We all know that the only things certain in life are death and taxes.
The UK’s postcode lottery means babies born in the richest areas, such as Hampstead in north London, are expected to live to 88 years old, while those in Glasgow can expect 12 years less, with a life expectancy of 76, according to the Office for National Statistics.
As for taxes, 750,000 of the UK’s poorest households currently have no money to save, while the richest benefit most from the £7bn in annual tax breaks.
Indeed, the Resolution Foundation reports the richest 10% of households will gain £800 from tax allowances, on average, while the poorest 10% will gain only £38.
In 2022, incomes for the poorest 14 million people fell by 7.5%, while incomes for the richest fifth saw a 7.8% increase. Eye-watering statistics.
Everyone will die one day, so let’s help them make a financial plan avoiding tax as they go
The way the UK tax system operates can mean that the more you earn, the less you pay in tax. One in 10 people earning more than £1m annually will pay proportionately less tax than someone earning £15,000, the minimum wage.
The tax burden on lower earners needs to reduce to help with the cost-of-living crisis, the various and long-running industrial disputes and the serious recruitment problems for the National Health Service and other major employers.
I believe the richest need to be taxed more and it’s good to see many agree with me. Groups like the Patriotic Millionaires UK speak out for a fairer tax system, with its millionaire members reportedly happy to pay more tax as part of a contribution to creating a more equitable society.
Of course, a competent adviser will know all about tax benefits and the financial implications of death but it saddens me that ‘ordinary’ people may not even fully understand the tax on their pensions, investments and savings.
Few advice firms mention any community-based activities, reaching people face to face or via virtual presentations
I have judged hundreds of financial services awards and notice recent entries proudly pointing to a growing social media presence, online portals and all-singing, all-dancing websites.
These endeavours are great for brand building but they are reactive, waiting for contact to be made by potential clients. Few advice firms mention any community-based activities, reaching people face to face or via virtual presentations.
If this proactive, outward-facing business was undertaken, more people would benefit from advisers’ knowledge and new clients would result. Business generated by a group of ordinary people through commissions on life and income cover, for example, would likely more than cover time costs.
Having spoken at many events, including Women’s Institute meetings, where a commonality is often divorce or death of a spouse, my presentations cover the importance of will writing, probate rules, inheritance tax, spousal tax benefits and capital gains tax (CGT).
The richest 10% of households will gain £800 from tax allowances, while the poorest 10% will gain only £38
The new CGT and divorce rules introduced in the 2022-23 Finance Bill are important for all, even those with few assets or that may still share a former matrimonial home. This is the type of knowledge we need to share.
Advisers will have a community group they can speak at where they can educate people on the implications of death and taxes. Everyone will die one day, so let’s help them make a financial plan avoiding tax as they go.
Kim North is managing director at Technology & Technical
I deliberately did NOT comment upon this tirade at the time…however, having just done so regarding Womens’ Wealth see Lois V. article today… I remembered that the above missed a few basic truths itself…
Income and, to an extent, gains are taxed progressively – I personally believe VAT should be also but on price – this means the richest pay by far the most in these taxes. They also create jobs, both in work and domestically, often not getting the write off as expenses, E.g. A domestic servant attracts all the costs of an employee, but is paid generally from nett income.
The richest 5% pay the vast majority of income and capital gains taxes.
However, the references to community and group ‘sessions’ or advice forums over coffee has proven very effective for other entities drinking from the same pool of, usually, Widows at a loss for support on emotion and finances, E.g. MacMillan.
The larger charities heavily rely upon bequests. This is good news for advisers who can be bothered to research non packaged products which can compliment giving, this leads to greater reliefs whilct supporting or ‘giving back’ as people are want to do at a time of personal loss.
That the UK tax system is topsy turvey is beyond question – manuals have expanded only less than the Highway Code – The main point of KN is in the TITLE… knowledge is power, and much more value can be added if you know where to look beyond the packed product world!!