Autumn Statement Predictions?

LightFlare

I would much rather any “excess” money be used to try and fix this broken country we live in rather than used to cut taxes

But then by cutting taxes it then gives them something to raise again when they want to

Eldi_Dos

westv said:

Eldi_Dos said:

westv said:

Eldi_Dos said:

njm123 said:

 - not pensioners or the economically inactive living off savings income.    

Do not know if it was your intention to characterise pensioners as economically inactive but it is not a description I would recognise.

It is an official description.

"Economically inactive people are simply those who are neither employed nor unemployed; they're not in paid work, but they're also not looking for a job or available to start work. You might be economically inactive for a number of reasons, such as being retired, a student or too ill to work."

As I said it is not a description I recognise,we pay Vat same as anyone else,we pay income tax if above a certain level, my pension administrator makes sure the chancellor gets their cut every month. I am sure the council is glad to receive my donation at the begining of the month.
If you go down any High St mid week it is noticeable how many pensioners use the coffee shops, who provide employment and pay business rates.
So not what I would characterise as economically inactive.

So? You seem to be getting hot under the collar about a technical description. 
Being "economically inactive" has nothing to do with how much money you have.

Because language is important, it can demonise sections of the community and cause unconscious bias.
Not so much hot under the collar as frustrated that otherwise sensible people cannot see that.

Sea_Shell

Selfishly, I'd like to see increases in the personal allowance for Income tax, so we can draw a little more from our pensions, tax free.

And for the IHT allowance to be a flat rate of £500k per person, not just for those with children (and property).

We have organised our finances in such a way that any changes to help those on lower incomes, should benefit us too.

To hit us, they'd have to hit "the little guy" too.  

Unless they* went really radical and introduced a blanket wealth tax, on net worth, regardless of where it's held (ISA/pension/property)


* "they" might also include whoever gets in next 

westv

Eldi_Dos said:

westv said:

Eldi_Dos said:

westv said:

Eldi_Dos said:

njm123 said:

 - not pensioners or the economically inactive living off savings income.    

Do not know if it was your intention to characterise pensioners as economically inactive but it is not a description I would recognise.

It is an official description.

"Economically inactive people are simply those who are neither employed nor unemployed; they're not in paid work, but they're also not looking for a job or available to start work. You might be economically inactive for a number of reasons, such as being retired, a student or too ill to work."

As I said it is not a description I recognise,we pay Vat same as anyone else,we pay income tax if above a certain level, my pension administrator makes sure the chancellor gets their cut every month. I am sure the council is glad to receive my donation at the begining of the month.
If you go down any High St mid week it is noticeable how many pensioners use the coffee shops, who provide employment and pay business rates.
So not what I would characterise as economically inactive.

So? You seem to be getting hot under the collar about a technical description. 
Being "economically inactive" has nothing to do with how much money you have.

Because language is important, it can demonise sections of the community and cause unconscious bias.
Not so much hot under the collar as frustrated that otherwise sensible people cannot see that.

It only demonises if people are ignorant of the correct usage or choose to ignore it.

player1_2

MattMattMattUK said:

Audaxer said:

Silvertabby said:

QrizB said:

2nd_time_buyer said:

A 1% cut in the basic income tax rate will probably cost less than unfreezing the rates.

1% off the basic rate is a 5% reduction on the tax tackle on the BR band. It will cost about as much as raising the personal allowance by £1500.

Raising the personal allowance will disproportionately help pensioners, and old people vote.

An increase in the personal allowance would surely be easier (and therefore cheaper) to administer?  It would benefit most people - and it would stop the whines from certain members of the pensioner community who want bigger State pensions, but then express their shock and horror at the indignity of being 'dragged into paying tax'.

But, at the end of the day, you can't please all of the people all of the time.  Something like 40% of UK adults don't pay income tax.  Not one penny.  So any tax cuts, by whatever means, will undoubtably be met with screams of "but what about me?"

Yes, I find it strange when I hear complaints about people being being dragged into paying tax, or dragged into the higher rate tax band. I personally would be very happy to have enough income to get into the higher rate tax band.

The thing is £50k pa is not actually that big an income, so for those people to start paying the higher rate, as well as losing things like child benefit does feel a little harsh to those who have to pay it. Though that is probably skewed by anyone earning under £50k actually pays very little tax by international comparisons, so when the rate suddenly jumps up it feels a bit harsh.

As a comparison of tax free allowances, the one on the UK is very large, which skews people's perception.
UK - £12,570
France - £8,500
Germany - £8,035
Norway - £4,067
The Netherlands - £0

	Inc.	Tax	Tax %	Inc.	Tax	Tax %	Inc.	Tax	Tax %	Inc.	Tax	Tax %
UK	£  25k	£    3,978	15.91%	£  50k	£  11,978	23.96%	£100k	£  32,951	32.95%	£500k	£224,722	44.94%
Fra	£  25k	£    4,775	19.10%	£  50k	£  13,965	27.93%	£100k	£  36,923	36.92%	£500k	£225,000	45.00%
Ger	£  25k	£    7,247	28.99%	£  50k	£  18,459	36.92%	£100k	£  42,110	42.11%	£500k	£227,287	45.46%
Nor	£  25k	£    5,071	20.28%	£  50k	£  13,787	27.57%	£100k	£  36,536	36.54%	£500k	£225,689	45.14%
Ned	£  25k	£    5,432	21.73%	£  50k	£  17,830	35.66%	£100k	£  45,988	45.99%	£500k	£239,680	47.94%

In the lower earnings brackets those in the UK pay a much lower effective rate of income taxation, however at the higher end we are largely in line with international norms. The bottom two thirds of earners in the UK pay the lowest effective rate of income taxation in the EU, where as the top third pay the fifth highest. This has the effect that many people are very used to paying little tax, and in the majority (55% of households) are used to actually being paid more in cash benefits than they pay in tax, so when people do reach a level where they start to properly pay tax it fees like a shock to the system.

As you can see from the below, the effective rate of income taxation rises rapidly, additionally there will be benefits paid to the majority of households on lower incomes, which means that 55% of households actually have negative effective rates of income taxation, meanwhile the difference between £50,000 and £60,000 for an earner with two children is significant, they face an effective rate of income taxation of 62.5% on their income between £50k and £60k, which is punitive. 


Pure PAYE

Gross	Net	Tax Paid	%
£      12,500.00	£   12,500.00	£                    -	0.00%
£      15,000.00	£   14,222.00	£           778.00	5.19%
£      20,319.00	£   17,839.00	£        2,480.00	12.21%
£      25,000.00	£   21,022.00	£        3,978.00	15.91%
£      50,000.00	£   38,022.00	£      11,978.00	23.96%
£      75,000.00	£   52,549.00	£      22,451.00	29.93%
£    100,000.00	£   67,049.00	£      32,951.00	32.95%
£    125,000.00	£   75,549.00	£      49,451.00	39.56%
£    150,000.00	£   89,778.00	£      60,222.00	40.15%
£    200,000.00	£116,278.00	£      83,722.00	41.86%
£    250,000.00	£142,778.00	£    107,222.00	42.89%
£    500,000.00	£275,278.00	£    224,722.00	44.94%
£ 1,000,000.00	£540,278.00	£    459,722.00	45.97%

Accounting for loss of Child benefit, two children.

Gross	Net	Tax Paid	%
£      50,000.00	£   40,096.80	£        9,903.20	19.81%
£      60,000.00	£   43,849.00	£      16,151.00	26.92%

The UK tax system is broken and needs reform, not because as many like to falsely claim that "the rich" or "high earners" do not pay enough, but because everyone else outside that group does not pay enough. 

The above assumes ( like many threads ) that the taxpayer is English. Fair enough I suppose since the majority of readers will be English, but not all. Tax powers are devolved and as a result some Scottish taxpayers  pay higher tax rates, and the higher rate threshold is lower. Just pointing out in an attempt to ensure conversations are as inclusive as possible, and setting out the Scottish rates in the table above would be interesting. 

bluenose1

MattMattMattUK said:

The thing is £50k pa is not actually that big an income, so for those people to start paying the higher rate, as well as losing things like child benefit does feel a little harsh to those who have to pay it. Though that is probably skewed by anyone earning under £50k actually pays very little tax by international comparisons, so when the rate suddenly jumps up it feels a bit harsh.

As a comparison of tax free allowances, the one on the UK is very large, which skews people's perception.
UK - £12,570
France - £8,500
Germany - £8,035
Norway - £4,067
The Netherlands - £0

In the lower earnings brackets those in the UK pay a much lower effective rate of income taxation, however at the higher end we are largely in line with international norms. The bottom two thirds of earners in the UK pay the lowest effective rate of income taxation in the EU, where as the top third pay the fifth highest. This has the effect that many people are very used to paying little tax, and in the majority (55% of households) are used to actually being paid more in cash benefits than they pay in tax, so when people do reach a level where they start to properly pay tax it fees like a shock to the system.

The UK tax system is broken and needs reform, not because as many like to falsely claim that "the rich" or "high earners" do not pay enough, but because everyone else outside that group does not pay enough. 

Not exactly comparing like for like. 
eg in France they can retire younger and I know in the Netherlands they may pay more tax but they get far more benefits for those taxes - 95% re-imbursement of child care costs  etc etc.

You also aren’t mentioning that those on lowest incomes pay far more of their income on indirect taxes - gas, electric, petrol etc. `As per -ONS data in 2021 the poorest fifth of people paid 22. 9% on indirect taxes such as VAT compared with 9.1% of richest fifth of people 
With the increase in energy prices I expect there is even greater disproportion of spend on indirect taxes in 2023.

Not only do the poorest pay a lot more proportionately in indirect taxes they also do for housing.
The poorest quarter of the population on average spent 21% of their household income on housing costs (rent or mortgage interest) in 2021, compared with only 6% for the richest quarter of the population. This means that the poorest 25% spent 3.5 times more on housing as a fraction of their income than the richest 25%

It seems inequalities are getting worse not better so totally against increasing taxes on those on low incomes.

Altior

LightFlare said:

I would much rather any “excess” money be used to try and fix this broken country we live in rather than used to cut taxes

But then by cutting taxes it then gives them something to raise again when they want to

There is no excess money, alas. If you're referencing 'fiscal headroom', it simply means that the eye watering amount that the state expected to have to borrow/print to follow through on its spending plans is/was ever slow slightly less than predicted. Extraordinarily, some people would prefer that it was spent on some other wasteful pursuit, rather than not adding to the debt pile by quite so much as anticipated.

It doesn't really impact pensions too much, if at all, as that ought to be connected to long term planning by the civil service / treasury, on not based on any theoretical fiscal headroom in an isolated year. 

MattMattMattUK

bluenose1 said:

MattMattMattUK said:

The thing is £50k pa is not actually that big an income, so for those people to start paying the higher rate, as well as losing things like child benefit does feel a little harsh to those who have to pay it. Though that is probably skewed by anyone earning under £50k actually pays very little tax by international comparisons, so when the rate suddenly jumps up it feels a bit harsh.

As a comparison of tax free allowances, the one on the UK is very large, which skews people's perception.
UK - £12,570
France - £8,500
Germany - £8,035
Norway - £4,067
The Netherlands - £0

In the lower earnings brackets those in the UK pay a much lower effective rate of income taxation, however at the higher end we are largely in line with international norms. The bottom two thirds of earners in the UK pay the lowest effective rate of income taxation in the EU, where as the top third pay the fifth highest. This has the effect that many people are very used to paying little tax, and in the majority (55% of households) are used to actually being paid more in cash benefits than they pay in tax, so when people do reach a level where they start to properly pay tax it fees like a shock to the system.

The UK tax system is broken and needs reform, not because as many like to falsely claim that "the rich" or "high earners" do not pay enough, but because everyone else outside that group does not pay enough. 

Not exactly comparing like for like. 
eg in France they can retire younger and I know in the Netherlands they may pay more tax but they get far more benefits for those taxes - 95% re-imbursement of child care costs  etc etc.

In France one can retire younger, on a considerably higher state pension, in many countries people get subsidised childcare in a way that works (rather than the broken UK system), but that applies to all people, there is no upper earnings cut off for those (like there is with child benefit in the UK), they apply to everyone. 

bluenose1 said:

You also aren’t mentioning that those on lowest incomes pay far more of their income on indirect taxes - gas, electric, petrol etc. `As per -ONS data in 2021 the poorest fifth of people paid 22. 9% on indirect taxes such as VAT compared with 9.1% of richest fifth of people 

I am not, as I was talking about income tax. There are huge issues with the ONS data and the way it accounts for "low earners" and the percentage of their income spent on indirect taxation. The biggest issue is from pensioners spending savings, many pensioners have outgoings which significantly exceed their incomes, but that does not matter as they have planned to use savings and liquidate assets to fund that expenditure, yet their data is included in the low earner section of the data. The same with wealthy individuals who have variable incomes, they might earn nothing or even have negative income in one year (as reported on tax returns), yet that does not matter and is due to investment cycles, they are spending money from reserves etc. The 22.9% figure (in the Oct 22 data) is hugely distorted because of that, so much so that serious academic analysis says that the percentage figure is not valid for comparison and should not be used to inform policy. Low earners/poor actually tend to spend very little on taxes, rent and food has no VAT, household bills only attract VAT at 5% (energy) or zero (water), public transport has no VAT, etc. which means the only indirect tax they tend to pay of any real total is council tax (which for the lowest 10% they are exempt from anyway), or tax/duty on vehicle fuel, but again the lowest earners tend not to operate private vehicles. 

bluenose1 said:

With the increase in energy prices I expect there is even greater disproportion of spend on indirect taxes in 2023.

In general the bottom 10% did not hugely increase their energy costs, they were generally just colder. Now looking at the facts energy prices did rise increase from around £900 pa on average to £2,500, which increases the amount of tax paid on energy from £45 to £125, but again that is based on averages, not on expenditure by income so it does little to inform us. 

bluenose1 said:

Not only do the poorest pay a lot more proportionately in indirect taxes they also do for housing.
The poorest quarter of the population on average spent 21% of their household income on housing costs (rent or mortgage interest) in 2021, compared with only 6% for the richest quarter of the population. This means that the poorest 25% spent 3.5 times more on housing as a fraction of their income than the richest 25%.

Nearly everyone with a mortgage that has had to remortgage has faced significant housing cost increases, I know mine will rise by around 40% when I have to, most people with a mortgage are also spending around 20-30% of their income on housing, comparing people to the top 10%/1% is disingenuous, it does not generate and useful comparisons or inform policy in a way that is useful. 

bluenose1 said:

It seems inequalities are getting worse not better so totally against increasing taxes on those on low incomes.

The countries with the least income inequality and the least lifestyle in equality in Europe are the countries which levy higher taxes and more equal taxes across all income bands, the Scandinavian countries, followed by the likes of Germany and The Netherlands, then France. In terms of taxation the system operated in the UK is actually more progressive than those of Norway, Finland, Sweden, Germany, The Netherlands, or France, but I very much anyone but extremely high earners would say that our system is better. Those countries have worked to create a broad, stable and fair tax system, based on the principle that everyone should pay in. That allows them to fund the nice things, roads not filled with pot holes, schools not leaking and falling apart, hospitals with staffing levels that are not so low that they are deemed unsafe, doctors where you get an appointment on the same day rather than the same month if you are lucky etc. I would much rather have the Norwegian tax system, yes I would pay more in tax, so would everyone else, we could all benefit from the nice things that would be able to bring our society. Instead the UK has a system that is over reliant on high earners, where 55% of households do not make a net contribution, where less than 5% of people make a net contribution over their lifetimes and everything is falling apart because of inadequate funding. "Someone else" cannot keep being made to pay for things, the UK has proven it does not work, Scandinavian countries, Germany and the Netherlands have systems that do work, so maybe, just maybe, rather than following the broken UK system, we should learn from nations who have made it work. 

MattMattMattUK

player1_2 said:

MattMattMattUK said:

Audaxer said:

Silvertabby said:

QrizB said:

2nd_time_buyer said:

A 1% cut in the basic income tax rate will probably cost less than unfreezing the rates.

1% off the basic rate is a 5% reduction on the tax tackle on the BR band. It will cost about as much as raising the personal allowance by £1500.

Raising the personal allowance will disproportionately help pensioners, and old people vote.

An increase in the personal allowance would surely be easier (and therefore cheaper) to administer?  It would benefit most people - and it would stop the whines from certain members of the pensioner community who want bigger State pensions, but then express their shock and horror at the indignity of being 'dragged into paying tax'.

But, at the end of the day, you can't please all of the people all of the time.  Something like 40% of UK adults don't pay income tax.  Not one penny.  So any tax cuts, by whatever means, will undoubtably be met with screams of "but what about me?"

Yes, I find it strange when I hear complaints about people being being dragged into paying tax, or dragged into the higher rate tax band. I personally would be very happy to have enough income to get into the higher rate tax band.

The thing is £50k pa is not actually that big an income, so for those people to start paying the higher rate, as well as losing things like child benefit does feel a little harsh to those who have to pay it. Though that is probably skewed by anyone earning under £50k actually pays very little tax by international comparisons, so when the rate suddenly jumps up it feels a bit harsh.

As a comparison of tax free allowances, the one on the UK is very large, which skews people's perception.
UK - £12,570
France - £8,500
Germany - £8,035
Norway - £4,067
The Netherlands - £0

	Inc.	Tax	Tax %	Inc.	Tax	Tax %	Inc.	Tax	Tax %	Inc.	Tax	Tax %
UK	£  25k	£    3,978	15.91%	£  50k	£  11,978	23.96%	£100k	£  32,951	32.95%	£500k	£224,722	44.94%
Fra	£  25k	£    4,775	19.10%	£  50k	£  13,965	27.93%	£100k	£  36,923	36.92%	£500k	£225,000	45.00%
Ger	£  25k	£    7,247	28.99%	£  50k	£  18,459	36.92%	£100k	£  42,110	42.11%	£500k	£227,287	45.46%
Nor	£  25k	£    5,071	20.28%	£  50k	£  13,787	27.57%	£100k	£  36,536	36.54%	£500k	£225,689	45.14%
Ned	£  25k	£    5,432	21.73%	£  50k	£  17,830	35.66%	£100k	£  45,988	45.99%	£500k	£239,680	47.94%

In the lower earnings brackets those in the UK pay a much lower effective rate of income taxation, however at the higher end we are largely in line with international norms. The bottom two thirds of earners in the UK pay the lowest effective rate of income taxation in the EU, where as the top third pay the fifth highest. This has the effect that many people are very used to paying little tax, and in the majority (55% of households) are used to actually being paid more in cash benefits than they pay in tax, so when people do reach a level where they start to properly pay tax it fees like a shock to the system.

As you can see from the below, the effective rate of income taxation rises rapidly, additionally there will be benefits paid to the majority of households on lower incomes, which means that 55% of households actually have negative effective rates of income taxation, meanwhile the difference between £50,000 and £60,000 for an earner with two children is significant, they face an effective rate of income taxation of 62.5% on their income between £50k and £60k, which is punitive. 


Pure PAYE

Gross	Net	Tax Paid	%
£      12,500.00	£   12,500.00	£                    -	0.00%
£      15,000.00	£   14,222.00	£           778.00	5.19%
£      20,319.00	£   17,839.00	£        2,480.00	12.21%
£      25,000.00	£   21,022.00	£        3,978.00	15.91%
£      50,000.00	£   38,022.00	£      11,978.00	23.96%
£      75,000.00	£   52,549.00	£      22,451.00	29.93%
£    100,000.00	£   67,049.00	£      32,951.00	32.95%
£    125,000.00	£   75,549.00	£      49,451.00	39.56%
£    150,000.00	£   89,778.00	£      60,222.00	40.15%
£    200,000.00	£116,278.00	£      83,722.00	41.86%
£    250,000.00	£142,778.00	£    107,222.00	42.89%
£    500,000.00	£275,278.00	£    224,722.00	44.94%
£ 1,000,000.00	£540,278.00	£    459,722.00	45.97%

Accounting for loss of Child benefit, two children.

Gross	Net	Tax Paid	%
£      50,000.00	£   40,096.80	£        9,903.20	19.81%
£      60,000.00	£   43,849.00	£      16,151.00	26.92%

The UK tax system is broken and needs reform, not because as many like to falsely claim that "the rich" or "high earners" do not pay enough, but because everyone else outside that group does not pay enough. 

The above assumes ( like many threads ) that the taxpayer is English. Fair enough I suppose since the majority of readers will be English, but not all. Tax powers are devolved and as a result some Scottish taxpayers  pay higher tax rates, and the higher rate threshold is lower. Just pointing out in an attempt to ensure conversations are as inclusive as possible, and setting out the Scottish rates in the table above would be interesting. 

It does apply to England, you are correct. The SNP tax changes are pointless gesture politics, they penalise middle earners (notably dragging £6,338 into the higher rate band), but generates no meaningful additional revenue and complicates the tax system for political gain. 

Income	Eng. Wal. NI	Scot
0-12570	20%	19%
12,517-14,732	20%	20%
14,733-25,688	20%	21%
25,689-43,662	20%	42%
43,662-50,000	20%	42%
50,001-125,140	40%	42%
125,140-	45%	47%

Below are the earnings brackets with Scotland added as additional columns.

Gross	Net	Tax Paid	%	Scot Net	Scot Tax	Scot %	Dif	Dif %
£      12,500	£      12,500	£                -	0.00%	£    12,500	£              -	0.00%	£            -	0.00%
£      15,000	£      14,222	£           778	5.19%	£    14,243	£         757	5.05%	-£         21	-0.14%
£      20,319	£      17,839	£        2,480	12.21%	£    17,860	£      2,459	12.10%	-£         21	-0.10%
£      25,000	£      21,022	£        3,978	15.91%	£    21,043	£      3,957	15.83%	-£         21	-0.08%
£      50,000	£      38,022	£      11,978	23.96%	£    36,466	£    13,534	27.07%	£    1,556	3.11%
£      75,000	£      52,549	£      22,451	29.93%	£    50,439	£    24,561	32.75%	£    2,110	2.81%
£    100,000	£      67,049	£      32,951	32.95%	£    64,439	£    35,561	35.56%	£    2,610	2.61%
£    125,000	£      75,549	£      49,451	39.56%	£    73,189	£    51,811	41.45%	£    2,360	1.89%
£    150,000	£      89,778	£      60,222	40.15%	£    85,917	£    64,083	42.72%	£    3,861	2.57%
£    200,000	£    116,278	£      83,722	41.86%	£ 111,417	£    88,583	44.29%	£    4,861	2.43%
£    250,000	£    142,778	£    107,222	42.89%	£ 136,917	£ 113,083	45.23%	£    5,861	2.34%
£    500,000	£    275,278	£    224,722	44.94%	£ 264,417	£ 235,583	47.12%	£  10,861	2.17%
£1,000,000	£    540,278	£    459,722	45.97%	£ 519,417	£ 480,583	48.06%	£  20,861	2.09%

Grumpy_chap

GrubbyGirl_2 said:

I think they will increase the IHT threshold to £1m 

That might grab headlines as a simplification but, for many people (couples) the IHT threshold is effectively £1m now in any case.
£325k each = £650k couple standard IHT threshold
£500k each = £1m couple IHT threshold if passing on the family home to children

Unless the comment was meant to be read as a threshold £1m each, regardless of whether that includes property and regardless of whether the beneficiaries are children of the deceased. 
That would be a big change the in the threshold.  I suspect it would have a small impact on the total tax raised.