well off private pension provision. I would think a covert partial nationalisation would be more likely, just requiring SIPPS to hold a fixed % of Gilts with a negative real yield (to "protect" savers) would be far more palatable. Even countries that have seized some private pension assets have generally tended to favour a haircut.

That raises the question of Public Pension Provision, especially in the realms of Government and their Employees.

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Lightly Toasted
14 minutes ago, Errol said:

Pensions will be an obvious target. I can see eventual nationalisation of all Pensions - i.e. the Government in an emergency takes all pensions and puts them into one fund before handing out the same pension to everyone.

People who think Pensions, SIPPs or any other form of Government wrapper or product are safe are in for a shock.

I suppose that media-whipping-up of the privilege* of gold-plated pensions (and general intergenerational unfairness) will be the signal that this is on the cards.

 

* I bet most of those pension entitlements belong to white people xD

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Posted (edited)

I see all the talk of wealth tax as distraction.

Wealth tax, wealth tax, wealth tax, no wealth tax is unfair but we will slip NI on pensions payments / remove relief 

Stealing from old people, slowly.  

 

Edited by feed
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King Penda
2 hours ago, Errol said:

Pensions will be an obvious target. I can see eventual nationalisation of all Pensions - i.e. the Government in an emergency takes all pensions and puts them into one fund before handing out the same pension to everyone.

People who think Pensions, SIPPs or any other form of Government wrapper or product are safe are in for a shock.

Some form of this will happen but I’d go for means tested and compulsory enrolment 

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spunko
On 27/05/2022 at 11:27, Frank Hovis said:

If you look at what is currently extant in Europe I'd actually welcome the Fench one.

Norway's is set very low but that's been there for over a century.

Spain's may hurt depending upon how it's progressive.

Italy actually targets assets held abroad.

Such a tax is probably only going to have a material hit if you have £10m or more like £100m.

 

Net Wealth Taxes

Norway levies a net wealth tax of 0.85 percent on individuals’ wealth stocks exceeding NOK1.5 million (€152,000 or US $170,000), with 0.7 percent going to municipalities and 0.15 percent to the central government. Norway’s net wealth tax dates to 1892. Under COVID-19-related measures, individual business owners and shareholders who realize a loss in 2020 are eligible for a one-year deferred payment of the wealth tax.

Spain’s net wealth tax is a progressive tax ranging from 0.2 percent to 3.75 percent on wealth stocks above €700,000 ($784,000; lower in some regions), with rates varying substantially across Spain’s autonomous regions (Madrid offers a 100 percent relief). Spanish residents are subject to the tax on a worldwide basis while nonresidents pay the tax only on assets located in Spain.

Switzerland levies its net wealth tax at the cantonal level and covers worldwide assets (except real estate and permanent establishments located abroad). The tax rates and allowances vary significantly across cantons. The Swiss net wealth tax was first implemented in 1840.

Wealth Taxes on Selected Assets

France abolished its net wealth tax in 2018 and replaced it that year with a real estate wealth tax. French tax residents whose net worldwide real estate assets are valued at or above €1.3 million ($1.5 million) are subject to the tax, as well as non-French tax residents whose net real estate assets located in France are valued at or above €1.3 million. Depending on the net value of the real estate assets, the tax rate is as much as 1.5 percent.

Italy taxes financial assets held abroad without Italian intermediaries by individual resident taxpayers at 0.2 percent. In addition, real estate properties held abroad by Italian tax residents are taxed at 0.76 percent.

https://taxfoundation.org/wealth-taxes-in-europe-2020/

Where are you getting that 10m figure from? It represents such a tiny percentage of taxpayers it would be pointless

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Democorruptcy

Re assets overseas, HMRC not on the ball for some reason, well they will be owned by the weathiest people.

Quote

 

The UK tax authority has admitted it has no idea how much tax is being evaded by UK residents holding money offshore, after new figures revealed hundreds of billions of pounds was held in tax havens.

HM Revenue & Customs disclosed in freedom of information requests that UK residents had £850bn in financial accounts overseas — of which £570bn was based in tax havens — in 2019, the latest year HMRC has released statistics for.

The figures come from financial data that has been shared with HMRC by more than 100 countries since 2017, under international rules known as the Common Reporting Standard (CRS).

But when asked if HMRC had used the CRS data to estimate what proportion of UK residents had properly reported their overseas accounts, HMRC said it had not.

cont

https://12ft.io/proxy?q=https%3A%2F%2Fwww.ft.com%2Fcontent%2Fa14162d0-0f65-4c63-842e-e0778516d03a

 

 

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PatronizingGit
On 28/05/2022 at 10:29, Errol said:

Pensions will be an obvious target. I can see eventual nationalisation of all Pensions - i.e. the Government in an emergency takes all pensions and puts them into one fund before handing out the same pension to everyone.

People who think Pensions, SIPPs or any other form of Government wrapper or product are safe are in for a shock.

Pretty much why they are forcing everyone to 'invest' in workplace pensions...its not for those being forced into them, its to keep afloat those retiring rather sooner.

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