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[the grumpy old men] 24/7/2019 12:24

Adam Smith Institute
The Window Tax
July 24, 2019
The Window Tax
Madsen Pirie

It was on July 24th, 1851, that the hated Window Tax was finally abolished. Introduced under King William III, it was not intended to hit poor people, and exempted cottages, but was designed to be in proportion to the wealth of the taxpayer. An income tax was thought too intrusive, because the government had no business knowing how much people earned. The Window Tax was initially levied in two parts. People had to pay 2 shillings annually (a tenth of a pound) per house if they had fewer than 10 windows, 6 shillings if they had between 10 and 20, and 10 shillings for those with more than 20 windows. In current values, 2 shillings then would be worth about £13.50 now.

Of course, taxes change behaviour, and dynamic models must take this into account. The tax did not raise the hoped-for sums because many people responded to it by bricking up some of their windows in order to avoid it. Visitors to Britain stare in fascination at some of our old houses, noting that where there was clearly once a window, there are now bricks or plaster. Sometimes this can be seen in whole rows of terraced houses. New houses were built with fewer windows to avoid the tax.

In Scotland a Window Tax was introduced after 1748. A house had to have at least seven windows, or a rent of at least £5 to come under the tax. When it was increased in the 1780s, some Scots opted, instead of bricking up windows, for the less costly recourse of painting them black, with a surrounding white frame. These were known as Pitt’s Pictures, after the prime minister of the day, and can still be seen in some places.

The Window Tax was unpopular, because it was seen by some as a tax on "light and air." The tax was increased many times, especially during the wars with France, but it was halved by the reforming administration of 1823, and ended altogether in 1851 after popular agitation.

It does provide a salutary lesson for those who would levy taxes. Increases in tobacco duty might be intended to raise money or to make people smoke fewer cigarettes, but they also encourage smuggling. Increases in alcohol duties might be for revenue or to cut alcoholism, but they also lead people to opt for cheaper booze, and in Scotland, perhaps even for opioids.

Stamp duties on house purchases result in fewer transactions because people stay put in order to avoid it. This leaves the elderly staying in larger homes than they need once their children have left, leading to a market shortage of homes suitable for young and growing families. There is a point at which income tax increases produce a fall in revenue as people put in less work and use tax-shelter schemes to avoid paying them. Higher corporation taxes lead corporations to locate elsewhere, and higher capital taxes lead people to move it beyond the reach of the tax man.

A ruling of the United States Supreme Court stated that "The legal right of an individual to decrease the amount of what would otherwise be his taxes or altogether avoid them, by means which the law permits, cannot be doubted," and a judicial ruling in the UK declared almost a century ago that the law did not require a person to pay the maximum tax if they could avoid doing so.

Two things in particular irritate those who would spend our money as they wish rather than as we wish. One of these is tax competition, which gives people the option of moving assets and earnings to lower tax environments. And the other is the ability of people to modify their behaviour in order to escape the incidence of taxes levied upon it. The history of the Window Tax is a good lesson.

[brancho] 18/7/2019 20:04

Are three yesr carry forward rules regarding pension relief no longer available?

[rhcm] 02/7/2019 09:32

Adrian, thanks for the update. Very sad news.

[adrian j boris] 02/7/2019 08:34

rhcm

sadly our inhouse super tax expert,miata, is no longer with us

RIP

He would have responded staightaway

other posters fill in the best they can, more to keep his memory alive

[rhcm] 01/7/2019 14:22

.double post

[rhcm] 01/7/2019 14:21

Hi sarkasm
I was trying to avoid phoning HMRC as the last time i had a wait of about 1 hour. I was hoping for a reply from MIATA but i see he/she hasn't posted for a while. Alternatively someone who has actually filed their return electronically who had foreign dividends in excess of £300.

[sarkasm] 01/7/2019 13:34

sorry rhcm for unhelpful response

why not ask the experts






and let us kow what they sayeth

[rhcm] 01/7/2019 11:29

Thanks for the reply but it does not answer the question - can foreign dividends in excess of £300 be submitted on line or does do you have to fill in a paper self assessment.

[rhcm] 01/7/2019 08:52

If you have foreign dividends in excess of £300 can you file your self assessment online or do you have to fill in a paper version .ie with form sa106.
thanks

[zangdook] 16/6/2019 07:31

post 1480

"£100bn supercomputer"

The revenue spent a hundred billion on a computer? Must be an Apple.

[waldron] 03/6/2019 06:50

Taxpayer Who Owed No Tax Must Pay Late-Filing Penalties
By
Steven Wilson -
June 3, 2019
0
86
taxes

The courts have backed HM Revenue & Customs for a second time for imposing thousands of pounds of self-assessment late-filing penalties on a taxpayer who owed no tax.

Barry Edwards had argued HMRC was unfair to him by asking for penalties and interest when his tax returns showed he had no tax to pay. Before the First Tier Tribunal, but lost his case and appealed to a higher court.

The Upper Tribunal heard that Edwards had received late-filing assessments of almost £4,000 for three tax years – £1,300 plus interest for 2010-11; £1,600 plus interest for 2011-12; and £980 plus interest for 2012-13.

But HMRC argued that if a taxpayer was asked to file a self-assessment return, they must do so regardless of if they owe any tax.

Because of this, Edwards should have filed his returns and as he did not, the penalties were raised.

[la forge] 27/5/2019 16:06

Do you qualify for a Council Tax discount? Here's how to find out

If you are disabled, have a health condition or are a carer, you could be overpaying on council tax without even knowing it

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ByEmma MunbodhDeputy Money Editor

14:26, 27 MAY 2019Updated14:31, 27 MAY 2019

Money
Woman putting pound coin in model house money box
Many councils have come under fire for their aggressive tax collection methods against people who simply cannot afford it (Image: Getty)
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Thousands of people in the UK could be overpaying on council tax because they're unaware they qualify for a discount, the Government has warned.

It comes after charities slammed councils for their controversial tax collection methods that have resulted in forced entries from bailiffs and low income familes being slapped with thousands in fees for missed payments .

A new council tax guide explains that while most tenants and homeowners over the age of 18 will have to legally pay the levy, there are a few circumstances where it becomes the owner's responsibility, such as in the case of:

Empty homes
Nursing homes and other similar homes
Houses of religious communities
Houses in multiple occupation (where rooms are let individually)
Residences of staff who live in houses which are also occupied by an employer
Residences of ministers of religion

Elsewhere, other groups such as students are exempt entirely, while those who live alone or with dependents can get a 25% discount.

Local Government Minister Rishi Sunak MP, said: "Council tax is a vital source of funding for local government, supporting most of the day-to-day services we all use and rely on.

"However, no one should be paying more than their fair share. We want to help people keep more of what they earn which is why we've produced this easily-accessible guide explaining the discounts and exemptions available – many of which people may never even knew existed."

Full exemptions include when an entire household are full-time students, if a person has recently moved into hospital or a care home or if all people in the household have a mental impairment, such as dementia.

There are also family discounts for annexes, the armed forces, and separate rules for when someone passes away. Here's what you need to know.

[grupo] 27/5/2019 07:56

Council tax ‘only regressive tax in the UK’
By:
Dominic Brady
27 May 19

The UK’s taxes on the whole are progressive – with council tax being the only one that is regressive, an economic think-tank has said.

Direct taxes including income tax and National Insurance Contribution work alongside benefits to reduce inequality, the Institute for Fiscal Studies claimed in a briefing note today.

Council tax, however, is markedly regressive as it is not linked to income, with the poorest tenth of the population paying 8% of their income on council tax, while the next 50% pay 4-5% and the richest 40% paying 2-3%.

Pascale Bourquin, an author of the briefing note and research economist at IFS, said: “Council tax is clearly regressive, income tax and NICs are significantly progressive, and we should probably think of indirect taxes as being broadly distributionally neutral.”

She added: “The tax and benefit system significantly reduces the gap between rich and poor, with benefits playing a particularly big role.”

The IFS said their findings were contrary to the conclusions of the Office for National Statistic’s annual report on taxes and benefits from May last year.

The NAO report suggested taxes had a “negligible221; effect on income inequality. “Contrary to the ONS’s claim, taxes do also reduce inequality,” Bourquin added.

Before tax the highest-income fifth of individuals on average have an income that is 12 times as large as that of the poorest fifth. But after, including benefits and deducting direct taxes, this ratio falls to five, the IFS said.

While the UK tax system is progressive “benefits are considerably more so”, the IFS claimed. The think-tank found that at any point in time 30% of individuals are in households that receive more in cash benefits than they pay in direct and indirect taxes.

Dominic Brady

PF reporter

[waldron] 22/5/2019 07:17

publicfinance.com


English councils ‘face £52bn funding black hole’
By:
Emily Twinch
22 May 19

English councils could be forced to make draconian cuts to local services if Westminster does not pump extra cash into local government to avoid a £51.8bn black hole over the next six years.

This is according to the County Councils Network, which released figures today saying that even if local government in England raised council tax by 2.99% per year between 2019 and 2025, the funding gap would still be more than £30bn.

Paul Carter, CCN’s chair, said: “Over the last decade councils have played a crucial part in reducing the deficit, but the yearly compounding effect of funding cuts and rising demand means that the situation is fast becoming untenable.

“This research demonstrates the need for government to provide all councils with additional resources at the Spending Review, with the most significant financial challenges being experienced by county and metropolitan authorities most in need.”

The £51.8bn funding gap would only maintain services as they are currently run, the CCN added – plugging it would not improve or enhance them. The £30bn figure assumes that central government would allow councils to raise council tax bills by 2.99%, the organisation also said.

Councils in England were likely to end up offering residents a ‘bare minimum core offer’ to residents unless government provides extra funding, the CCN warned. “Yearly council tax, using their reserves, and making services more efficient and productive, will not be anywhere near enough to fill the funding gap".

If the Spending Review does not happen this year – as seems possible because of Brexit uncertainty – Westminster should provide English local government with emergency funding for the next year, council leaders have told the CCN.

County councils, which have responsibility for adult social care and cover 46% of England’s population, were expected to be worse hit – as they have limited ability to raid reserves or introduce fees to charge for services, the umbrella group pointed out.

“If government does not provide additional funding for councils over the medium term, many local authorities will resort to providing the bare minimum, with many vital services all but disappearing, particularly preventative services,” Carter added.

“Even these draconian cuts won’t be enough for many well run councils to balance the books, and it will leave our finances in disarray with many of us struggling to deliver even the basic level of local services.”

CCN commissioned the consultancy giant PwC to carry out the research, which looked at government figures using a formula developed by consultancy Pixel Financial Management.

Emily Twinch

Deputy editor