TAX FEATURE: Tax and the long distance commuter. By Dan Martin

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Dan Martin speaks to AccountingWEB members for their views on the tax implications of long distance commuting.

By 2016, 1.5 million people will be working in the UK but living overseas, research from travel firm Thomson recently claimed. The report predicted the rise of an "overseas commuter belt" will be driven on by high UK house prices, low cost flights, flexible working hours and modern technology developments. Long distance commuters will also benefit from not having to pile into overcrowded public transport on their way to work.

But what potential impact does this trend have for the UK tax system? In what way, if any, will it change the way we levy taxes and should the system be...

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28th Jul 2006 14:25

Just a quick one.
Isn't the housing market cyclical? I only ask because the Land Registry shows that half the country has seen falling house prices since 2004.
New builds are said to have dropped 12% in the south west, and that was from the people who built them.
Mervin King and the IMF have both said that the UK economy cannot support current prices.

It is said that the only way the Economic Cycle continues is that intelligent people are surprised by it every time.
But this it the most clearly recorded boom/bust market in history.

Come on people, the housing market has been about nothing else but the sale of a massive amount of credit in a low inflation environment.
The accountants out there can do the maths.

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31st Jul 2006 10:12


Immigration has been one of the more controversial causual arguments for the housing boom.
It is one that people tend to want to avoid discussing, it is also simple to debunk.
If you look at the actual figures of birth and deaths, immigration to the UK and people migrating from the UK you will see that we have infact more houses per head of capita then at any time in history.
The new builds are also outstripping any possible growth in demand with a new home being created for every 2.1 people that the population grows by. At the start of the boom, there was a home for every 2.76 people, in 2004 it was down to 2.6 and it is getting better all of the time
No, it is not true, people do not want to live alone.
The demand created by immigrants that is pushing the housing marker up is a smoke screen to hide a good old fashioned speculative market.
Another name for a speculative market is the "greater fool market"
Remember, a bull is always eventually wrong, a bear is always eventually right. Investment has only ever been about timing.

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By rdowney
28th Jul 2006 13:31

Tax Avoidance not Illegal therefore not immoral.
Mr Gauden seems to be following labour's line in trying to make tax avoidance 'immoral' , we all avoid tax when we choose not to purchase goods, decide not to work extra hours is that immoral too?

If people want to live abroad and work here then that is a free market working, just as hopefully over time the UK will have to adjust its high tax burden downwards to compete with the rest of the world otherwise more and more of the most talented people will leave and not just for the weekend!

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28th Jul 2006 16:48

Fuel - housing is immigration, airline duty is stupidity
This housing boom is being fueled by massive influx of people moving here from many places of which the government dare not measure their numbers or origin.

The latest re-estimate/revision a.k.a. increase seems to 'guess' at half a million... that is several time more than the build of new homes...

Hence supply and demand is creating paper-based inflation which no-one dare pull-the-plug upon because the effects would not just cripple the economy but more importantly to GB - the government would be in financial melt-down.

Regarding the article as a whole - the sad thing is that the jobs that can be done remotely are:
1. Often highwe value-add compared to 'service industry' - plumber, joiner, chef, waiter etc..
2. Open to be done by people other than ex-pats - this is a danger as well as an opportunity. Indian call centres may have given this option a bad name initially but the principle holds.

Regarding the issue of influencing behaviour - 20 years ago I was thought 'odd' when I was proclaiming that the only practical way to build a better UK transport infrastructure was to make it clear to both industry and the public that the real (above inflation) rate of increase in petrol prices would be 5-fold OVER TWENTY YEARS... That allows long-term planning by both types of consumer about 'where to live', 'what car to buy', 'is it economic to provide a bus service from xx to yy?', 'should I invest in a warehouse hub near motorways or rail facility?' etc...

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28th Jul 2006 12:53

cause and effect
The problem I have with all of this is that it is trying to use the tax system (and making it more complex as a result) to solve several different supposed problems.

The two key problems aired are the loss to the Revenue as a result of international commuting, and the environmental impact of cheap air travel.

So ask yourself, is it cheap air travel that is the cause of increasing international commuting?

Then ask yourself, is increasing international commuting causing any real losses to HM exchequer?

And then finally ask yourself, will imposing "carbon taxes" solve the problem of emmissions.

In fact there is no simple answer to any of this. All you can really say with any authority is that tickering with the tax system in response to this phenomenon will simply make the tax system more complex. If you think differently then you have fallen into the "its common sense" trap. But what is patently obvious is that gradually the cost of collecting taxes in the UK is rising. It is one thing to moan about the extent of the tax collected from your pay packet, but it is something else when you realise how much of that take is to finance the taking of it!

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