The budget

[gingerjon]

9 hours ago, Saintslass said:

'Their manifesto and the subsequent National Insurance (Rate Ceilings) Act 2015 that prevents the Government from raising National Insurance rates, referred to Class 1 Contributions only. It never covered class 4 contributions or Class 2 (which are being scrapped anyway next year).' (As cited by Saint Toppy above)

According to a snap Sky poll - very scientific, obviously - 56% are in favour of the NI rise for the self-employed.  I wasn't involved in the poll but I'm in favour of it, not least because I didn't know the self employed paid less in NI contributions.  I don't see how them paying less can justified. 

 

I think they should pay the same - however I don't think we should be raising taxes on earned income whilst cutting them on unearned incomes such as inheritance tax.

I presume the lower rate was to acknowledge that self employed people enjoy fewer employment perks and need to support themselves at times when they are sick etc rather than turning to statutory sick pay or employee benefits.

[RidingPie]

Well at least they've delayed the change to quarterly reporting for sme's for 12 months. Let's face it all that's going to happen there is that my accountancy bills will go up by x 4

[Trojan]

I listened to Nick Robinson on the Trotskyite BBC this morning interviewing John McDonald on the NI rise for the self employed.  Whilst Mcdonald wanted to talk about the affects on the low paid gig economy self employed, Robinson repeatedly interrupted him to ask about some mythical management consultant on £52K pa.  What a tosser that man really is.  He's not fit to lace James Naughtie's or John Humphreys' boots, let alone wear them.

[ckn]

2 hours ago, gingerjon said:

I think they should pay the same - however I don't think we should be raising taxes on earned income whilst cutting them on unearned incomes such as inheritance tax.

I presume the lower rate was to acknowledge that self employed people enjoy fewer employment perks and need to support themselves at times when they are sick etc rather than turning to statutory sick pay or employee benefits.

Absolutely, when I was self employed I had inevitable periods of no work, everyone doing consultancy type work gets it while pitching for new work. I got no income and was not eligible for any benefits. I got no paid leave, no sick pay, no employment protection at all and had also to pay for my own costs of business.

There's also the hit of the dividend hit for owner directors. That wouldn't have hit me but it will hit most who operated like I did.

Lots of hits for small businesses.

[Griff9of13]

Apparently the thinking behind the increase in NI for self employed is that there has been a significant rise in self employment over recent years; the ration between employed and self employed having been fairly constant over the previous decades. This is now having a direct impact am the total amount of NI collected. The question that needs to be asked is, is this a rise in entrepreneurship in the UK or is it down to the "gig" economy using self employment contracts for their employees in order to dodge employment laws?

There was a high profile case here in London a couple of weeks ago where a plumbing company, Pimlico Plumbers lost a case in the high court when an employee of theirs took them to court over workers rights. Their emplees had to use Pimlico Plumbers vans,Pimlico Plumbers  uniforms and weren't allowed to take on work for anyone other than Pimlico Plumbers, yet Pimlico Plumbers claimed they were self employed. 

[ckn]

In fact, I was just thinking of it over breakfast just now.  There's far easier ways to get the disguised employees, make it a law that companies have to declare for each person working for them on zero hours or self-employed basis (individuals) whether that role could be done by a permanent employee, if so then they're treated as an employee for tax and NI purposes but also gain all the rights and protections of an employee on a similar basis.  That means paid leave, sickness, etc but also still no full rights until they've been there two years, once they're there for two years though, regardless of any enforced absences, they get full rights.  If they're not in that class then the company has to justify why it's truly a one-off bit of work that deserves to be outside of the rules.

Sorts the tax avoidance, sorts the scandal of low-paid "employees" being forced into self-employment and is the ethically right thing to do.

The government won't though as it'd hit big companies, the way they're doing it hits small companies disproportionately.  For example, if they did it the way I suggested then a substantial portion of contractors coming into the NHS through the Capita run CL1 process would immediately have far higher costs and would reduce substantially almost overnight, directly hitting the untouchable Capita's profit line.

[Griff9of13]

8 minutes ago, ckn said:

For example, if they did it the way I suggested then a substantial portion of contractors coming into the NHS through the Capita run CL1 process would immediately have far higher costs and would reduce substantially almost overnight, directly hitting the untouchable Capita's profit line.

Do Capita employ a large number of contractors? I used to work for one of it's main competitors in the SI market and they employed very few contractors.

[ckn]

21 minutes ago, Griff9of13 said:

Do Capita employ a large number of contractors? I used to work for one of it's main competitors in the SI market and they employed very few contractors.

NHS CL1 interim process is Capita run, we have to use them for every contractor. They go out to the market, i.e. other recruitment agencies, the other agencies keep the interim on their books, pass on the interim cost plus their charges to Capita who then pass it onto the NHS plus their own costs. Adds no value at all but adds cost and at least two to four weeks to bring someone new in.

[ckn]

According to Hammond this morning, all of the tax rises and failures to increase funding for services was because of Brexit.

[Saint Toppy]

1 hour ago, Griff9of13 said:

Apparently the thinking behind the increase in NI for self employed is that there has been a significant rise in self employment over recent years; the ration between employed and self employed having been fairly constant over the previous decades. This is now having a direct impact am the total amount of NI collected. The question that needs to be asked is, is this a rise in entrepreneurship in the UK or is it down to the "gig" economy using self employment contracts for their employees in order to dodge employment laws?

There was a high profile case here in London a couple of weeks ago where a plumbing company, Pimlico Plumbers lost a case in the high court when an employee of theirs took them to court over workers rights. Their emplees had to use Pimlico Plumbers vans,Pimlico Plumbers  uniforms and weren't allowed to take on work for anyone other than Pimlico Plumbers, yet Pimlico Plumbers claimed they were self employed. 

I don't think its just down to that. As you alluded to in the 2nd part of your post there have been several court cases over the last few years with the outcome being that the 'self employed' are now entitled to far more 'benefits' similar to staff than they used to be.

Part of the argument for the self employed paying less in NI was that they had to then pay themselves for a whole range of other benefits that they didn't get as staff. Now that gap has closed somewhat I think its only right they contribute more than they used to because they're entitled to more than they used to.

[RidingPie]

I do fall in this category and I'm not torn up about it.

what I would like to see is big business pursued for the same % tax increase that they've come after the little guys for. 

That would net the treasury far more. We're all in it together. 

[nadera78]

10 minutes ago, RidingPie said:

I do fall in this category and I'm not torn up about it.

what I would like to see is big business pursued for the same % tax increase that they've come after the little guys for. 

That would net the treasury far more. We're all in it together. 

That's not going to happen. The reductions to Corporation Tax since 2010 mean the government receives over £10billion less p/a. Obviously, our public services are so awash with cash that they don't need that money.

[GeordieSaint]

24 minutes ago, nadera78 said:

That's not going to happen. The reductions to Corporation Tax since 2010 mean the government receives over £10billion less p/a. Obviously, our public services are so awash with cash that they don't need that money.

What's the rationale behind it? Are we attracting enough investment from other Corporations to offset the loss of tax or is it simply a tax cut for their mates?

[RidingPie]

As far as I know the rationale behind it is that big corps are likely to put more money through the uk if the corporation tax is lower. I've seen no evidence it works though. 

[nadera78]

8 minutes ago, GeordieSaint said:

What's the rationale behind it? Are we attracting enough investment from other Corporations to offset the loss of tax or is it simply a tax cut for their mates?

 

2 minutes ago, RidingPie said:

As far as I know the rationale behind it is that big corps are likely to put more money through the uk if the corporation tax is lower. I've seen no evidence it works though. 

This^^

[Griff9of13]

10 minutes ago, RidingPie said:

As far as I know the rationale behind it is that big corps are likely to put more money through the uk if the corporation tax is lower. I've seen no evidence it works though. 

They may be putting extra money through UK PLC, however that may be via a PO box type company address registered here without any actual business activity taking place on UK soil that would be of a benefit to the economy. 

[RidingPie]

Just now, Griff9of13 said:

They may be putting extra money through UK PLC, however that may be via a PO box type company address registered here without any actual business activity taking place on UK soil that would be of a benefit to the economy. 

Again though, I've never seen a material benefit. If that were the case corp tax receipts would increase. 

[PC]

4 hours ago, ckn said:

There's also the hit of the dividend hit for owner directors. That wouldn't have hit me but it will hit most who operated like I did.

Yes, they've dropped the tax free threshold from £5,000 to £2,000. That's a hell of a drop, and I will suffer, personally. Why the government are on this drive to equalise the tax structures for contract and permanent staff is beyond me.

[Bedford Roughyed]

18 minutes ago, PC said:

Yes, they've dropped the tax free threshold from £5,000 to £2,000. That's a hell of a drop, and I will suffer, personally. Why the government are on this drive to equalise the tax structures for contract and permanent staff is beyond me.

Because companies and 'freelancers' are using the rules to avoid tax whilst operating the same as permanent staff.  Its been going on for years with higher earners but now the lower wage workers are doing the same its seen to be an issue.

(lower wage workers don't seem to have a choice, whilst the higher wage earners its a conscious thing) 

[PC]

16 minutes ago, Bedford Roughyed said:

Because companies and 'freelancers' are using the rules to avoid tax whilst operating the same as permanent staff.  Its been going on for years with higher earners but now the lower wage workers are doing the same its seen to be an issue.

(lower wage workers don't seem to have a choice, whilst the higher wage earners its a conscious thing) 

As an engineering contractor, I don’t have a lot of choice. Employers pretty much demand that you are a Limited Company. Yes, there are certain things I offset against tax, but there’s not that much these days. Of course, if the government want to make it a legal requirement that contractors receive the same holiday pay, sick pay, employment rights and out of work benefits that permanent staff get, then that’s a different scenario. Somehow I can’t see that happening.

All that will happen is that contractors and agency staff will endeavour to go permanent, but this will create a number of issues.

1. Various parts of the economy rely on contract staff. In my field of engineering, a lot of a companies business is project based, and there are peaks and troughs associated with this. Contract staff take up the slack when needed, and move on when not needed.

2. The NHS and councils use a fairly large number of agency staff in front line nursing and social work roles. New rules mean that they will have to pay the same tax an NI as a permanent staff member. Most of these people will sack of agency work, meaning that there will be a shortage of frontline staff, but more pressure on already overstretched services.

3. I may pay a smaller percentage of tax, but due to the higher rate that I earn, I will pay more tax as an absolute figure. Pushing people to permanent may actually result in a smaller tax take by HMRC.

As you said, the idea isn’t really to punish people like myself, but we inevitably get caught in the crossfire. While the high earners it’s aimed have enough money to pay a decent tax consultant and find new ways of avoiding paying tax.

Sorry to go off topic there, but I just felt the need to rant.

[shrek]

56 minutes ago, PC said:

As an engineering contractor, I don’t have a lot of choice. Employers pretty much demand that you are a Limited Company. Yes, there are certain things I offset against tax, but there’s not that much these days. Of course, if the government want to make it a legal requirement that contractors receive the same holiday pay, sick pay, employment rights and out of work benefits that permanent staff get, then that’s a different scenario. Somehow I can’t see that happening.

All that will happen is that contractors and agency staff will endeavour to go permanent, but this will create a number of issues.

1. Various parts of the economy rely on contract staff. In my field of engineering, a lot of a companies business is project based, and there are peaks and troughs associated with this. Contract staff take up the slack when needed, and move on when not needed.

2. The NHS and councils use a fairly large number of agency staff in front line nursing and social work roles. New rules mean that they will have to pay the same tax an NI as a permanent staff member. Most of these people will sack of agency work, meaning that there will be a shortage of frontline staff, but more pressure on already overstretched services.

3. I may pay a smaller percentage of tax, but due to the higher rate that I earn, I will pay more tax as an absolute figure. Pushing people to permanent may actually result in a smaller tax take by HMRC.

As you said, the idea isn’t really to punish people like myself, but we inevitably get caught in the crossfire. While the high earners it’s aimed have enough money to pay a decent tax consultant and find new ways of avoiding paying tax.

Sorry to go off topic there, but I just felt the need to rant.

Was the same when I was an IT contractor, your either LTD or go through an Umbrella Company, there was no other option.  I've never really understood why the government doesn't make a move to push more down the Umbrella route, companies like Parasol have tens of thousands on the books, but claiming expenses etc within in agreed limits with HMRC and for everyone doing this its one less one man band LTD company HMRC has to police.

Would go down like a lead ballon amongst the contractor community, but just seems logical to me, I'm sure there's a logical argument why they don't, just never seen it myself.

[Griff9of13]

4 minutes ago, shrek said:

Was the same when I was an IT contractor, your either LTD or go through an Umbrella Company, there was no other option.  I've never really understood why the government doesn't make a move to push more down the Umbrella route, companies like Parasol have tens of thousands on the books, but claiming expenses etc within in agreed limits with HMRC and for everyone doing this its one less one man band LTD company HMRC has to police.

Would go down like a lead ballon amongst the contractor community, but just seems logical to me, I'm sure there's a logical argument why they don't, just never seen it myself.

Parasol have changed their expenses reclaiming process so that they no longer deduct expenses from weeks/months payments but make you claim back from HMRC at the year end via p87.

[shrek]

7 minutes ago, Griff9of13 said:

Parasol have changed their expenses reclaiming process so that they no longer deduct expenses from weeks/months payments but make you claim back from HMRC at the year end via p87.

lol - I'm so out of touch, not two years since I've been out as well!

[Trojan]

On ‎3‎/‎9‎/‎2017 at 8:27 AM, Trojan said:

I listened to Nick Robinson on the Trotskyite BBC this morning interviewing John McDonald on the NI rise for the self employed.  Whilst Mcdonald wanted to talk about the affects on the low paid gig economy self employed, Robinson repeatedly interrupted him to ask about some mythical management consultant on £52K pa.  What a tosser that man really is.  He's not fit to lace James Naughtie's or John Humphreys' boots, let alone wear them.

Sorry to quote myself, but on Friday morning Tom Tugendhat (?) and David Willetts were interviewed on the same subject.  It was noticeable how polite Robinson was to them.  They were allowed to get their points across, without constant interruption and hectoring.  So much for left wing bias at the Beeb.

[ckn]

Another hit on smaller businesses, Daily Mail link, this time a VAT one.  The flat rate scheme is an excellent system that allows small businesses to not have to micro-manage VAT, especially relevant for small businesses with lots of small transactions with differing VAT charging rates, by simply paying a flat reduced VAT on all income but not being able to reclaim VAT on purchases except in very specific circumstances.

Add that to the NI thing that's got the attention of the media.  And then the rate rise idiocy that'll see large commercial companies get some big cuts while NHS hospitals and small businesses get massive increases.