Corbynomics: A Dystopia

Thrugelmir

Malthusian wrote: »

If Corbyn is elected then an 8% increase in corporation tax is the least thing small business owners will have to worry about as they are ground into the ash heap of history by the march towards a post-capitalist economy.

That's if the relentless march of Amazon to dominate doesn't get them first.

lisyloo

dunstonh wrote: »

Earlier in the year, Philip Hammond get his fingers burnt by proposing a very small increase in NI for the self-employed. Yet there was massive outrage and it was dropped.

I didn't have a big issue with the rise per se, but I had a huge issue with directly breaking a manifesto commitment.

Corbyn is proposing an increase in corporation tax of 26%. This will affect small company owners including builders, plumbers, bakers to name a few.

The increase would be to 21% for small companies.
If labour get in then our company might cease to exist and we'll have to move. That's more of a concern to us.

tincans6

dunstonh wrote: »

Earlier in the year, Philip Hammond get his fingers burnt by proposing a very small increase in NI for the self-employed. This would have been averaged around 60p a week (not unfair considering the self employed now qualify for full state pension and not basic - work approx £40pw extra). Yet there was massive outrage and it was dropped.

Corbyn is proposing an increase in corporation tax of 26%. This will affect small company owners including builders, plumbers, bakers to name a few. The Conservatives have it planned to drop to 18%.

This extra 8% difference is going to cost small business owners thousands of pounds a year. Yet you don't see any sort of outrage from business owners.

Examples.

A plumber with a profit of £24,000 a year. At 18% CT, he pays £4320 a year. At 26% CT, he pays £6240 a year. That is an extra £1920 a year tax.

A business with a profit of £40,000 a year. At 18% CT that is £7200 a year. At 26% CT, that will go to £10400 a year. An extra £3200 a year in tax.

Do small company directors realise this?

Probably not but then Corbyn has said that small company corporation tax would be set at 21%

So basically a load of scare mongering nonsense.

Thrugelmir

lisyloo wrote: »

I didn't have a big issue with the rise per se, but I had a huge issue with directly breaking a manifesto commitment.

A hole dug by Cameron and Osborne though. About time the tax code was simplified.

BobQ

dunstonh wrote: »

A plumber with a profit of £24,000 a year. At 18% CT, he pays £4320 a year. At 26% CT, he pays £6240 a year. That is an extra £1920 a year tax.

A business with a profit of £40,000 a year. At 18% CT that is £7200 a year. At 26% CT, that will go to £10400 a year. An extra £3200 a year in tax.

Do small company directors realise this?

They are not very astute business people if they do not.

These figures are not taxes on personal income. The business owner is probably only employing himself and his wife. Both probably get a low salary from the business, paying little or no income tax. They probably have both their cars as business expenses and draw a dividend taxed at basic rate when they need it.

I realise that small business owners like yourself are being asked to pay a little more tax but please do not pretend that you are not in a very good position to avoid tax

http://bishopfleming.co.uk/dividend-tax-change-in-2018/

Spidernick

Thrugelmir wrote: »

A hole dug by Cameron and Osborne though. About time the tax code was simplified.

A tutor on a tax training course I went on once said:

'I love it when governments ''simplify'' tax laws, as it gives me so much work to do.' He was talking about Capital Gains Tax (which just gets extra layers of complication added to it every few years as part of the 'simplification' process), but could equally apply to most taxes!

lisyloo

BobQ wrote: »

They are not very astute business people if they do not.

These figures are not taxes on personal income. The business owner is probably only employing himself and his wife. Both probably get a low salary from the business, paying little or no income tax. They probably have both their cars as business expenses and draw a dividend taxed at basic rate when they need it.

I realise that small business owners like yourself are being asked to pay a little more tax but please do not pretend that you are not in a very good position to avoid tax

http://bishopfleming.co.uk/dividend-tax-change-in-2018/

And national insurance.
An astute company director would avoid NI altogether.

Very easy to avoid paying much tax if you earn less than £110k and have a partner e.g. £10k income, £30k divs each, £40k pension.

A spouse who is earning can salary sacrifice into pension down to minimum wage and use their basic rate tax band for divs.

The rules are wrong IMO but I'm playing by the rules and the only people fit to criticise are those who have volunteered to pay more tax than they had to.

We won't complain but we will withdraw our labour and skills at the point we are disincentivised.

Mr_Costcutter

How do we achieve 'a land of milk and honey' because that's essentially what most people are looking for - aren't they? If we want the UK to be a country where living conditions are good and people have the opportunity to make enough money to lead a life where every moment isn't a struggle to survive, then something has to radically change - guess that's obvious. However, my feeling is that no political party has the answer to this fundamental problem - although they might think they have. As for the rest of the issues which confront them - they seem to be at a complete loss there too. I'm completely disillusioned with the lot of them!

BobQ

lisyloo wrote: »

And national insurance.
An astute company director would avoid NI altogether.

Very easy to avoid paying much tax if you earn less than £110k and have a partner e.g. £10k income, £30k divs each, £40k pension.

A spouse who is earning can salary sacrifice into pension down to minimum wage and use their basic rate tax band for divs.

The rules are wrong IMO but I'm playing by the rules and the only people fit to criticise are those who have volunteered to pay more tax than they had to.

We won't complain but we will withdraw our labour and skills at the point we are disincentivised.

Thanks for being open about the reality of these arrangements.

I do appreciate that there are risks to this method of trading but when I hear those who have these tax advantages by choice implying they are hard done by I find it rather disingenuous.

Thrugelmir

Mr_Costcutter wrote: »

How do we achieve 'a land of milk and honey' because that's essentially what most people are looking for - aren't they? If we want the UK to be a country where living conditions are good and people have the opportunity to make enough money to lead a life where every moment isn't a struggle to survive, then something has to radically change - guess that's obvious. However, my feeling is that no political party has the answer to this fundamental problem - although they might think they have. As for the rest of the issues which confront them - they seem to be at a complete loss there too. I'm completely disillusioned with the lot of them!

What gets overlooked is that higher taxes are paid by someone. So higher Corporation Tax for example. Will be paid by employees (wages), customers (higher prices) or shareholders ( pensions). All the talk of spending £50 billion or whatever the figure is. Comes at a considerable long term cost to someone.