May's "ordinary working people"?

[teamsaint]

the NIC change is a bit of a kick in the teeth for the self employed, but in terms of tax they will have to pay, it is a pretty minor, though unwelcome change. And AFAIK, class 2 NIC has just been abolished ( I think) which was a modest gain for elf employed people.

Schedule D for the self employed is also widely recognised to be more generous than Schedule E( PAYE) in terms of allowances.
None of which addresses the basic issues of illogical marginal rates.

[Sir Velo]

One thing I noted in the article from the previous sentence is that tax is paid on "profit" for self employed persons. Perhaps such people should make sure that they don't actually make any "profit". I don't really understand this, but the wording strikes me as a bit odd. Of course people who are poorly paid may have to be quite ingenious to offset their "profits" and it would be both time consuming, and also perhaps difficult to claim allowed expenses, whereas some of the very rich in our societies seem to find that kind of behaviour quite easy to do.

Not really if you think about it. Corporation tax is paid on profits (adjusted for disallowable expenditure) and has been since the year dot. There really would be very little incentive to go into business on your own if for example you were taxed on turnover, with the very different margins that pertain to different types of business activity.

Re claiming expenses: HMRC will look into the type of business that a person is involved in and calculate what sort of profit margin they would expect. Anything which shows a wildly different result, particularly where profit might appear to be understated, will be challenged. In that case, any self employed person had better make sure they have bona fide records to support their returns. Of course, if you can afford a good accountant you might be able to convince the revenue that more of your expenditure should be allowable.

[ahinton]

One thing I noted in the article from the previous sentence is that tax is paid on "profit" for self employed persons. Perhaps such people should make sure that they don't actually make any "profit". I don't really understand this, but the wording strikes me as a bit odd. Of course people who are poorly paid may have to be quite ingenious to offset their "profits" and it would be both time consuming, and also perhaps difficult to claim allowed expenses, whereas some of the very rich in our societies seem to find that kind of behaviour quite easy to do.

If self-employed people generate no profit, they'll have nothing on which to live. Profit to the self-employed is equivalent to salary before taxes to the employed. Simples.

Anther feature of this Budget is supposedly an increase in and widening of crackdowns on suspicious tax avoidance schemes and blatant tax evasion; the simpler the tax system, the harder it is for taxpayers to get around its provisions and requirements.

[Dave2002]

If self-employed people generate no profit, they'll have nothing on which to live. Profit to the self-employed is equivalent to salary before taxes to the employed. Simples.

Anther feature of this Budget is supposedly an increase in and widening of crackdowns on suspicious tax avoidance schemes and blatant tax evasion; the simpler the tax system, the harder it is for taxpayers to get around its provisions and requirements.

Surely there are allowed expenses, or even the salary sacrifices. I've never been self employed, so I don't know. If people aren't making any money at all, should they then not have to go on "benefits"? Some self employed people are consultants, who, I understand often form companies which then employ themselves. However many other people are sole traders, or working in small partnerships, and I have no idea what kind of status HMRC think they have. I'm not talking about people who are able to comprehend the workings of the tax system, but many "ordinary" workers who may, or may not, be paying tax - doing jobs such as window cleaning, gardening etc., many of whom struggle to survive, and provide whatever services they do, without having a clue about tax and filling in tax forms.

[Barbirollians]

Because there was a preelection pledge NOT to raise Class 1 NI. But Class 4 is not the same as Class 1, so that's all right.

No that is not true . There was a pre election pledge not to raise NICs when they put their silly Act of Parliament in place shortly thereafter this was limited to Class 1 .

[Lat-Literal]

True, of course, but that doesn't make this latest gaffe any better of more justifiable.


Why? Against what risks does it "insure" whom? How do people claim on it as they do when necessary on their car insurance, private health insurance, home insurance &c.? NIC4 doesn't even come with any state benefit entitlement attached!


I can't see the logic in that. State retirement benefit is no different to any other state benefit in terms of how it is funded, namely from the taxes of one kind and another that the state receives during the couple of weeks or so prior to paying them out. State retirement benefit involves no pension fund into which taxpayers can invest their "pension contributions" and then vest it at retirement or whenever they might choose at a certain age, so to call it a "pension" is thus a misnomer, as it is quite unlike actual pensions, be they employer based or personal; it is a benefit like all other state benefits funded out of the taxes that other people pay.


...which is by no means confined to the self-employed! Anyway, what would?


What state retirement benefits and actual pensions do have in common is that they are liable to tax, so to that extent "the most needy" will be paying the least tax (or none at all) on their state retirement benefit whereas those with six-figure incomes from pensions, earnings/profits, investments et al will be paying the most tax back to the state on theirs; the latter for the most part hardly even notice the state retirement benefit that they receive upon reaching what I imagine will have to be the ever increasing qualifying age.

Yes, the terms do need changing. Get rid of "National Insurance Contributions" for starters and be honest and call them "tax"; indeed, merging the two 9which has been considered in the past but never actually done) would itself save the state - i.e. all of us - a fortune in itself.

Thank you for your comments which I found interesting.

We have always had different opinions on these matters.

[Lat-Literal]

And ?

Grouping all "self-employed" people together is daft
Many of the richest people are also "self-employed" for tax purposes
but for many of us who are self-employed musicians (which is the vast majority) this is terrible

Perhaps it is daft to group them. I think there can be considerable differences between small shop holders whose finances can easily be checked and tradesmen roaming from place to place. But I believe Hammond who is, of course, a multi-millionaire - he could be far more transparent in his own finances - has said the change will be no more than 60p pw.

I don't think I could bring myself to do that. It has been suggested that I join the "Cons", with some notion that I could "change it from within". That approach has not been perceived as a successful way for the UK to deal with the EU, and it could be argued that both the EU and the UK were just not willing to change sufficiently for an outcome acceptable to the UK electorate, which has turned out to be the case. I would probably rather not vote (and I would be disgusted with myself for not doing ....) or vote for any of the other minority parties, though it would not have a significant effect as the area where I live now would vote for the Tories even if the candidate was just a labelled pot of lard.

I've not realy digested the content of the budget yet - http://www.bbc.co.uk/news/business-39193938

One thing I noted in the article from the previous sentence is that tax is paid on "profit" for self employed persons. Perhaps such people should make sure that they don't actually make any "profit". I don't really understand this, but the wording strikes me as a bit odd. Of course people who are poorly paid may have to be quite ingenious to offset their "profits" and it would be both time consuming, and also perhaps difficult to claim allowed expenses, whereas some of the very rich in our societies seem to find that kind of behaviour quite easy to do.

Well joining them would be a dramatic step!

[Dave2002]

I see (or rather hear) that Mr Hammond has been playing numbers games. Of course many people are employed by others - hence he dismissed the remaining percentage as not particularly significant. (Today programme, this morning). I think he managed to eliminate 85% percent of "workers" that way, leaving a "mere" 15% - many of whom might actually "be better off". Trouble is, he may be right - there might be a lot of the "devil in the detail" depending on how one looks at it, and/or plays the game.

[french frank]

No that is not true . There was a pre election pledge not to raise NICs when they put their silly Act of Parliament in place shortly thereafter this was limited to Class 1 .

You probably know, as I only read the news: "Mr Hammond told BBC Breakfast that "no-one had objected" when this legislation made clear the "no increases" pledge did not include NI rates for the self-employed." Surely the government knows what it's doing … :erm:

[Lat-Literal]

My advice to all the musical entrepreneurs is to charge 12p extra per gig if undertaking five performances per week and 6p extra per gig if undertaking ten performances.

If the audiences all suddenly disappear, there is something wrong with the act.

[greenilex]

I don't imagine most musicians as part of the gig economy, but perhaps I am wrong and they originated the term...

[ardcarp]

"Mr Hammond told BBC Breakfast that "no-one had objected" when this legislation made clear the "no increases" pledge did not include NI rates for the self-employed."

Yes, it's absolute b******s isn't it?
Nothing damages a politician's cred more than trying to wriggle out of trouble by weaselly tricks with words.
I was very pleased to hear Mr Hammond being given a good kicking by Phil Robinson on R4 this morning on this very subject.

[ardcarp]

I have become increasingly aware of how plumbers, electricians and the like - some are relatives - have overtaken ordinary workers in the public sector to the extent of having mansions here and holiday homes abroad. The 4 x 4 and the second and third vehicle etc etc. That is essentially the difference between decades of public sector workers having tax deducted at source and [? plumbers, etc. ?] every day being [? paid ?] cash in hand.

I hope my suggestions in square brackets are what you meant. L-L. If you are suggesting that some plumbers, electricians, builders, etc are criminally avoiding paying tax, then I agree with you that they should not and that HMRC should make more effort to stop these practices. If you are suggesting that a hard-working plumber, electrician, builder, etc...an 'ordinary working person' in fact....should know his place and not aspire to earn as much as a company director then I disagree very strongly. I also agree that many public sector workers are not paid as well as they should be, especially those at the chalk-face cf the 'execs'.

The Tories have always said they support enterprise and value working (though not necessarily working-class) people. One would suppose that someone starting a small business (shop, cafe, boat-builder, taxidermist, whatever) might be encouraged in their enterprise, an enterprise which is unlikely in its early stages to do more than scrape a living. The increase in Class 4 NIC sends all the wrong messages, and has let a (probably accidental) cat out of the bag about who the Tories really represent.

[Lat-Literal]

I hope my suggestions in square brackets are what you meant. L-L. If you are suggesting that some plumbers, electricians, builders, etc are criminally avoiding paying tax, then I agree with you that they should not and that HMRC should make more effort to stop these practices. If you are suggesting that a hard-working plumber, electrician, builder, etc...an 'ordinary working person' in fact....should know his place and not aspire to earn as much as a company director then I disagree very strongly. I also agree that many public sector workers are not paid as well as they should be, especially those at the chalk-face cf the 'execs'.

The Tories have always said they support enterprise and value working (though not necessarily working-class) people. One would suppose that someone starting a small business (shop, cafe, boat-builder, taxidermist, whatever) might be encouraged in their enterprise, an enterprise which is unlikely in its early stages to do more than scrape a living. The increase in Class 4 NIC sends all the wrong messages, and has let a (probably accidental) cat out of the bag about who the Tories really represent.

Here are the details of the NI rise for public sector workers since the election.

You might have missed it because no one commented except The Independent, briefly, and one part of Unison:

http://paullewismoney.blogspot.co.uk/2015/11/national-insurance-rise-for-millions.html

There might be a question as to whether higher NI payments at higher salary levels sends out the wrong message to those in the public sector who could strive for promotion.

However, I have never heard that argument being put forward, nor has there been any evidence to suggest that it has ever been a factor in people staying on the same grade.

[teamsaint]

I hope my suggestions in square brackets are what you meant. L-L. If you are suggesting that some plumbers, electricians, builders, etc are criminally avoiding paying tax, then I agree with you that they should not and that HMRC should make more effort to stop these practices. If you are suggesting that a hard-working plumber, electrician, builder, etc...an 'ordinary working person' in fact....should know his place and not aspire to earn as much as a company director then I disagree very strongly. I also agree that many public sector workers are not paid as well as they should be, especially those at the chalk-face cf the 'execs'.

The Tories have always said they support enterprise and value working (though not necessarily working-class) people. One would suppose that someone starting a small business (shop, cafe, boat-builder, taxidermist, whatever) might be encouraged in their enterprise, an enterprise which is unlikely in its early stages to do more than scrape a living. The increase in Class 4 NIC sends all the wrong messages, and has let a (probably accidental) cat out of the bag about who the Tories really represent.

Many Sub Contractors in the construction industry have tax deducted at source.

https://www.gov.uk/what-you-must-do-as-a-cis-subcontractor/pay-tax-and-claim-back-deductions