Budget 2024

Discussion in 'Politics 2.0' started by hornmeister, Sep 13, 2024.

  1. hornmeister

    hornmeister Tired

    Just done a quick back of fag packet calculation.

    I'm a basic rate tax payer. Just under 60% of my income is currently taken in various taxes, income, VAT etc. and that's a cautious calculation as I likes my booze and the meistermobile is thirsty. If I spent time drilling into not applying a blanket 20% on my non-food shop it would be more.

    I think the government need to be careful in October. My financial modelling shows that as a 50 year old single fairly frugal person it's actually no longer worth me working. Any increase in the tax I pay could actually push me into early retirement.

    I would hope the governemnt will be a bit more savvy and take more time over the budget compared to their recent decisions.

    What do you hope for come October?
     
    Last edited: Sep 14, 2024
  2. UEA_Hornet

    UEA_Hornet First Team Captain

    Tax the rich until it hurts. And also 50 year old single fairly frugal people. A tax specifically designed to target them and only them is long overdue :D

    Seriously though, I don't hope for anything in particular. We all have to do our bit. It's going to be a tough budget, so we all need to strap in and get on with it I think. The Tories have razed the lot to the ground in recent years, so there's no miracle cure. I'd like to see money and investment incentives for big infrastructure, projects of national importance in things like energy and food production and a doubling down on the commitment to neuter the NIMBYs and get the country building again.

    Not sure what you mean about them taking more time over the budget though. As in literally wait longer? If Starmer and Reeves wanted to rush they'd have called an emergency budget in late July. This is just the usual date a budget takes place. If you mean thinking things through more, I don't think the fact some newspapers and campaign groups are jumping up and down means they didn't think things through. It just means some people don't like some decisions... which is normal I'd say. Any government that tries to please everyone and achieves it would be a first! And if anything it's a bit of a relief to have a government that isn't straining to be populist all the time.
     
    Last edited: Sep 13, 2024
    hornmeister likes this.
  3. Why is it no longer worth you working? Does your working result in a negative net income for you?

    I'd be interested to see your workings. If you earn 50k your tax will be about 7600. Your NI will be about 3000. If you spend all of the remaining 39400 on Vatable goods your VAT is about 6500. Total taxes 17100 or about 34%.

    Do you need an accountant?
     
    Last edited by a moderator: Sep 14, 2024
    AndrewH63 likes this.
  4. Otter

    Otter Gambling industry insider

    There are other things like council tax and there could be a company car or other benefits in kind which affect the tax free allowance.
     
    hornmeister likes this.
  5. EnjoytheGame

    EnjoytheGame Reservist

    The point Ghost of Barry Endean was making was that if Hornmeister spent every single penny of his post income tax and NI income on VAT-able goods, his tax burden would be about 34%. Okay, so add Council Tax and a company car and it's still likely to be a massive reach to say that 60% of the income of a lower tax rate payer goes in taxes.
     
  6. If you have a company car you really have to add that benefit to your income if you are going to compare tax take to income.
     
    Since63 likes this.
  7. Additionally, not working doesn't mean you don't pay council tax, so doesn't really fit into the 'not worth working' narrative.
     
    lm_wfc likes this.
  8. hornmeister

    hornmeister Tired

    The 60% is NI, income tax, council tax, road fund licence, TV licence, tax on energy bills and Vat applied to my non-food shop.

    Low paid now, but was a financial analyst in the past and own a decent home and have some savings because I've worked hard been frugal and saved for the future. I could draw down on savings and release equity at the level of net income I receive currently and break even up to retirement age. Therefore there is no real incentive for me to continue working as it is now. If my tax burden increases which given the rumours could end up being a 3-4% cut in take home pay then I'm done. If the government want to take a further slice of the savings or equity I built to support myself in retirement they'll I'll liquidise and utilise it early.
    I'm in a lucky position granted, not rich by any means but secure. There must be many more out there like me. The current tax burden and structure is wrong. It explains why there are so many economically inactive.

    Additionally with effectively no taxable income, being a part time carer I could in theory end up costing the tax payer rather than contributing.

    For my circumstances taxation is on a knifedge.
     
  9. It's not 60% or anywhere near it, is it, unless you earn so little that your council tax is 20% of your earnings? In which case any Labour tax increases are unlikely to affect you at all.

    And as for no incentive to keep working, is not using up your savings and not releasing equity that would give you a more comfortable retirement an incentive? For a financial analyst, your thinking appears incredibly woolly.

    Without giving us a figure for your earnings, just say using a hypothetical £40k income, can you explain how you get to 60% tax. Genuinely interested, in case I'm missing something.
     
  10. hornmeister

    hornmeister Tired

    Circa 16% is council tax.

    Circa 58% total so near enough to 60% imho considering the duty on booze and petrol is higher than 20%
     
    Last edited: Sep 14, 2024
  11. My workings would be:
    Earnings: £40,000

    Income tax - 20% on 27,430: 5,486
    NI 8% on 27,430 : 2,194
    Council tax assume 2,500
    VED assume dirty gas guzzler 500
    assume 2500 a year on gas/elec, tax 5% 125
    assume 400 a month on food, out of the remaining 26820 means the balance of £22,020 is spent on Vatable stuff. 1/6 of this (22,020 being the gross amount) is £3670.

    Total tax: 14,475
    I'll even give you an extra £1,000 on fuel duty and £500 on alcohol duty (check your liver), and the tax take is still less than 40%. You would need to find an extra £8,000 tax to get to 60%.
     
    hornmeister likes this.
  12. So you are earning less than £20 k, or live in a walled estate and exist solely on booze fags and gasoline. I'm not totally sure you can count. Happy to be proved wrong though.
     
  13. hornmeister

    hornmeister Tired

    Yes and yes.

    You pay vat on moat drainage
     
  14. It might be more than my example, but I'll bet it's not more than my actual CT. (LBH). What else is wrong with my figures?
     
  15. hornmeister

    hornmeister Tired

    Dunno, you're paid too much? You need to move to a nicer house?:D
     
  16. EnjoytheGame

    EnjoytheGame Reservist

    Every decision affecting your tax rate (direct and indirect) over the past 14 years has been imposed on you by the Conservative Government. So, while the October budget may well not have you skipping through the fields with joy do bear in mind that it's been a decade and a half of Conservative policy that led to your tax burden being 60 per cent. (If that's the case).

    I do find it quite hard to believe your implied tax rate is 60%. I will take your word for it but it doesn't stack up. If you are low paid the first £12,500 doesn't get taxed at all and your NI contribs will be relatively low. Then from 12,500 to 50k the tax rate is 20%.

    VAT is 20% but obviously only on things you choose to buy so perhaps you are spending a lot. VAT on household energy is 5% so unless you're heating Oxford Street that's not going to be a huge amount. So to increase your overall implied tax rate to 60% – even of a low income – you would probably have to be paying 70-plus % tax on some things but I can't think what they'd be.

    (There's been some talk about 'the 60% tax trap' over the past couple of years but that applies to people earning between 100k and 125k a year – basically their personal allowances change and they end up paying 60% on that higher portion of income.)

    If you have the sort of savings / investments that mean that it's got to a point where it's no longer worth doing a low-paid job, well, what's the problem with that? Does everyone have to be 'economically active'? Free up a space for someone who needs the work if you're comfortable enough and can't see the point in working. Isn't that the entire point of those savings / investments? I don't know.

    It's funny how this argument goes generally, though. People often say that benefits are too high because they discourage the poor from working. Now tax is too high and it discourages the (relatively) wealthy from working. At some point we're going to have to address the fact that a lot of work is badly paid and big corporations are taxed far too lightly because the money flies off the conveyor belt into the same few pockets time and time again. If the corporations that operate in the UK paid the same tax rate you claim to pay pretty much every problem would be solved overnight.
     
  17. hornmeister

    hornmeister Tired

    And there's the rub isn't it. The rich can avoid tax and it's the middle that get squeezed and squeezed. The system is broken through years of tinkering around the edges and not changing with the way the global economy has. We need a reset of the system.
     
  18. AndrewH63

    AndrewH63 Reservist

    The institute of Fiscal Studies has excellent analysis on how to reform tax, to take away cliff edges and to incentivise productivity.

    The problem is anomalies get baked in. Politicians are not around long enough to want to take them on.

    The classic is National Insurance. That has evolved from a basic flat rate payment (your stamp), paid by all. To both a cost on business, which pays a tax on employing someone. Which also has the impact of suppressing wages. It is also a form of income tax, paid by employees at 10% for basic rate tax payers. Making their marginal rate really 30% Income tax. At 2% on additional income that attracts 40% income tax. Has different rates for the self employed. Is levied based on your employment status. So filthy rich lawyers who are “partners” avoid it altogether. Plus the partnership avoids making the employer contribution, as there are no employees!

    One idea is to reduce VAT but to apply it universally and make every business and sole trader with trade income above £12,500 register for VAT. Simplifying VAT makes it easier to administer, you can reduce the rate and get more money in. The example is why does children get exempt. So the Harrods child coat at £4,000 has no VAT. But size 7 work shoes in Primark does.

    Compared to Western Europe we are a low tax of income economy. That’s why the mega rich flock to Monaco. We really should send a gunboat there and take it over. It was a strategy Palmerston used frequently, so the navy will have the plan somewhere.
     
  19. hornmeister

    hornmeister Tired

    NI is just an extra tax that goes into the pot. It really makes no sense other than to be used a qualifying stick for various beenfits. Should be rolled into the overall income tax percentage imho.
     
  20. hornmeister

    hornmeister Tired

    Already announced:
    https://www.bbc.co.uk/news/live/cp9zrg128get
    Agreed
    Agreed
    Agreed but the worg way to do it.
    Agreed
    Agree in principle but there are so many knock on effects that I think they should have taken some more time over it.
    Again agree in principle but the cost will be passed on to the consumers at the end of the day.

    So 5/6 so far. (the ones in principle get a half point.) It'll be minus several million if they but the tax up on beer.
     
  21. sydney_horn

    sydney_horn Squad Player

    I think the "new" government have had too many own goals since it took office.

    It's almost all about communication.

    The bus fare cap was the latest one. The cap was coming to end. That was the last government's plan. There was literally no funding made available beyond 2024.

    So Labour are actually cutting bus fares for 2025 by extending the cap beyond it's current deadline. This should be seen as a positive story.

    Yet Labour just announced/leaked the policy without any context. The media and opposition then claimed it as an increase for the "poor working person" to pay and it's now become a negative story.

    In all honesty, politically they would probably have been better off just letting the cap die and blaming the Tories for the lack of funding.
     
    UEA_Hornet and With A Smile like this.
  22. hornmeister

    hornmeister Tired

    Certainly their press office/officer has been doing a **** job since they came to power. Not all of the problems can be blamed on a hostile press who, lets face it, were rooting for them coming up to the election.
    My fears before the election were that SKS and Labour as a whole were just not very good. I want them to be better, we need them to be better because at the moment the alternatives don't bear thinking about.
     
  23. With A Smile

    With A Smile First Team

    The increase in the minimum wage is a good thing and relatively cost free for the government. In fact its a good way for them to make money.
    It basically pushes anyone with a 2nd household income or part time job, doing 20hrs a week into the lower tax bracket
    The lower age £10hr pushes anyone including students who work 20hrs a week into lower tax
    Puts anyone working more than 14hrs a week into employer NI
    If she does nothing with the benefit levels, or has it at a lower % increase than the increase in the minimum wage, it will reduce social security benefit payments.

    In essence it's going to be a double whammy for SME companies, increase in wages, increase in employers NI.
    I haven't really looked at the new employment laws, but suspect that these have been written to try to prevent a rise in unemployment, knowing this was coming.

    The rise in the bus fare, although its only a £1 is going to be the talking point. I heard on the radio that it cost the government about £520m in support, so in effect they are cutting that cost - Austerity! Unfortunately it does hit those who are the lowest earners and those that can't afford to run a car.

    The poorest households are more than four times as likely to have no access to a car as the wealthiest.
    https://www.health.org.uk/evidence-.../trends-in-households-without-access-to-a-car
    One of the biggest work sectors to use busses are NHS staff because of parking costs around Hospitals - another argument.
    I feel that this simple choice is going to be another that they have massively got wrong in the delivery, much like the WFA. If they announced it in the budget immediately after announcing the increase in the minimum wage, it would have been better received.

    Fuel will go up 7p - probably from 6pm tonight.
    There will be a short term increase at the budget. The last government made a temporary decrease in fuel allowance by 5p a litre in 2022 and in March of this year said they would extend that by a further 12 months, to March 2025
    https://www.fleetnews.co.uk/news/budget-2024-full-expensing-for-leased-assets-and-fuel-duty-frozen I suspect though that that policy will be reversed and the 5p will be added back on at the pumps.
    Way back in around 2008 the then government introduced a 2p a liter increase, every year going forward and yep its still in place! The last government though haven’t ever introduced it and always simply frozen that increase. Thee is no reason why it would be frozen again, making the increase at the pump being 7p.

    The VAT on schools is going to be bit of a dud. Yes it makes it look like Labour are being tough on the toffs, but the amount of pressure its going to put on state schools with SEND children, what ever increase there is in children changing school (we won't know that until next September). The money raised is just going to be absorbed elsewhere with little or no difference to the level of education for the children in state schools.

    I think we all understand that the government need more money, but it's going to be at the expense of the private sector, especially smaller businesses. Great o have a strong private sector, but you can't grow the economy using the public sector, you need the private sector to do that.

    I said a couple of weeks ago, the increases in young unemployment, those with a household 2nd income losing their jobs or having their hours cut, is a real risk.
     
    hornmeister likes this.
  24. lm_wfc

    lm_wfc First Team


    It's a double whammy for large companies too.

    Why do people always frame anything costing SMEs more money as bad but anything costing large businesses as good?

    SMEs are not charities
     
  25. Keighley

    Keighley First Team

    I don't understand this. How can a 50% rise be called a 'cut'? What I think you are saying is that they are extending the cap, and that, if the cap hadn't been extended, fares would have gone up more. That's not 'cutting bus fares' though is it? It's not putting them up as much as they might have been.
     
  26. Malteser2

    Malteser2 Squad Player

    What’s the point of even having the Budget statement in the House today when practically everything has been revealed/deliberately leaked anyway over the past few days.

    It’s made a nonsense of the whole procedure.
     
    Jumbolina likes this.
  27. Keighley

    Keighley First Team

    I assume the rationale for the leaks is to avoid 'doing a Kwasi'?
     
    hornmeister likes this.
  28. Lloyd

    Lloyd Squad Player

    Most of my income is 'unearned' so I expect to get stiffed. Hopefully my accountant will have a few wheezes up his sleeve to get round Reeves' attempt to pick my pocket and I'll be able to keep all of my lovely, lovely money. Public services, the NHS and the poor can f**k off as far as I'm concerned
     
  29. Keighley

    Keighley First Team

    Hopefully she will tax you until your pips squeak, @Lloyd. ;)
     
  30. Lloyd

    Lloyd Squad Player

    Where is @Moose by the way. Unlike him to be quiet on a day like this
     
  31. Lloyd

    Lloyd Squad Player

    My pips already squeak, m8!
     
    Keighley likes this.
  32. Keighley

    Keighley First Team

    I wondered that too, he messaged me a couple of weeks ago to say he had some personal stuff going on.
     
  33. UEA_Hornet

    UEA_Hornet First Team Captain

    It's more of a reduced subsidy than a cut, but even at £3 it's still a massive saving on a lot of bus fares.

    The whole policy was a mess in the first place really - another dodgy inheritance from the Tories. Local bus services aren't run by or funded from Whitehall but it completely muddied the waters. All the price cap does is subsidise the private companies who run them to the tune of hundreds of millions of pounds. It would be better just to take bus services back into public hands and run them at a loss than keep bunging money to Arriva, Stagecoach and their shareholders.
     
    Since63, lm_wfc and hornmeister like this.
  34. Lloyd

    Lloyd Squad Player

    Oh dear. Thoughts and prayers.....

     
    Keighley likes this.
  35. With A Smile

    With A Smile First Team

    Because SMEs employ over 60% of people in the private sector, nearly 70% of under 24's, the majority of part time workers - especially those who are the 2nd income in a household.
    They also work off smaller profits, where they don't have months worth of available capital sitting in the bank to cover increased costs, if needed.
    They don't have the same assets to pull in additional investment or the bank accounts to cover additional costs.
     

Share This Page