*** The 2017 Budget *** Official Matchday thread

[soistes]

Such talk is muddying the big difference between the self employed and those who are employed company owners.

The self employed cannot really control how much tax they pay apart from refusing working or taking it in a different tax year. No different to an employed person taking a job either side of the tax year to benefit from whatever rates are on offer at the time.

I see no reason why the self employed should not have the same NI as an employed person. Remember, they still don't have employer NI to contend with.

Company owners can control their income by choosing when dividends are paid. Remember, dividends are now taxed and are paid from profits AFTER the company has paid corporation tax. So an additional rate tax payer would pay dividend tax at 38.1% after the company has already paid 20% corporation tax. Conversly the self employed or employed person in such a tax bracket would only be paying 2% NI over and above £827pw.

Conclusion is that the additional NI rate for the self employed is justified but any more tinkering the dividend tax rates that would penalise the company owners who already risk all and create jobs would not be a great move.

An easy target is the huge reliefs that are avaialble to the wealthy with regards to savings. Most will consider themselves lucky if they have £50 left to save at the end of the month, yet from April the ISA limit is increasing to an astonishing £20,000. So, if you earn enough money to be able to save £20,000 a year, you can do so and not pay a penny tax on it. I should stress that this allowance is in addition to the £1000 we can earn in interest without paying tax. At today's paltry interest rates, one might need £100k save to use this allowance to the max.

Also, note that the ISA limit has been increasing year on year. There are now a large number of wealthy people who have been able to shelter over £1m in ISA's and not pay a penny tax on their interest or dividends. How can this be just? A well invested £1m pot would likely be generating up to £50k a year income and if this was tax normally the government coffers would be boosted by £10k to £27500 for each ISA millionaire.

Then we have the hugely genourous limits for pensions. Who can afford to to save £40k into their pension each year? If you are rich enough HMRC will give you tax releif at your margin rate which could mean if you earn loads you just need to pay £22k of your own money and the government will put in £18k gratis!

But it gets worse! If you have not used your pension allowance from previous years, you can use this year's allowance and the previous 3 years! Mental.

Conclusion

ISA's:-

Make it so that the maximum than can be held tax free in an ISA is £100,000. And reduce the annual ISA limit to £6000. If you are lucky enough to be able to save £500pm then go for it. This move would earn HMRC billions in extra tax and might at the same time encourage those who have huge sums in their ISA's to take it out and spend it, thus helping the economy.

Pensions:-

Eliminate the ability to backdate pensions 3 years with immediate effect. A compromise might be to allow one year so that contracters with erratic incomes can take advantage in their better years. At the same time, reduce the annual limit to £30,000 from £40,000 but give everyone tax relief at 30%. It's simply not fair that someone on £150k PA gets over twice as much tax releif as someone on the average wage.

This move would ensure the maximum tax liabiilty HMRC have per person would be £9000 instead of the £76,500 you could get in releif this year!

This is a good post - and I say that as someone lucky enough to have benefited hugely from both ISA and pension tax reliefs. However, it's perfectly possible to do the rational thing on these as an individual, if you can afford to, and still recognise that these tax subsidies for the well-off are both hugely regressive and do little or nothing to incentivise entrepeneurialism or economic activity.

 

[soistes]

View attachment 82704

Not so good over last 8 years and not at ALL good compared to other advanced countries. We are the ONLY advanced economy where GDP increase is matched with real wage decrease since the bankers crashed the economy.

There are different (and in my view, better) ways to interpret this chart. For example, see the interesting discussion in
https://mainlymacro.blogspot.co.uk/2017/03/why-its-your-bloody-gdp-not-ours.html

 

[Herr Tubthumper]

"In 2010 the Conservatives' original target was to eliminate the deficit by 2015. That has since slipped year-by-year and in November's Autumn Statement Mr Hammond pledged to eliminate it "as early as possible in the next Parliament".
But the OBR said: "The deficit falls little in 2020-21 and 2021-22, while the ageing population and cost pressures in health are likely to put upward pressure on the deficit in the next Parliament."

Can't be trusted to run the economy.

 

[Pavilionaire]

This was a tax rise in itself. Before this was introduced basic rate tax payers didn't pay any dividend tax as they was the rather complex tax credit where one was charged 10% and then had it refunded. The rates paid by higher and top rate tax payers on dividends was much lower so when the change happened the allowance eased what was a massive hike in taxation on those who received dividends.

Your 2nd point, although factually correct on the surface actually means that the company has an extra £450 available to distribute as a dividend. A top rate tax payer would lose 38.1% of this extra £450

The £5,000 Dividend Allowance - plus the abolition of the £2,000 Employment Allowance for single director companies - were huge reasons why making spouses second directors and shareholders were so attractive.

As for your final point, how many directors are actually earning £150K+? For most of them - especially with spousal involvement - almost all are below £100K and most are at or below £45K Higher Rate threshold so suffering just 26% CT and dividend tax combined.

 

[Joe Gatting's Dad]

All savings into ISAs are from previously taxed income. The idea is to encourage people to save so that they can gain a tax free benefit, reducing their ultimate dependence on the state when they are older.

 

[Pavilionaire]

Crikey I hope this poster has donned his armour before all the feminists shout at him.

Let's get real here. When a young mum calls up and says she can't come into work because her kid is sick and she has no childcare, but will make the time up later, what exactly is the boss going to say?

 

[Herr Tubthumper]

As a feminist, I did think about it. but then decided not to bother.
I have a job and a life. Can't fight every battle.

You will be expected to. Otherwise those tiresome right-wingers, you know, the ones who can't criticise an actual case in hand as they know deep down they don't have an argument , will snipe and call you a hypocrite.

 

[vegster]

To be fair almost everything will be up in the air when the Brexit negotiations hit the fan. All we have learned today is that ( Allegedly ) we have a strong and robust economy (Zero Hours contracts and enforced self-employment ) and that this is paying for the increase in funds for the NHS ( Spending on the NHS always increases due to inflationary forces ) .. Unfortunately, many people have yet to see a recovery in their own economies' since the recession, and, as expected, there is little real cheer for many in this budget.

 

[heathgate]

eh? On what possible basis would you describe her as 'Anti-Tory'? Being a bit nasty to the Donald?
There is very little to spin because the budget was almost entirely inconsequential. Look at the estimates for financial implications of the various announcements. Square root of bugger all. He basically said nothing except that they will carry on as they were. Which is screwing the poor in favour of the rich. See FT graph above...

Nasty... she simply asked the same question a dozen times... about NIC for self employed .. class 4 only in fact... not the specifics.. just trying to muck rake on the manifesto content from 2015..

Sent from my SM-G920F using Tapatalk

 

[vegster]

All savings into ISAs are from previously taxed income. The idea is to encourage people to save so that they can gain a tax free benefit, reducing their ultimate dependence on the state when they are older.

If people were paid more there would be better tax returns for the government and an increase in the size of the economy, who knows, people might be able to save for their retirement too rather than just make ends meet ?

 

[Pavilionaire]

As a feminist, I did think about it. but then decided not to bother.
I have a job and a life. Can't fight every battle.

I don't know what planet you're on but you give feminism a bad name. As a small employer I've worked through my employee's maternity leave, then been flexible about whether she is up to working 3, 4 or 5 days, eventually settling on the hours she has chosen to work, I've coped with the sudden unannounced days off because of her child is ill, she is ill, her childcare has cancelled and so on. I don't mind this because she is good and doesn't take the piss. However, the arrangement is basically flexible working.

 

[kingcole]

If people were paid more there would be better tax returns for the government and an increase in the size of the economy, who knows, people might be able to save for their retirement too rather than just make ends meet ?

That's a very simplistic response. If I paid my staff more my company would need to raise our prices which would mean inflation or worse, my customers buy from China as they are cheaper.

The socialist like this idea though and every time its leads to doom. Just check the inflation rates under labour governments

 

[portslade seagull]

"In 2010 the Conservatives' original target was to eliminate the deficit by 2015. That has since slipped year-by-year and in November's Autumn Statement Mr Hammond pledged to eliminate it "as early as possible in the next Parliament".
But the OBR said: "The deficit falls little in 2020-21 and 2021-22, while the ageing population and cost pressures in health are likely to put upward pressure on the deficit in the next Parliament."

Can't be trusted to run the economy.

Bit unfair with that assumption. Whoever is in control faces the issue of an aging population. This in turn ups the pressure on the NHS and homecare. With the pensioners outnumbering the workers raising taxes seems the only option. Most governments seem a little reluctant to do this but at some time in the future it will have to be visited.

 

[vegster]

That's a very simplistic response. If I paid my staff more my company would need to raise our prices which would mean inflation or worse, my customers buy from China as they are cheaper.

The socialist like this idea though and every time its leads to doom. Just check the inflation rates under labour governments

Every year my store manager expects an increase in takings of 10% at least, yet for the last two years " times were tough " and we had to skip our annual pay review, I have luckily just negotiated a rise of 4% starting this week, my first rise since 2014 ! My take home pay is £1240.00 pcm and my tax is reducing to a point where I will be beneath the tax threshold in the next few years. This also means I don't have the cash to spread about so I shop as cheap as I can.
I really wouldn't mind trying high inflation because the current model of economy certainly isn't working for me.

 

[Westdene Seagull]

Flexible hours is not something that is the preserve of the self-employed. Try employing female staff with young children - you're basically agreeing to flexible hours dependent upon child sickness, child care availability.

And why shouldn't female staff with young children have flexible working hours ? It would seem a tad unfair to deny them it when the fathers have it.

 

[Ernest]

"In 2010 the Conservatives' original target was to eliminate the deficit by 2015. That has since slipped year-by-year and in November's Autumn Statement Mr Hammond pledged to eliminate it "as early as possible in the next Parliament".
But the OBR said: "The deficit falls little in 2020-21 and 2021-22, while the ageing population and cost pressures in health are likely to put upward pressure on the deficit in the next Parliament."

Can't be trusted to run the economy.

#longtermeconomicplan

 

[Hampster Gull]

ISAs contributions are made from post tax income, high earners have already been taxed at a progressive rate. Seems sensible to move towards aligning NI contributions

 

[nicko31]

Nothing that major in the budget today, Hammond is cautious and with the uncertainty ahead he should be.

As I suspected there was nothing for the JAMS, May's speech at Tory party conference was just hollow words that sounded good on the stage

 

[Herr Tubthumper]

Bit unfair with that assumption.

Not at all. It's on their watch so they're to blame.

 

[Herr Tubthumper]

Nothing that major in the budget today, Hammond is cautious and with the uncertainty ahead he should be.

As I suspected there was nothing for the JAMS, May's speech at Tory party conference was just hollow words that sounded good on the stage

Typical Tory bullshit, pretending to care whilst looking after themselves and their rich mates.