[Politics] The Budget - March 2020

[Weststander]

I know this, and I hear you. But it also causes a headache for genuine freelancers who have multiple clients and have genuine overheads and expenses.

They’re exactly the people who should not fall foul of IR35, in a fair system, imho.

Multiple (unconnected and not contrived) clients, a clincher for me.

Unless its the equivalent of two or three part jobs, where they’re under the control of the different employers on their days working for them.

 

[nwgull]

I’m not sure this is necessarily correct. Eg I don’t believe a single client IT contractor can simply switch to zero hours to circumvent the this off-payroll legislation.

You don’t circumvent the off-payroll part of it. Your hours will be paid via the employer’s PAYE system and taxed accordingly. The main impact is that the employer now has to pay employers’ NI so the rate is reduced by about 13% to account for it. It does however allow you to remain flexible, and you’ll generally still benefit from a much better hourly rate than the pro-rata pay of a staff member.

 

[Weststander]

You don’t circumvent the off-payroll part of it. Your hours will be paid via the employer’s PAYE system and taxed accordingly. The main impact is that the employer now has to pay employers’ NI so the rate is reduced by about 13% to account for it. It does however allow you to remain flexible, and you’ll generally still benefit from a much better hourly rate than the pro-rata pay of a staff member.

That’s correct.

It’s catering, in tax terms, for the new category of worker who’s not formerly employed. Operating through their limited company.

 

[WATFORD zero]

The consensus from those ex-ministers and hugely respected financial writers such as Gillian Tett is that this coming recession will be short. Caused by the pandemic. From a sharp downturn, growth over the following 4 plus years could be strong.

I voted Remain like you. But I’m not hoping that my country has a long recession to prove me right. We are where we are, I want our country to prosper.

I'm hoping, same as you, just not quite as optimistic

But seriously concerned about the experience, ability and motivation of this current cabinet

 

[Dr Bandler]

Will anyone shed a tear for a loss of some specialist accountants and agencies? The raison d’etre of many of these was simply to facilitate arrangements to circumvent tax rules, costing the country tax revenue, whilst they themselves became wealthy on the back of it.

.

In most times, no, but as we have both said, now is not the time to remove people from the economy who will contribute tax. Even though some of these people can be seen as parasites.

I was working at The Treasury (funnily enough as a contractor) when Dawn Primarolo introduced IR35, and the cost of administering it was higher than the tax take when first brought in. We need a bit of sensible thinking here.

 

[Weststander]

In most times, no, but as we have both said, now is not the time to remove people from the economy who will contribute tax. Even though some of these people can be seen as parasites.

I was working at The Treasury (funnily enough as a contractor) when Dawn Primarolo introduced IR35, and the cost of administering it was higher than the tax take when first brought in. We need a bit of sensible thinking here.

The Primarolo version seemed very naive, clever tax lawyers, ex-HMRC officials working for big accounting firms and a small army of facilitators soon riding roughshod over the new rules. I’m not sure that that government’s heart was truly determined to stop the abuse.

NSC’s socialists would be surprised to learn, the governments of the last 10 years have brought in several measures that mean those running small limited companies pay more tax than they did in the noughties, far more than slight reductions in corporation tax. The new dividend income tax band of 7.5%, IR35 for many, the cessation of recent indexation allowance against chargeable gains in companies, today’s slashing of the lifetime allowance of Entrepreneurs Relief. Plus the limits put on pension contributions and tax-free fund size.

HMRC seem confident that this time IR35 will raise significant revenue, based on £0.55B extra tax raised per annum on public sector payments to contractors since 2017.

 

[swindonseagull]

Which public services or pensions would you like to see cut to pay for your lower tax?

Any will do.

 

[PeterOut]

It's a big spend budget without a doubt, so I'm waiting to see the GDP predictions this is based on given we have 0.0 growth for the last quarter, followed by the effects of Coronavirus, followed by a worldwide recession, followed by whatever Brexit brings.

I'm sure Rishi has factored those into the underlying GDP figures the whole budget is based on, after all, he's a professional, isn't he?

Anyone know those figures (I know from experience, that they have been published as part of the Budget And want to put the five year prediction up here?

See https://www.gov.uk/government/publications/budget-2020-documents/budget-2020

Search for Chart 1.2

 

[WATFORD zero]

See https://www.gov.uk/government/publications/budget-2020-documents/budget-2020

Search for Chart 1.2

Sorry, I knew the answer, hence the question

Could be considered a little optimistic maybe

 

[Farehamseagull]

Change to a building society who looks after their members.

[tweet]1237686675507236864[/tweet]

Most of them are reducing their rates for Standard Variable and Tracker deals but HSBC have already put rates up for new fixed rate mortgages and I’m guessing the others will follow suit now.

 

[Harry Wilson's tackle]

Conservatives acclaimed for a budget of spending that outstrips the spending plans of Labour by some distance.

And Labour were ridiculed as being 'boom and bust'....

It's not what say you'll do, its who you are.

Consider this:

"I'm going to give you a night to remember"

Said by Hilda Ogden, you'd think 'no thanks'. Said by Fanny Ardant, however.....

 

[Thunder Bolt]

Most of them are reducing their rates for Standard Variable and Tracker deals but HSBC have already put rates up for new fixed rate mortgages and I’m guessing the others will follow suit now.

Tracker mortgages follow the bank base rate. Why would Nationwide announce that after the budget?

 

[Harry Wilson's tackle]

I'm hoping, same as you, just not quite as optimistic

But seriously concerned about the experience, ability and motivation of this current cabinet

I'm more with Westy here (despite voting etc etc). The Cummings government is not going to be bound by rules. That Cummings is in charge of budgetty matters is no londer a matter of debate. The Chancellor is the money expert so he can manage the detail, but yer actual 'policy' is Cummings'. That may actually work out fine - simply in operational terms it is better than having a rival government operating at number 11.

The question is whether Cummings has a trajectory, a sense of purpose, and nerve, in the budgetty areas. My worry is that in areas that don't concern Cummings (and I suspect that 'fiscal policy' doesn't much interest Cummings) the government may lurch from one plan to another according to circumstances and mood (i.e., events, dear boy), with the lurching underpinned neither by 'policy' nor purpose.

 

[WATFORD zero]

I'm more with Westy here (despite voting etc etc). The Cummings government is not going to be bound by rules. That Cummings is in charge of budgetty matters is no londer a matter of debate. The Chancellor is the money expert so he can manage the detail, but yer actual 'policy' is Cummings'. That may actually work out fine - simply in operational terms it is better than having a rival government operating at number 11.

The question is whether Cummings has a trajectory, a sense of purpose, and nerve, in the budgetty areas. My worry is that in areas that don't concern Cummings (and I suspect that 'fiscal policy' doesn't much interest Cummings) the government may lurch from one plan to another according to circumstances and mood (i.e., events, dear boy), with the lurching underpinned neither by 'policy' nor purpose.

Well the borrow/spend budget yesterday certainly confirms that Johnson has no political ideals other than to stay in power although, to be fair, I believe he has recruited a Cabinet completely in line with those principles

I was worried that Brexit, headed by Cummings was going to be a car crash, simply because Cummings doesn't have the experience and takes, I believe, a simplistic view to some very complex areas. (See the bullying/resignations/recruitment things). I also don't think he is as clever as he thinks, a recipe for disaster, everytime I have seen it in business.

I am afraid that adding in Coronavirus and a probable worldwide recession hasn't done anything to alleviate my concerns. Of course, there could always be a U-turn, but Johnson has no history of that

 

[highflyer]

I'm more with Westy here (despite voting etc etc). The Cummings government is not going to be bound by rules. That Cummings is in charge of budgetty matters is no londer a matter of debate. The Chancellor is the money expert so he can manage the detail, but yer actual 'policy' is Cummings'. That may actually work out fine - simply in operational terms it is better than having a rival government operating at number 11.

The question is whether Cummings has a trajectory, a sense of purpose, and nerve, in the budgetty areas. My worry is that in areas that don't concern Cummings (and I suspect that 'fiscal policy' doesn't much interest Cummings) the government may lurch from one plan to another according to circumstances and mood (i.e., events, dear boy), with the lurching underpinned neither by 'policy' nor purpose.

Indeed. There is definitely a sense of this budget serving a politcal purpose (stealing Labour's clothes on spending, while keeping both wealthy donors/supporters and new 'red wall' voters happy) far more than any long term economic plan. The overall effect of the fiscal measures outlined will be regressive, while they postponed the commitment to scrutiny of the budget plans against climate commitments, knowing full well that there is very little real coherence or overall economic strategy (eg this is no 'Green New Deal').

While the shift away from needless austerity is to be welcomed, the media's focus on measures related to coronavirus has actually help shield them from some potentially diffcult questions. I heard a spokesperson from the goverments treasury team getting a pasting yesterday on 5 live when pushed on questions like 'what has changed in the last three years than mean you can suddenly spend like this'? And 'why have you only started to care about anyone north of Watford since the election'? The honest answers are obvious, but cannot be stated openly. Sadly, in the main, this level of basic scrutiny will be lacking.

The resignation of Sajid Javid (how quickly we all forget). was a HUGE event - in that it signalled that perceived politcal 'necessity' will now be driving economic decision making.

 

[beorhthelm]

... And 'why have you only started to care about anyone north of Watford since the election'? The honest answers are obvious, but cannot be stated openly. Sadly, in the main, this level of basic scrutiny will be lacking.

think they've been quite open about that, talking of the north "lending their vote" etc.

 

[highflyer]

think they've been quite open about that, talking of the north "lending their vote" etc.

Indeed, but when the question is framed as: 'Why were you not interested in providing support to the north while in power for the last ten years, despite all the very obvious deprivation'? Then it is hard to answer 'we only care about people when they might vote for us' even when everyone knows it to be true!