Non-partisan mini-budget predictions thread

MattMattMattUK

mebu60 said:

MattMattMattUK said:

mebu60 said:

MattMattMattUK said:

mebu60 said:

Combine Income tax and NI into one single Income Tax.

How do you see this working?
(I made an observation on this point earlier in the thread).

I see it working exactly as intended, those who do not pay NI would pay the combined income tax rate rate, largely pensioners earning more than the LEL. 

Earning or receiving? Huge difference. 

It depends on the source, eg. standard income would be taxed as income, dividend as dividend etc.
Base rate from LEL up to £50k would be 32%, although that should probably be increased.
Higher rate from £50-100k (ideally lowering the threshold for the additional rate) to 42%.
Higher rate from £100k upwards 47%.

What about the large and not necessarily wealthy demographic that does not currently pay NI, are they to be taxed at 32% rather than 20% for their base rate on all income? 

Yes, at the increased rate.

t1redmonkey

eskbanker said:

t1redmonkey said:

The changes being made for investors sound terrible, I only get about £600 dividends per year so I'm not a big investor at all but looks like even I will be paying tax on that in a couple of years time

Perhaps the companies concerned will reduce their dividends as the recession takes hold....

Maybe, but I have a sharesave scheme through my employer that I pay into every month so it'll probably drag me in regardless.

Is the fact they're choosing not to decrease the Personal Savings Allowance a signal that they want more people to save, so to discourage spending and possibly contribute to bringing down inflation do you think?

MattMattMattUK

t1redmonkey said:

The changes being made for investors sound terrible, I only get about £600 dividends per year so I'm not a big investor at all but looks like even I will be paying tax on that in a couple of years time

You will pay £8.25 in dividend tax at the base rate, hardly enough to mean investing becomes terrible. 

ColdIron

t1redmonkey said:

The changes being made for investors sound terrible, I only get about £600 dividends per year so I'm not a big investor at all but looks like even I will be paying tax on that in a couple of years time

While I agree with the sentiment (I have a large unwrapped income portfolio) I don't think £8.75 is going to hit you too hard  

t1redmonkey

I was talking generally, not for me specifically.

dunstonh

It is worth noting it was said that they are going to look into how unearned income is taxed in the UK and will report on it in the future.  

sammyjammy

I wonder how many people will end up on NMW that aren't now.  Its depressing, we have a race to the bottom.  

mebu60

MattMattMattUK said:

What about the large and not necessarily wealthy demographic that does not currently pay NI, are they to be taxed at 32% rather than 20% for their base rate on all income? 

Yes, at the increased rate.

Certainly not going to happen two years (or less) before a General Election. If ever. 

MA260

The Living wage is rising to £10.42 per an hour. This would mean someone on full week would be earning over 20K per Year. There will be a lot of people who will now be affected by the minimum wage increase that were just 3/4 years ago well above it, even though they will have received average salary increases in the meantime. How does anyone see this affecting the labour market given smaller pay differentials on these salary levels, especially given the 32% tax on earnings at this level meaning a lot more people will be earning similar amounts . For instance someone 3/4 years ago would have been earning say 3-4K less than another person , but this gap likely to be closed to a much smaller amount. 

Also Public sector pay levels such as in Health are going to be a lot lower than 10%. Might they come under more staffing pressure for people content to earn slightly less money outside the sector with smaller differentials in pay?

Band7

t1redmonkey said:

The changes being made for investors sound terrible, I only get about £600 dividends per year so I'm not a big investor at all but looks like even I will be paying tax on that in a couple of years time

If you are a small investor, why are your investment not all in tax shelters? Are your investments not eligible for an ISA and/or a SIPP?