Serious Money

An American reader puts down his copy of The Razor’s Edge by Somerset Maugham and, after taking  a sip or two from a glass of Riesling, writes to remind me that in 1976 the UK Labour government was compelled to borrow almost £4 billion from the IMF. That’s about £30 billion in today’s money. It was a bitter pill and there was wrangling within the Cabinet. Some advocated rejecting the loan and imposing strict import and currency controls. The loan came with strings that the IMF pulled.  Put simply, a feckless Labour government dropped the UK in the mire, a situation only too familiar to Greeks today.

What is the connection between Uncle Fred (a PG Wodehouse character) and the Piccadilly Line? Hmmm, Uncle Fred was an Earl, so how about Earls Court? That was my, incorrect, answer. Uncle Fred was the Earl of Ickenham and Ickenham is a station on the Piccadilly Line. That was the sort of question served up by Paul Kent in a quiz at a recent meeting of the P G Wodehouse Society. The winning team were presented with shrimping nets so that they could join Jeeves on holiday in Herne Bay.

If you are a UK taxpayer and live on dividend income you will have received a nasty shock in the Budget. To refresh your memory, from 6th April 2016 the first £5,000 will be tax free and income in excess of that will be taxed at 7.5% (previously nil). Higher rate taxpayers wil pay 32.5% (previously 25%). As you know, these rates are lower than those for earned income as the companies paying these dividends have already paid Corporation Tax. Had there been even a 1% increase in Income Tax on earned income we would have heard the howls of protest from as far away as the Hebrides. People living on dividends are more stoic. And, incidentally, calling dividend income “unearned income” infuriates me. It should be called income derived from a lifetime of prudently saving so that you will not be a burden to the taxpayer in your old age.