Non-partisan mini-budget predictions thread

coastline

Cash savers have suffered for years but there's a bit more hope now with products around 4%. Investors have done very well over two decades. In 2000 PEP'S were replaced with ISA'S and the PEP allowance was £3,000/£6,000 a year. Today ISA is still £20,000. Can't complain at all. Over a decade you can build up substantial sums for early retirement especially as personal pensions are locked until 57 yo. Pension plans have tax breaks still intact. Overall a massive improvement in recent years. Platform fees are better and no bid/offer spread on funds. Great. I doubt many would want to turn the clock back ?
Todays 10.1% increase in state pension and benefits is also good news. Could have been worse. The rest well you'll just have to get on with it. Inflation is difficult situation and hopefully it eases next year. 

t1redmonkey

Band7 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

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?

It's an Employee Share Plan, which I don't think can be held within an ISA.

Exodi

sammyjammy said:

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

MA260 said:

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.

As an employer with around 30 staff, the increases proposed by the government are scary. We used to pay a decent chunk above minimum wage, but after the past couple of years of relentless cost increases, we are now expecting to finally have our production staff drop onto minimum wage.

We are now staring down the barrel at a possible 9.7% wage increase for minimum wage workers, following a 6.6% wage increase proposed last year. Our managers and senior managers certainly will not be receiving 9.7% increase, nor did they receive a 6.6% increase last year. We're also mindful of the future issue of managers thinking "why am I accepting all these additional responsbilities, when I'm no longer being paid a reasonable amount more".

I don't know what the answer is, keep putting up our prices up I guess? Our gross margin has already taken a battering this year.

talexuser

I assume the dividend rates are staying the same, the reduction in the KamiKase budget were reversed? So if higher rate is still 33.75% with allowance of £500 I'll pay an extra £506 a year (ISA and SIPP maxed). I still think the personal allowances freeze is the biggest tax hike that most people do not register the impact, particularly in periods of high inflation. One comment I've heard already is at least income tax hasn't gone up....  but with years of allowance freeze the result certainly has!

MK62

MattMattMattUK said:

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.

....and that's on top of their permanently frozen personal allowance, and non-triple locked state pension......what a hoot retirement would be then.....

artyboy

Those (and I declare an interest here) that joined an employer sharesave scheme over the past couple of years could be in for a nasty shock with those brutal reductions in CGT allowance.

Not only will 3/5 year schemes start to mature just at the point that the cuts take effect, but the initial share price (that determines the final gain) will likely have been low, so result in some fairly significant gains...

FWPs etc etc, nice problem to have, but more people will need to be educated about the tax implications of 'cashing out' immediately rather than taking the shares and drawing down more gradually.

t1redmonkey

artyboy said:

Those (and I declare an interest here) that joined an employer sharesave scheme over the past couple of years could be in for a nasty shock with those brutal reductions in CGT allowance.

Not only will 3/5 year schemes start to mature just at the point that the cuts take effect, but the initial share price (that determines the final gain) will likely have been low, so result in some fairly significant gains...

FWPs etc etc, nice problem to have, but more people will need to be educated about the tax implications of 'cashing out' immediately rather than taking the shares and drawing down more gradually.

I think those can be transferred into an ISA wrapper when they mature though, so surely it should be possible to wrap them, and then sell them to avoid the CGT?

coastline

talexuser said:

I assume the dividend rates are staying the same, the reduction in the KamiKase budget were reversed? So if higher rate is still 33.75% with allowance of £500 I'll pay an extra £506 a year (ISA and SIPP maxed). I still think the personal allowances freeze is the biggest tax hike that most people do not register the impact, particularly in periods of high inflation. One comment I've heard already is at least income tax hasn't gone up....  but with years of allowance freeze the result certainly has!

With the 10.1%increase in the state pension that'll mean even less in the personal allowance . Pensioners with a small second pension will pay more income tax. Not what they wanted to hear.  

kev2009

I've recently started buying some shares and I left them in a standard share account as I'm totally new to this and didn't want to pay fees to have them in a isa type account when potentially I may not make any money and would still be paying fees.  I felt this was right at the time due to the limit i could make before tax and I certainly wasn't expecting to make that limit and if by a miracle I did, I'd take out up to the limit and leave the rest invested.  However, now the rates are changing, I'll have to consider what to do as unfortunately I'm loosing money on the investment anyway and now having a smaller limit i can take out tax free, I may decide to just sell them before next April and be done with them.  I could potentially sell them and re-buy in a ISA but I'm already down over 1k and don't really want to sell and buy again as prices have started to rise a bit on my shares.

I presume the 1k you can make in interest on savings accounts is still remaining/not changed? I didn't see it referenced anyway but thought I'd just check in case it has been and I missed it.

Thanks

Kev

artyboy

t1redmonkey said:

artyboy said:

Those (and I declare an interest here) that joined an employer sharesave scheme over the past couple of years could be in for a nasty shock with those brutal reductions in CGT allowance.

Not only will 3/5 year schemes start to mature just at the point that the cuts take effect, but the initial share price (that determines the final gain) will likely have been low, so result in some fairly significant gains...

FWPs etc etc, nice problem to have, but more people will need to be educated about the tax implications of 'cashing out' immediately rather than taking the shares and drawing down more gradually.

I think those can be transferred into an ISA wrapper when they mature though, so surely it should be possible to wrap them, and then sell them to avoid the CGT?

I wasn't aware that was possible, will have to read up - given that (all being well) mine will mature at a multiple of the annual ISA allowance - not to mention that I already use my allowance each year - I have a suspicion it won't be that simple