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Equalising the generations

Equalising the generations

£10,000 to get a step on the property ladder and £2.3bn NHS Levy, funded by pensioners.

The Intergenerational Commission has produced a report which proposes to enhance the prospects of the younger generations and better fund the NHS and our social care system.

The proposal is to introduce a ‘citizen’s inheritance payment’ of £10,000 for all 25 year olds.  The payment will have restricted uses, being to provide the recipient with a deposit for a property or to provide vital capital to invest in a new business.

The £10,000, if introduced would be financed by replacing Inheritance Tax with a new lifetime receipts tax.  This would tackle widespread avoidance of Inheritance Tax and the tax would be payable by the recipients, rather than the estate.  Such a receipts based gift tax does operate in other parts of the world, France for example and its introduction here has been mused by government in the past.

Property Tax Proposals

In addition, the Intergenerational Commission’s report proposes halving Stamp Duty Land Tax for first-time buyers (but not those who own multiple properties) and offering a Capital Gains Tax cut for selling properties to first-time buyers.  The intention of both these moves would be to put first-time buyers in a much stronger position in the housing market.  With ever increasing house prices, for many the only hope of owning their own home is to turn to the bank of mum and dad or to accept they will be long term renters.  This provision could offer the hope of securing a property deposit however there will of course be those who just miss out on qualifying for the payment by virtue of their age, fairness in any system to be introduced will need to be addressed.

Equalising the generations

In order to further assist the younger generations, the following further recommendations were made:

  • Introducing indeterminate tenancies.
  • Providing rent stability with a three year ‘light touch’ policy.
  • Regular contracts for zero hour’s contract workers.

The health and care needs of the elderly were also addressed and proposals were made to help improve the health and social care packages for older people.  These include:

  • Introducing a £2.3bn NHS levy to improve NHS finances.  Rather than raising NICs for working age people it will be funded by introducing an additional charge to National Insurance contributions on people in employment and self-employed who are over the State Pension age.
  • A further funding boost could be achieved by replacing council tax with a progressive property tax, where payments would be deferred for those families who are asset-rich but income-poor. A new model for the provision of care should also include a contribution towards their care for those who can afford it, subject to strict limits.

In spite of a growth in the economy of 15% over the last 15 years, these recommendations are determined by research which indicates that there is no difference between the disposable incomes of millennials aged thirty and the generation before them at the same age.

Our Tax Specialists are here to keep you fully compliant with all tax legislation.  We won’t just save you money, our team will ensure all deadlines are met and that any relevant tax planning opportunities are taken advantage of.  Contact one of our tax team today so you don’t pay a penny more than you have to.

Posted: May 24th, 2018