Asset Values

[Vagophile]

Need bigger extremes

This was a real life example. Interesting that my friend managed to choose a house that sold well above the average value.

 

[soulstyledevon]

Not in the current uk system, once you hit £100k per year income you loose £0.50 of the tax free allowance for every £1 over £100k that you earn, up to approx £122k where your allowance is reduced to zero. So there is potentially no benefit at all to the 10th man.

Between £100k and £150k you pay the equivalent of 60% tax.
Yet earnings above £150k are taxed at £45%...??

 

[Bellcrew]

Not quite correct. Tax is payable on dividends. But remember dividend is taken from a taxed amount in the first instance. Pensions are a different matter and a tax free allowance is available plus an offset, but tax is payable once this is taken up and free pay allowance surpassed.

I pay myself dividends. If I paid myself the higher amount, total tax take would be 57.1% made up of 19% corporation tax + 38.1% dividend tax. Salary is a cost.

​

Those employer and employee National Insurance contributions are just another little absurdity in the system that many seem to avoid.

 

[soulstyledevon]

This was a real life example. Interesting that my friend managed to choose a house that sold well above the average value.

If your friends house in Kenilworth is only valued at £500k, it’s not that special.
I sold a faceless semi there two years ago at £400k and the markets risen 16% since.

 

[andyinluton]

Between £100k and £150k you pay the equivalent of 60% tax.
Yet earnings above £150k are taxed at £45%...??

Not quite, from £100k until your personal allowance is wiped out is at 60% then it reverts to 40% up to £150k where it goes up to 45%

With current NI £1000 pay rise converts into £380 in the pay packet

 

[Velma's Dad]

I pay myself dividends. If I paid myself the higher amount, total tax take would be 57.1% made up of 19% corporation tax + 38.1% dividend tax. Salary is a cost.

Unless I've misunderstood you, that's not quite right. If I own a business (or part thereof) that generates profits of £1m, on which it first pays £190k corporation tax then distributes the whole net profit after tax as dividend, I pay 38.1%** on that reduced amount, and the total effective tax rate is 49.9% (not 57.1%).

** Noting that that's the 'additional rate' of dividend tax, on >£150k.

Of course in practice most business profits are reinvested and if realised will probably eventually be as CGT, at 20%. That is then a total effective rate of just 35.2% even taking into account the corporation taxes, even on extremely large amounts of unearned income.

 

[pjm-84]

Okay. I've never paid myself that much so had to work it out.

On 100k profit / 19k Corporation tax and £30,861 in dividend tax on the remaining 81k so yes you're correct on the figure. Doesnt feel so bad now! So £49,861 tax bill on £100k. Off course this is after >150k

CGT no good for me (had to look CGT up). The business is a service* so very little value once the key directors go. (*Luckily not in taxiation)

 

[pjm-84]

Those employer and employee National Insurance contributions are just another little absurdity in the system that many seem to avoid.

Its a way of paying yourself that is advised by accountants.I am an employee of the company and an shareholder / owner. I have two roles. If I dont make a profit I dont get paid. Imagine if you have to pay NIC on investment income?

Anyway quite a few came a cropper in 2020 missing out on furlough / self employment support. No support for directors paid via dividends

Yes the government gave me £10k grant during lockdown 1. However costs for my unused office came to £8k. Disruption to my small business probably cost me a further £20k. And I will pay £26k corporation tax bill to HMRC in Jan.

 

[willwander]

Bitcoin just hit a new all time high
One Bitcoin now $33,000

You may laugh, but it’s been my best performing asset over the last 5 years

 

[GrumpyGranddad]

Bitcoin just hit a new all time high
One Bitcoin now $33,000

You may laugh, but it’s been my best performing asset over the last 5 years

I have to confess I really don’t understand Bitcoin (and other Crypto currencies). What drives up (or down) the value? I’ve read that a value of >$100,000 is predicted this year.

 

[Amarillo]

I have to confess I really don’t understand Bitcoin (and other Crypto currencies). What drives up (or down) the value? I’ve read that a value of >$100,000 is predicted this year.

Bitcoin is a pyramid scheme, a little like a Ponzi scheme, where new investors fund old investors.

 

[GrumpyGranddad]

Bitcoin is a pyramid scheme, a little like a Ponzi scheme, where new investors fund old investors.

So a collapse is inevitable at some point and those who bought in late will feel the pain.

 

[Velma's Dad]

Bitcoin (and other crypto currencies) is not a Ponzi scheme. It's a currency, not backed by any intrinsic assets but then neither are pretty much any national currencies since the abandonment of the gold standard in the 1930s.

Like all currencies, Bitcoin's functions are to be a means of exchange and a store of value. In terms of the third function of a currency, to be a unit of account, Bitcoin is less relevant.

Also like all currencies it's subject to speculation that, to date, has made is exchange rate against conventional currencies like the US dollar highly volatile.

No, its collapse is not inevitable, if you mean will it 'go bust'. But whether its recent bull run since August will be sustained is entirely open to question.

 

[willwander]

I have to confess I really don’t understand Bitcoin (and other Crypto currencies). What drives up (or down) the value? I’ve read that a value of >$100,000 is predicted this year.

It’s basically a hedge against inflation since there is a fixed supply...a bit like gold, but it is easier to trade and store than physical gold, it is decentralised so cannot be controlled or manipulated by governments (who have a habit of just printing more money)...or anyone else for that matter, nor do you need a central clearing bank to make transactions. Basically no one can control/manipulate/meddle with it, that is why governments and banks fear it.

 

[Amarillo]

So a collapse is inevitable at some point and those who bought in late will feel the pain.

Like all currencies, how long it will last is uncertain. The British Pound at ~1200 years old is the longest surviving currency. The Bitcoin is a relative newcomer, but its collapse is probably not imminent but almost certainly inevitable.

 

[Morsels]

While banks can print money, any store of value that is genuinely of limited quantity will, everything else being equal, always outperform bank-issued currency. Over time, it isn’t even close. It‘s why gold has held its value since Roman times. Bitcoin has that advantage, and is also devilishly ingenious. I personally believe in it and am glad to be invested in it. That said, I have only invested what I am prepared to lose...

 

[GrumpyGranddad]

Bitcoin (and other crypto currencies) is not a Ponzi scheme. It's a currency, not backed by any intrinsic assets but then neither are pretty much any national currencies since the abandonment of the gold standard in the 1930s.

Like all currencies, Bitcoin's functions are to be a means of exchange and a store of value. In terms of the third function of a currency, to be a unit of account, Bitcoin is less relevant.

Also like all currencies it's subject to speculation that, to date, has made is exchange rate against conventional currencies like the US dollar highly volatile.

No, its collapse is not inevitable, if you mean will it 'go bust'. But whether its recent bull run since August will be sustained is entirely open to question.

Interesting, thanks.
I’m too risk averse to go anywhere near it

 

[Vagophile]

When I've seen articles about bitcoin, there is mention of banks of computers doing something related to it. can anyone explain?

 

[willwander]

When I've seen articles about bitcoin, there is mention of banks of computers doing something related to it. can anyone explain?

Simplified version...
Anyone can earn Bitcoin by processing Bitcoin transactions and doing the accounts/bookkeeping...this is called Bitcoin mining.
Computers compete against each other for the privilege of doing this work, by solving a pointless cryptographic puzzle. The first one to solve it gets to do the bookkeeping and is therefore paid and makes the money.
The puzzle they have to solve takes a huge amount of computing power, which uses a huge amount of electricity.

It is estimated that Bitcoin mining currently uses the same amount of electricity as a medium sized country like Switzerland or the Netherlands.

Crazy really

 

[GrumpyGranddad]

Simplified version...
Anyone can earn Bitcoin by processing a Bitcoin transaction and doing the accounts/bookkeeping...this is called Bitcoin mining.
Computers compete against each other for the privilege of doing this work, by solving a pointless cryptographic puzzle. The first one to solve it gets to do the bookkeeping and is therefore paid and makes the money.
The puzzle they have to solve takes a huge amount of computing power, which uses a huge amount of electricity.

It is estimated that Bitcoin mining currently uses the same amount of electricity as a medium sized country like Switzerland or the Netherlands.

Crazy really

Even more bizarre the I imagined. I’m feeling old

 

[willwander]

Even more bizarre the I imagined. I’m feeling old

It’s even more bizarre than that... the whole thing was created by a mysterious individual called ‘Satoshi Nakamoto’ nobody knows who he is. He posted it on the internet, then disappeared, never to be heard of again.

 

[Amarillo]

It’s even more bizarre than that... the whole thing was created by a mysterious individual called ‘Satoshi Nakamoto’ nobody knows who he is. He posted it on the internet, then disappeared, never to be heard of again.

If you were creating a gargantuan pyramid scheme in which many people would lose millions and you’d make billions you’d want to be anonymous.

 

[soulstyledevon]

If you were creating a gargantuan pyramid scheme in which many people would lose millions and you’d make billions you’d want to be anonymous.

Insert
“Evil Cackle”

 

[willwander]

Bitcoin hitting new highs
One Bitcoin now ~$55,000
Up ~70% from my last post in January

 

[Amarillo]

Bitcoin hitting new highs
One Bitcoin now ~$55,000
Up ~70% from my last post in January

The higher it goes the further it has to fall, more people will make more money, more people will loose more money, and more electricity than the needs of Sweden will be expended each year in the hunt for “free” Bitcoin which has no intrinsic value whatsoever, and no government to support it when it collapses.