What taxes should the UK implement, reform or abolish?

[Bletchleyite]

Have a single rate of VAT with no zero rating ie no exemptions and all businesses regardless of turnover liable to be VAT registered and charge VAT

You think 20% on rail fares would go down well?

(Germany does charge VAT on domestic transport though)

 

[Bishopstone]

1. Tax gambling winnings as income. If you get £50k from employment, or £50k in dividends/rental income, it's taxed. The same should apply to a £50k win on the horses, at the casino or on the National Lottery.

2. Stick a £1 tax on each home delivery of hot food. These renegade Apps are causing significant negative externalities, and the tax raised could be used to offset these social costs. I'd be tempted to extend this levy to supermarket home delivery services, in recognition of the significant extra traffic and road surface deterioration they cause.

3. Put VAT on first class rail travel. (Runs away fast)

 

[35B]

Merge Income Tax and National Insurance and have more graduated rates ie increase bands in 5p points with all income taxed the same, ie dividends, wages, self employment, pensions, bank interest etc
Increase fuel duty and introduce a carbon tax
Have a single rate of VAT with no zero rating ie no exemptions and all businesses regardless of turnover liable to be VAT registered and charge VAT
Have a land tax payable by the land owner replacing council tax and business rates based on value of land regardless of its use - and rebased on a regular basis
Put all tax returns into the public domain and require any business selling items valued at more than say £50k checks purchaser against the tax register and report if income reported and expenditure are out of kilter.

I look forward to your discussion with the retired, who do not pay NI today.

== Doublepost prevention - post automatically merged: 8 Aug 2025 ==

That was going to be resolved by applying VAT to all takeaway prepared food, which does make sense as takeaway prepared food is a luxury (the non-luxury option is to buy bread and fillings and make your own sandwiches at home). I would say I was in support of that, but enough of a campaign was mounted by the likes of Greggs that it was dropped.

You are showing an unusual attachment to Treasury thinking. The whole "pasty tax" fiasco came about because the Treasury were mad keen on precisely the sort of rationalisation you describe, and completely ignored the politics. Having done some time behind a fast food counter, I've a lot of sympathy for the poor beggars who'd actually have had to make this work.

 

[Bletchleyite]

Having done some time behind a fast food counter, I've a lot of sympathy for the poor beggars who'd actually have had to make this work.

Make it work? A simple 20% on their prices would make it work. And they'd stop getting a gobful for refusing to reheat because the VAT rules didn't allow them to!

I struggle to have sympathy for a big company like Greggs needing to do some admin.

 

[oldman]

When VAT was first introduced, carry-out food was zero-rated because fish and chips was seen as a staple in working-class households. It was Thatcher who, as well as snatching milk, put VAT on fish suppers in 1984.

 

[styles]

When VAT was first introduced, carry-out food was zero-rated because fish and chips was seen as a staple in working-class households. It was Thatcher who, as well as snatching milk, put VAT on fish suppers in 1984.

Thatcher Thatcher, haddock snatcher.

 

[deltic]

I look forward to your discussion with the retired, who do not pay NI today.

This is why our tax system is such a mess with all the carve outs to special interest groups.

== Doublepost prevention - post automatically merged: 8 Aug 2025 ==

When VAT was first introduced, carry-out food was zero-rated because fish and chips was seen as a staple in working-class households. It was Thatcher who, as well as snatching milk, put VAT on fish suppers in 1984.

It would have been Nigel Lawson who was responsible for VAT

== Doublepost prevention - post automatically merged: 8 Aug 2025 ==

You think 20% on rail fares would go down well?

(Germany does charge VAT on domestic transport though)

If you had VAT on everything the rate would be significantly reduced whilst bringing in the same income.

 

[styles]

This is why our tax system is such a mess with all the carve outs to special interest groups.

== Doublepost prevention - post automatically merged: 8 Aug 2025 ==


It would have been Nigel Lawson who was responsible for VAT

And the politicians endeavor to continue making carve-outs.

There's been countless calls for exemptions to either the personal allowance tapering, or pension contribution rules, for e.g. doctors who happen to cross the £100k threshold.

Not just taxes, but we do this with laws. There's a separate offence now for assaulting an emergency worker. There's calls for an extra offence to be created of assaulting a retail worker. At what point do we roll all this back and say actually you know, assaulting anybody is bad, let's leave it at that?

 

[35B]

It would have been Nigel Lawson who was responsible for VAT

Introduced 1973 by Anthony Barber

 

[deltic]

Introduced 1973 by Anthony Barber

The reference was to VAT on fish & chips not the original introduction of VAT

 

[SuspectUsual]

If you had VAT on everything the rate would be significantly reduced whilst bringing in the same income.

The proportion of a lower income family’s expenditure that goes on currently zero rated items is higher than for a higher income family. Introducing across the board VAT at a rate to equalise overall receipts would hit the worst off hardest

 

[Oxfordblues]

The maximum holding of Premium Bonds is £50,000. Increasing it to, say, £5m would generate lots of much-needed revenue.

 

[deltic]

The proportion of a lower income family’s expenditure that goes on currently zero rated items is higher than for a higher income family. Introducing across the board VAT at a rate to equalise overall receipts would hit the worst off hardest

Which can be addressed via income tax and benefit system

 

[SuspectUsual]

Which can be addressed via income tax and benefit system

So more complication.

 

[JonathanH]

There's been countless calls for exemptions to either the personal allowance tapering, or pension contribution rules, for e.g. doctors who happen to cross the £100k threshold.

There is possibly a case for people doing 'noble' jobs like doctors, nurses, teachers, maybe emergency workers, to be taken out of income tax, and just paid their (lower) wages tax free. Then no one has to worry about where the awkward thresholds are set, because they dont apply to that group of workers.

It was a Reform policy at the last election to exempt NHS workers from paying basic rate income tax for three years.

https://www.tax.org.uk/general-elec...s-in-income-inheritance-and-corporation-taxes

• All frontline NHS and social care staff to pay zero basic rate tax for 3 years.

Obviously an unfunded promise, but it was clearly someone's idea.

 

[SuspectUsual]

There is possibly a case for people doing 'noble' jobs like doctors, nurses, teachers, maybe emergency workers, to be taken out of income tax, and just paid their (lower) wages tax free. Then no one has to worry about where the awkward thresholds are set, because they dont apply to that group of workers.

How do you define “noble”?

For example the NHS. Front line staff only? Everyone on the payroll? Should consultants earning six figures pay no tax? Should my son who works in NHS IT pay no tax? I don’t think the answer is the same for all of those, which means you need to draw lines and with that will come argument and division

I really think we need simplicity!

 

[JonathanH]

For example the NHS. Front line staff only? Everyone on the payroll? Should consultants earning six figures pay no tax? Should my son who works in NHS IT pay no tax? I don’t think the answer is the same for all of those, which means you need to draw lines and with that will come argument and division

Well I quoted the Reform party policy that seemed to have the idea of exempting front line NHS workers from basic rate tax, and we know that it is often doctors who are cited as being adversely affected by the thresholds designed to take more tax from higher earners. The general perception seems to be that we want to take more tax from higher earners, but it has a distorting effect on what doctors are prepared to do.

I agree that frontline may be difficult to define, and that some simplicity is warranted.

 

[35B]

Well I quoted the Reform party policy that seemed to have the idea of exempting front line NHS workers from basic rate tax, and we know that it is often doctors who are cited as being adversely affected by the thresholds designed to take more tax from higher earners. The general perception seems to be that we want to take more tax from higher earners, but it has a distorting effect on what doctors are prepared to do.

I agree that frontline may be difficult to define, and that some simplicity is warranted.

The distortion arose because of an attempt to increase tax on pension savings which increased the marginal tax rate massively on some doctors. That issue of excessive marginal rates applies in many circumstances, and can be destructive (especially transitioning away from benefits).

I suggest that should be the focus, rather than trying to create another set of exemptions with complicated rules.

 

[styles]

There is possibly a case for people doing 'noble' jobs like doctors, nurses, teachers, maybe emergency workers, to be taken out of income tax, and just paid their (lower) wages tax free. Then no one has to worry about where the awkward thresholds are set, because they dont apply to that group of workers.

It was a Reform policy at the last election to exempt NHS workers from paying basic rate income tax for three years.

https://www.tax.org.uk/general-elec...s-in-income-inheritance-and-corporation-taxes


Obviously an unfunded promise, but it was clearly someone's idea.

The issue I have with this is, where does it end?

In the legislation example I gave, there's active interest in the front benches for legislation which makes a specific criminal offence for assaulting retail workers. That's separate to the specxific criminal offence created recently for assaulting emergency workers.

When COVID-19 lockdowns were about, we had a definition of a 'key worker', and that basically included everybody from retail workers to doctors to firefighters.

If we have a problem with doctors leaving the UK because of the £100k-125k tax trap (which I'm yet to see evidence of - more likely people go to other countries for higher salaries, but nevermind), the solution probably isn't to make an exception just for doctors; it's to scrap the ludicrous 67.5% tax trap above £100k (thanks Gordon Brown). Otherwise, headteachers, accountants, software engineer team leads etc are still going to leave the UK and I think we can agree we want those people to stay here.

I'm cynical, but I actually think the whole exempting doctors from the personal allowance tapering or increasing annual pension allowances (which are already very generous at £60k pension contributions a year!) is pure voter appeasing, not based in any actual policy objective.

 

[Harpo]

The issue I have with this is, where does it end?

Quite. As per the Ian Gillan quote stolen by Motorhead - ‘everything louder than everything else’.

Assault is assault and anything else can surely be dealt with through sentencing guidelines?

 

[SuspectUsual]

Assault is assault and anything else can surely be dealt with through sentencing guidelines?

Absolutely. But that’s no good for populist headlines is it?

 

[styles]

Quite. As per the Ian Gillan quote stolen by Motorhead - ‘everything louder than everything else’.

Assault is assault and anything else can surely be dealt with through sentencing guidelines?

Yes I was going to mention earlier on that this is the sort of thing sentencing guidelines should account for.

Assault is assault. But if you assault an emergency worker that's an aggravating factor and you may get a harsher penalty. While this has never (as far as I know) been listed as an aggravating factor in the England & Wales sentencing guidelines, I imagine it will have been applied as such when hearing the particulars of a case. Adding it to the sentencing guidelines as an aggravating factor may be helpful in standardising.

There's no need for a separate offence though. This just muddies the water when it comes to charging etc.

There's no need for a separate tax bracket for doctors - we just need to get rid of the weird personal allowance tapering above £100k which leads to 67.5% effective marginal tax rates (actually if you add on 2% employee NI and 9% student loan, 78.5%; or if you receive tax-free childcare the effective rate can be >100%!).

 

[deltic]

So more complication.

There is no complication in raising benefits or tax allowances to compensate for additional living costs.

 

[35B]

There is no complication in raising benefits or tax allowances to compensate for additional living costs.

There are plenty of complications. Especially if you do it differentially.

Those complications tend to come at the boundaries, where reducing benefits and increasing taxes intersect and make the marginal tax rate extremely high.

The extreme case is where someone’s income goes from £99,999 to £100,000 and they have small children. The increase in tax rate, combined with loss of free childcare and some specific effects to do with NI, mean the marginal tax rate is effectively infinite, and they will be out of pocket unless they can earn something like £25k more.

The point is not how dreadful things are in that particular circumstance, but the way that creating complicated structures can have serious unintended consequences. Remember, the Income Tax system is in theory designed so that as you earn more, you pay more, but you never lose more than you gain.

 

[Falcon1200]

From a personal point of view (as perhaps are most discussions on raising more tax?), Council Tax must be reformed ASAP.

In my street there are two types of house; Semi-detached, in one Council Tax band, and detached, in the next, higher band. Except one; One detached house is in the next, higher, band again. Why? Because when the homes were valued it had already been extended and was larger. Other homes in the street have since been extended and are larger again, yet pay less Council Tax. And that's before we consider the actual income received by the occupants of these houses. IMHO a local income tax would be fairer.

(It won't come as a surprise that mine is the one house in the higher Council Tax band!)

 

[Magdalia]

The maximum holding of Premium Bonds is £50,000. Increasing it to, say, £5m would generate lots of much-needed revenue.

This would not generate any revenue, because premium bonds are borrowing, not tax.

But it would increase expenditure, through paying out more premium bond prizes. The current effective interest rate on premium bonds is 3.6%, so every £5m of new premium bond issues would require £180k of new expenditure on prizes.

 

[dcbwhaley]

1. Tax gambling winnings as income. If you get £50k from employment, or £50k in dividends/rental income, it's taxed. The same should apply to a £50k win on the horses, at the casino or on the National Lottery.

And on premium bonds?

 

[styles]

This would not generate any revenue, because premium bonds are borrowing, not tax.

But it would increase expenditure, through paying out more premium bond prizes. The current effective interest rate on premium bonds is 3.6%, so every £5m of new premium bond issues would require £180k of new expenditure on prizes.

It does however provide cash for other investment, and from the government's point of view is a low interest rate compared to traditional gilts, which are currently at 4.6% yield for a 10 year investment.

I'm not sure raising the premium bonds limit would be super helpful though. Even additional rate taxpayers are likely better off investing in a global all cap index fund and taking the tax hit than buying premium bonds. They're handy as a shorter term investment with (relatively) decent liquidity, but I don't know how many people would do well keeping >£50k in premium bonds. Apparently 670,000 people hold the maximum £50k mind, which is quite impressive.

 

[dcbwhaley]

My view on IHT is that it should never be paid by ordinary people. The bands need to be such that a "normal" family home and a "normal" level of saving should be exempt. As I said elsewhere no one in my family has ever paid IHT. No one in my family owns shares or investments or a second home. Most of them don't own a first home!

Exempting the value of the family home form IHT (just as the sale of such home is exempt from CGT) would be the way to go

 

[styles]

Exempting the value of the family home form IHT (just as the sale of such home is exempt from CGT) would be the way to go

If the home is left to children/grandchildren, the tax-free allowance for passing on a home is currently £500k, which tbh I think is fine. Perhaps it could be increased for certain London homes.