Non-partisan mini-budget predictions thread

Millyonare

fizio said:

Overall it was a pretty well balanced budget given the constraints. Bottom end ‘looked after’, middle ‘squeezed’, well off ‘squeezed more’..  freezing and reducing various allowances doing most of the hard work.. Some areas could have been done differently but mostly at the margins..
My vote heading back towards tory’s after a 7 year absence

It's a pernicious horror show of a budget, that delivered the biggest tax burden in modern British history and a commitment to make Brits poorer by stealth over the next decade to satisfy the fickle markets, not their voters.

No other major country on Earth is raising taxes post-covid.

And this is not the end, but the start. It looks increasingly likely that fuel duty (petrol) will rise +23% from March 2023. Tax on tax on tax on tax on tax.

dunstonh

NedS said:

dunstonh said:

Millyonare said:

Today's budget is a disaster. As bad as feared.

Tax and axe.

A middle manager on ~£60k is set to pay ~£15k more tax over 5 years.

The war on wealth has just begun 😒

A company owner on a similar amount is around £5000 a year worse off just from Corp tax and dividend changes.

and how about if they choose to pay themselves by PAYE instead of by dividends?

Because they are the company owners.  They have risked their money and taken risk to build a company and typically company earnings are variable and don't work well with monthly PAYE.

NedS

dunstonh said:

NedS said:

dunstonh said:

Millyonare said:

Today's budget is a disaster. As bad as feared.

Tax and axe.

A middle manager on ~£60k is set to pay ~£15k more tax over 5 years.

The war on wealth has just begun 😒

A company owner on a similar amount is around £5000 a year worse off just from Corp tax and dividend changes.

and how about if they choose to pay themselves by PAYE instead of by dividends?

Because they are the company owners.  They have risked their money and taken risk to build a company and typically company earnings are variable and don't work well with monthly PAYE.

Yes, I completely get that, but they don't have to pay themselves £5k/month - they can equally choose to pay themselves £60k through PAYE in March once they know what the company profits are looking like for the year, rather than paying corporation tax on that £60k and then taking a dividend. It's about the most tax efficient method of taking that £60k profit from the business.

Kim1965

dunstonh said:

NedS said:

dunstonh said:

Millyonare said:

Today's budget is a disaster. As bad as feared.

Tax and axe.

A middle manager on ~£60k is set to pay ~£15k more tax over 5 years.

The war on wealth has just begun 😒

A company owner on a similar amount is around £5000 a year worse off just from Corp tax and dividend changes.

and how about if they choose to pay themselves by PAYE instead of by dividends?

Because they are the company owners.  They have risked their money and taken risk to build a company and typically company earnings are variable and don't work well with monthly PAYE.

Lots of one man band tradesman are limited. Always work for trades, zero risks taken. 

Ocelot

sevenhills said:

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. 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?

It doesn't help that my local authority employer gave us a £2,000 across the board pay rise. The numbers of low paid workers means the deal was accepted. But large pay rises affect local authority badly. But this is around inflation.
Local authorities should be allowed to increase council tax inline with inflation, without a referendum. Rather strange to limit them to 3%, did they believe inflation would never be high again, when that target was set?

Not sure most people would be happy paying 11% more each year, especially when the council are giving their staff a £2000 pay rise.

hallmark

Ocelot said:

sevenhills said:

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. 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?

It doesn't help that my local authority employer gave us a £2,000 across the board pay rise. The numbers of low paid workers means the deal was accepted. But large pay rises affect local authority badly. But this is around inflation.
Local authorities should be allowed to increase council tax inline with inflation, without a referendum. Rather strange to limit them to 3%, did they believe inflation would never be high again, when that target was set?

Not sure most people would be happy paying 11% more each year, especially when the council are giving their staff a £2000 pay rise.

That level of increase would turn Council Tax into a brutal wealth tax on retirees with a decent house. And I think that's exactly what Council Tax will become.

Malthusian

NedS said:

Yes, I completely get that, but they don't have to pay themselves £5k/month - they can equally choose to pay themselves £60k through PAYE in March once they know what the company profits are looking like for the year, rather than paying corporation tax on that £60k and then taking a dividend. It's about the most tax efficient method of taking that £60k profit from the business.

You'll have to show your working on that one. 
Above the national insurance threshold, salary is taxed at 42% at basic rate (15.05% employer's NI then 13.25% employee's NI and 20% income tax) and 51% at higher rate (15.05% employer's NI then 3.25% employee's NI and 40% income tax).
Dividends are taxed at 26% at basic rate (19% Corporation Tax then 8.75% dividend tax) and 46% at higher rate (19% Corporation tax then 33.75% dividend tax). 
Dividends will still be the most tax efficient way to take money out even after Hunt's tax hikes, so dunstonh's calculation is correct.

MK62

Malthusian said:

NedS said:

Yes, I completely get that, but they don't have to pay themselves £5k/month - they can equally choose to pay themselves £60k through PAYE in March once they know what the company profits are looking like for the year, rather than paying corporation tax on that £60k and then taking a dividend. It's about the most tax efficient method of taking that £60k profit from the business.

You'll have to show your working on that one. 
Above the national insurance threshold, salary is taxed at 42% at basic rate (15.05% employer's NI then 13.25% employee's NI and 20% income tax) and 51% at higher rate (15.05% employer's NI then 3.25% employee's NI and 40% income tax).
Dividends are taxed at 26% at basic rate (19% Corporation Tax then 8.75% dividend tax) and 46% at higher rate (19% Corporation tax then 33.75% dividend tax). 
Dividends will still be the most tax efficient way to take money out even after Hunt's tax hikes, so dunstonh's calculation is correct.

Is it though?........I'd be interested to see the workings to show how a company owner, taking £60000pa out of his business, will be around £5000 a year worse off just from Corp tax and dividend tax threshold changes.....

PS....I thought those NI rates went out the window on Nov 6th (unless I've missed something).......

sevenhills

hallmark said:

Ocelot said:

sevenhills said:

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. 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?

It doesn't help that my local authority employer gave us a £2,000 across the board pay rise. The numbers of low paid workers means the deal was accepted. But large pay rises affect local authority badly. But this is around inflation.
Local authorities should be allowed to increase council tax inline with inflation, without a referendum. Rather strange to limit them to 3%, did they believe inflation would never be high again, when that target was set?

Not sure most people would be happy paying 11% more each year, especially when the council are giving their staff a £2000 pay rise.

That level of increase would turn Council Tax into a brutal wealth tax on retirees with a decent house. And I think that's exactly what Council Tax will become.

It would not turn it into anything, it would be just keeping pace with inflation.
A 3% rise when inflation was 1% would be worse.

Exodi

MK62 said:

Malthusian said:

NedS said:

Yes, I completely get that, but they don't have to pay themselves £5k/month - they can equally choose to pay themselves £60k through PAYE in March once they know what the company profits are looking like for the year, rather than paying corporation tax on that £60k and then taking a dividend. It's about the most tax efficient method of taking that £60k profit from the business.

You'll have to show your working on that one. 
Above the national insurance threshold, salary is taxed at 42% at basic rate (15.05% employer's NI then 13.25% employee's NI and 20% income tax) and 51% at higher rate (15.05% employer's NI then 3.25% employee's NI and 40% income tax).
Dividends are taxed at 26% at basic rate (19% Corporation Tax then 8.75% dividend tax) and 46% at higher rate (19% Corporation tax then 33.75% dividend tax). 
Dividends will still be the most tax efficient way to take money out even after Hunt's tax hikes, so dunstonh's calculation is correct.

Is it though?........I'd be interested to see the workings to show how a company owner, taking £60000pa out of his business, will be around £5000 a year worse off just from Corp tax and dividend tax threshold changes.....

PS....I thought those NI rates went out the window on Nov 6th (unless I've missed something).......

They did - NI rates are back at 13.8% for employers and 12%/2% for employees effective from Nov.