Employers NI raise confirmed by BBC?

Altior

Albermarle said:

dcs34 said:

Baldytyke88 said:

Instead of doing what Liz Truss did, not telling anyone what their plans were, they are informing the media of their plans so that any response by the markets is gradual.

Yields on 10-year UK gilts have already risen to 4.25% - above the 4% level following the mini-budget which "crashed the economy". Does that mean Rachel Reeves has "crashed the economy"?

As far as the media is concerned all Labour have done this week is make it very clear they are having to shift the goalposts re-define what it means to be "working people".

And then there's the allegations that the Chancellor hasn't been entirely honest when it comes to her CV...

The Liz Truss mini budget, spiked yields up from a much lower level, to a peak of 4.25% so was a lot more dramatic.
The current 4.25% is actually lower than a year ago but 0.25% higher than a month ago.
UK 10 year Gilt Bond, chart, prices - FT.com

Nothing to do with the Fed hiking US central bank rates just before the 'mini budget'. 

Yields on government borrowing spiked across the west, as finally central bank rates began to normalise. Arguably the 'mini budget' hastened the unwinding in the UK, but the BoE poured petrol on the fire (deliberately in my view), and any stakeholder who did not agree with the moderate reduction of tax agenda (eg BBC, Sky).

Grumpy_chap

zagfles said: 

Well, they "earn an income", as in your quoted "pledge" above! But maybe they can "write a cheque to get themselves out of trouble". Or not, as who has a cheque book these days  :

Where do I fit in?
I don't have investment income.
I work.
I only received dividend income if I work - own Ltd Co.
I have a cheque book.
#confused 🤔

masonic

Hoenir said:

masonic said:

friolento said:

masonic said:

zagfles said:

Didn't take long to blatantly break a manifesto promise. "...we will not increase National Insurance, the basic, higher, or additional rates of Income Tax, or VAT". Assuming this speculation is on the mark. 

They will be relying on the bit before the "...", namely "Labour will not increase taxes on working people, which is why...". Employer NI is not a tax on working people, even if employers decide to recover the cost through reduced wages or benefits. This was raised as a loophole in a similar deleted thread here before the speculation in the media got to it.

There are many employers, particularly in SMEs, who are apoplectic with anger by the implied suggestion that they are not working people. 

I could understand a sole trader being angry about the suggestion, but SMEs are usually limited liability companies who pay corporation tax on their profits rather paying tax on their income

An employee turns up, does their contracted hours and gets paid every week/month. No worries. A business owner gets paid after everybody else. Borrows money and uses their personal private residence to secure the debt. Has the worry of what might tomorrow might bring. Entrepreneurs create wealth. Create new jobs. Often work 70 hours plus a week. Crush that spirit and the UK economy will flounder. 

That's a fair point, and I'm not suggesting they should be punished. But with so much ruled out, the hope that corporate personhood would apply in this context and protect businesses from tax rises was probably a stretch.

Baldytyke88

MX5huggy said:

Unless they set up a Ltd company and pay themselves a wages via PAYE. 

That would be a good place to increase taxes. Pay yourself the personal allowance and pay no tax, then pay yourself in dividends, that would be a low rate of tax.

Just something I watched online, I know very little about these things.

friolento

masonic said:

friolento said:

masonic said:

zagfles said:

Didn't take long to blatantly break a manifesto promise. "...we will not increase National Insurance, the basic, higher, or additional rates of Income Tax, or VAT". Assuming this speculation is on the mark. 

They will be relying on the bit before the "...", namely "Labour will not increase taxes on working people, which is why...". Employer NI is not a tax on working people, even if employers decide to recover the cost through reduced wages or benefits. This was raised as a loophole in a similar deleted thread here before the speculation in the media got to it.

There are many employers, particularly in SMEs, who are apoplectic with anger by the implied suggestion that they are not working people. 

I could understand a sole trader being angry about the suggestion, but SMEs are usually limited liability companies who pay corporation tax on their profits rather paying tax on their income, with the corporate entity being separate to the directors, who may or may not be considered working people depending on how they pay themselves. But I am sure there are many salaried employees that would not fit into the bizarre definition involving cheques. I don't think I would. Yet I have been in continuous employment since finishing education and have never earned enough to pay a penny in higher rate tax.

It's not so much about their tax status but about the implied suggestion that they are not working. It's disappointing messaging

MK62

It's a bit ironic that by the PM's own definition of a what a "working person" is, or is not, then he isn't a working person....

intalex

friolento said:

intalex said:

...although Reeves is not likely to introduce the levy to employers' pensions contributions.

This is surprising... objectively, this would be a more justifiable change, but optically, a straight increase to employers' NI rate may be perceived more favourably by "working people"... even if many employers will pass on these costs to employees either way...

The costs would almost certainly be passed on, either to employees or to customers, or both. I have a friend who owns a shop and employs two staff. The plan is that prices in the shop will rise by between 5% and 10% to fund any employer NI increase. Nice contribution to inflation 😉

Easier said than done, employee and customer retention will be affected if the costs are bluntly passed on... some tough choices undoubtedly...

I personally think that introduction of employers NI on employers pension contributions would be much better than simply raising the employers NI rate, because:
1. it doesn't make sense why employers should earn a "freebie" 13.8% saving from employees trying to save just 2% by way of more contributions through salary sacrifice (vs net pay / relief at source), especially those employers who do not share or pass on this "freebie" to the employees
2. where employers are passing on the saving to employees (directly into employee pension or indirectly as matching benefit), revocation of this benefit will hardly be a deal breaker for employees as it'll be obvious what led to it, and in the bigger picture, income tax reliefs will still remain as the prevailing benefit

TheBanker

MK62 said:

It's a bit ironic that by the PM's own definition of a what a "working person" is, or is not, then he isn't a working person....

True, but his dad used to make tools. He doesn't like to mention that, though

boingy

I'm enjoying the "working person" debate. What all of them mean but none of them dare say is "working class". 

But, yeah, the employers' NI thing is shaping up to be real. 

prowla

The Labour manifesto stated:

The Conservatives have raised the tax burden to a
70-year high. We will ensure taxes on working people are
kept as low as possible. Labour will not increase taxes
on working people, which is why we will not increase
National Insurance, the basic, higher, or additional rates
of Income Tax, or VAT.

4 months after they were elected...

• It seems that Labour are going to increase the "tax burden" from that 70-year high.
• The "Labour will not increase taxes on working people" belies the fact that the freezing of tax thresholds (fiscal drag) implicitly increases tax on workling people.

The wording of that paragraph was poor to begin with and now they are trying to weasel-word their definition of "working people".