Fate of the 50p income tax rate

Fate of the 50p income tax rate

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During the past week or so, the AccountingWEB editors' in-box has been swamped with messages and press statements putting forward arguments for and against the 50% tax rate band.

Is this all an artificial bit of political froth generated to fill the silly season vacuum, or is it a vital debate in which the views of AccountingWEB's members need to be brought to the Chancellor and business secretary's attention?

I'm concerned that in this instance my habitual cynicism may have clouded my news judgement and I've ignored the comments from the likes of Ernst & Young, UK200Group and Richard Murphy to concentrate on other issues. Do many people here feel strongly about the issue and want to go into it in more detail?

As a quick overview, here are some of the points pro & con:

Srap the 50% band

  • "There’s not much point in having taxes that are very economically inefficient." Chancellor George Osborne, Radio 4 Today programme, 16 August. The chancellor has reportedly asked HMRC to evaluate the impact of the rate on Self Assesment takings after its first year. The findings should be ready in time for the Budget.
  • "It punishes wealth creation by imposing on entrepreneurs and business people a marginal tax rate in excess of 50% once national insurance contributions are added in... This is particularly damaging when the UK needs to create new businesses in new industries and promote growth by small companies, which can grow fast. It applies to just 1% of taxpayers, who already pay 24% of all income taxes."
  • "A significant disincentive to doing business in the UK, providing a barrier to new business owners and executives from coming here, whilst also driving existing higher earners to foreign shores." Patrick Stevens, Ernst & Young
  • "If something is not bringing in a profit and it cannot be made to do so, there is no point in continuing... In business and economic terms, if the 50% tax rate is not covering its costs then it should be scrapped but politically that's a totally different question!" Jonathan Russell, UK200Group
  • "With National Insurance, top taxpayers pay over 50 per cent which means they are working more for the taxman than themselves... These high earners are often the creators of businesses and therefore jobs for those who do not have the same talent, management skills or qualifications. Do we really want to punish them for their successes and risk losing this hot-bed of talent?" John Kelly, Square One Financial Planning

Keep the 50% band

  • "By definition most small businesses aren’t going to get in the top 1% of income earners – there are about 4m small businesses in the UK right now, at least (over 1m companies and 3m or so self employed). All small businesses that will grow fast will be limited companies – enjoying effective tax rates of around 20% or so, utterly undermining this argument." Richard Murphy, TaxResearch blog.
  • "According to recent articles, a 1% cut in income tax would cost the Exchequer £4.5bn. So these economists think that putting £10bn into the hands of 300,000 already-very-wealthy people is a better recipe for the well-being of the country than (say) cutting EVERYONE’s income tax rates by 2p…" ChrisM, on Murphy's blog.
  • "The government is committed to a competitive tax system, but in reducing the deficit, we have always been clear that those with the broadest shoulders should carry the greatest burden." A Treasury spokesman reaffirming the government's commitment to the 50p tax rate on Tuesday 7 September.

Let me know if you're interested in this topic and what you think. If I've been mistaken about the significance, I'll make amends with a more detailed study of the arguments, and perhaps put it to a community poll. As always, your guidance is appreciated.

Replies (240)

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Replying to carnmores:
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By chatman
20th Sep 2011 13:47

Progressive rates v direct tax

Monty Python wrote:
So if differential rates of income tax can be justified, then how are flat rates of other taxes (VAT etc) justified?  Isn't there a certain hypocrisy in half the tax system being based on a flat rate for all, and the other half being based on differential rates?

In my experience, it is not the same people that support progressive income tax rates and flat-rate VAT, fuel duty etc. I find that those who support progressive rates of income tax do not support VAT and other direct taxes, and vice versa.

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Replying to carnmores:
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By frustratedwithhmrc
20th Sep 2011 13:55

Isn't tax taxing enough?

Monty Python wrote:

So if differential rates of income tax can be justified, then how are flat rates of other taxes (VAT etc) justified?  Isn't there a certain hypocrisy in half the tax system being based on a flat rate for all, and the other half being based on differential rates?

The fact is that 40% and 50% rates of tax have more to do with political dogma and class envy than they do with fairness and raising revenue.

The only reason that there are no differential rates for VAT is because it would require every shopkeeper to know what marginal tax rate he should charge for each customer and it would occassionally change when the customer moved from one rate to another (either upwards or downwards).

Unless we all started carrying cards issued by HMRC which let the shopkeeper know what VAT rate to charge the customer.

While it would probably remove some of the inequalities of VAT it would be a nightmare to administer.

What would you do about foreigners who have no cards? Charge them the highest rate - unfair (Go to the European Court, Do not pass "Go", Do not collect "€200").

Would you charge them the lowest rate? Suddenly everyone buying a new HD TV claims to be a resident of Ireland / France / Bulgaria.

Is tax taxing enough?

 

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Replying to carnmores:
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By User deleted
20th Sep 2011 14:42

Red herrings

Monty Python wrote:

So if differential rates of income tax can be justified, then how are flat rates of other taxes (VAT etc) justified?  Isn't there a certain hypocrisy in half the tax system being based on a flat rate for all, and the other half being based on differential rates?

The world is full of hypocrisy and inconsistencies - you don't have to look further than this forum to see perfect examples. But no, I don't believe that there is any 'hypocrisy' in two different taxes being applied differently. Income tax (a direct tax) and VAT (an indirect tax) are completely different - to compare the two is to compare apples and bananas.

Monty Python wrote:

The fact is that 40% and 50% rates of tax have more to do with political dogma and class envy than they do with fairness and raising revenue.

 

I have no political axe to grind and have no envy of the classes below or above me. Others may have political and/or class reasons, but my own justification is based on other principles. Any view that the rates of tax are political etc is a matter of opinion, not fact.

 

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Teignmouth
By Paul Scholes
20th Sep 2011 11:39

Single rate tax?

So it's all Sir Humphrey's fault?

After a bit of searching I came across an article I first read a few years back from The Adam Smith Institute.  Looks like it's 6 year's old but still interesting reading.  Basically given time, bottle and cross party consensus it could be done.....no problemo?

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By mwngiol
20th Sep 2011 13:16

GAAR

I remain convinced that a robust General Anti Avoidance Rule would increase the tax take more than any fiddling with the various rates.

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By Monty Python
20th Sep 2011 14:08

BUT .....

........  I'm not suggesting variable rates of VAT so how it could be adminstered is irrelevant.  I'm suggesting a flat rate for income taxes.  Something around £10k tax free then 25% on the rest for everyone, better still, 30% and scrap NI. 

Making it 30% with no NI would mean that the wealthier paid more as the upper earnings limit on NI would disappear.

By having one uniform rate encompassing NI, vast layers of bureaucracy  could be done away with saving taxpayers money. Tax evasion would be reduced as the incentive would be less, and the whole system would be simpler and less prone to errors.

 

 

 

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Replying to petersaxton:
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By chatman
20th Sep 2011 14:18

@Monty Python

Monty Python wrote:
Making it 30% with no NI would mean that the wealthier paid more as the upper earnings limit on NI would disappear.

If the wealthier end up paying more, why is it about class envy, as you said in an earlier post?

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Replying to pipper01:
By Monty Python
20th Sep 2011 14:31

Envy

chatman wrote:

Monty Python wrote:
Making it 30% with no NI would mean that the wealthier paid more as the upper earnings limit on NI would disappear.

If the wealthier end up paying more, why is it about class envy, as you said in an earlier post?

 

The different tax rates are about class envy - or as the left wing would put it , soaking the rich. What we forget is that the rich usually get there by hard work, and by building up businesses which in turn employ many others thereby adding to the nations wealth.

We need companies and individual wealth creators to come to Britain, not leave it. Is it any surprise that high earners and those with succesfulo businesses choose to live in Switzerland and other low-tax countries?  Surely we would be better taking 25% of their earnings in tax, rather than the current zero% because they've left Britain?

As a nation we need to attract those who make jobs for others and create wealth.  At present we seem instead to have become a magnet for scroungers and low earners thanks to our overgenerous benefits system which rewards those who breed excessively, and penalises those who work.

 

 

 

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Replying to Mathew:
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By User deleted
20th Sep 2011 14:48

Tangents

Monty Python wrote:

The different tax rates are about class envy

That is one opinion

Monty Python wrote:

At present we seem instead to have become a magnet for scroungers and low earners thanks to our overgenerous benefits system which rewards those who breed excessively, and penalises those who work.

 

What does that have to do with  the 50p tax rate? I'm not challenging the opinion, but experience tells me that when such remarks enter a discussion, the thread quickly degenerates into a slanging match.

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Replying to Mano Manoharan:
By Monty Python
20th Sep 2011 15:08

Low income unskilled

BKD wrote:

Monty Python wrote:

The different tax rates are about class envy

That is one opinion

Monty Python wrote:

At present we seem instead to have become a magnet for scroungers and low earners thanks to our overgenerous benefits system which rewards those who breed excessively, and penalises those who work.

 

What does that have to do with  the 50p tax rate? I'm not challenging the opinion, but experience tells me that when such remarks enter a discussion, the thread quickly degenerates into a slanging match.

 

 

I think it has a lot to do with the 50% tax rate. High taxes drive high earners and businesses away. High benefits attract low earners.  And for some years now Britain has had high tax rates (compared to our competitors) and high benefits which have attracted unskilled workers from other countries.

The net result is a low income unskilled workforce.

 

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Replying to George Attazder:
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By frustratedwithhmrc
20th Sep 2011 15:33

It isn't that benefits are particularly high in the UK

Monty Python wrote:

I think it has a lot to do with the 50% tax rate. High taxes drive high earners and businesses away. High benefits attract low earners.  And for some years now Britain has had high tax rates (compared to our competitors) and high benefits which have attracted unskilled workers from other countries.

The net result is a low income unskilled workforce.

Its not that benefits are particularly high. Certainly places like France, Germany, Denmark, Sweden, Norway, etc. have higher levels of benefit than the UK.

The issue is that applying for these benefits in the UK is relatively easy and no prior contribution is required.

You try that sort of thing in France and you'd find yourself being sent away with a flea in your ear or (if you expressed your "rights"), they would accept your application and file it under "Processus quand l'enfer gèle."

As Enoch Powell famously said about immigration "Those whom the gods wish to destroy, they first make mad.".

Bill Beveridge must be spinning in his grave poor chap.

 

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Replying to Mathew:
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By chatman
20th Sep 2011 15:33

@Monty Python. I still don't understand

Monty Python wrote:
The different tax rates are about class envy

But you are suggesting that under a flat-rate 30% tax, which you support, the rich would pay more. If someone were motivated by class envy, surely they would want the rich to pay more. So why would class envy make them oppose it?

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Replying to petersaxton:
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By frustratedwithhmrc
20th Sep 2011 16:01

Class Envy?

chatman wrote:

If someone were motivated by class envy, surely they would want the rich to pay more. So why would class envy make them oppose it?

Because the class warriors (remembering back to the Labour Party conference of 1976) are the ones who want "the rich"* to not just pay more than than your average worker, but to pay disproportionately more than your average worker.

For the class warrior, they really want a progressive rate which means that whatever a workers pre-tax income is, all workers post-tax incomes are the same.

Thus was the workers paradise achieved, with freedom and equality for all - just like in Russia. Unless you happened to be a member of the Congress of Peoples Deputies or the Politburo.

* = Really everyone who earns more than average

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Replying to petersaxton:
By Monty Python
20th Sep 2011 16:06

Chatman

chatman wrote:

Monty Python wrote:
The different tax rates are about class envy

But you are suggesting that under a flat-rate 30% tax, which you support, the rich would pay more. If someone were motivated by class envy, surely they would want the rich to pay more. So why would class envy make them oppose it?

 

 

It's not about who DOES pay more.  The "left" of the political spectrum are only concerned about who APPEARS to pay more.

By setting tax at 50% it appears to the ordinary voter that they are hitting the rich hard.

The fact that "the rich" can employ people like us to minimise their liability, and can afford to defer payments, move income abroad, and 101 other things to keep the taxmans grubby hands off their money doesnt matter. It's all about appearance, about appealing to the solid working class trade union supporting labour voter (if such an animal still exists).  The truth of course is that the lefts idea of it's core voter is as outdated as its policies but there is still a large proportion of the "left" that is still fighting the "class war" of the 30's.

I suspect we are going to see another example of "back to the future" in operation later this year with public service strikes and all the tired old rhetoric about public sectotr workers being low paid etc. (I saw a recent article, cant recall where, that suggested that in fact public sector workers earn, on average, 8% more than they would in the private sector), but dont expect the Unions to let facts get in the way of a good excuse for a strike).

Moving swiftly back onto the topic, a flat rate tax percentage would be fairer (in my opinion), and would enable a reduction id red tape and therefore a reduction in civil service numbers (never a bad thing), and, it would I believe attract more businesses to the UK.

 

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Replying to FirstTab:
By Hans Zarkov
20th Sep 2011 16:29

Incentives

Monty Python wrote:

a flat rate tax percentage ... would I believe attract more businesses to the UK.

 

I doubt that it would have a noticeable effect (my opinion). What attracts businesses to the UK are low corporation tax rates. And the UK isn't doing too badly there.

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By Fidget
20th Sep 2011 14:47

Unpatriotic

It would be very unpatriotic to move abroad, especially if it was the UK that helped them become successful. They may still be able to get their income from the UK without paying UK taxes, but the 50% tax is just a temporary measure and it seems a bit extreme for anyone to move abroad to avoid a 52% overall tax. 

Fairness would be that they should help the country that helped them. If they make their profit from UK residents then it would be pretty selfish, and self serving, to take the profits abroad.

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By Wiganer Elaine
20th Sep 2011 14:56

Monty Python

I would just like to state my support for Monty Python's point of view.

If everyone pays tax at a flat rate on all income above a prescribed tax free allowance (to help the lower paid) everyone will pay the same proportion of their income to the government. How is this unfair in any way??

Surely if we live in a so-called equal society everyone should be treated equally?

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Replying to Flying Scotsman:
By Hans Zarkov
20th Sep 2011 15:05

How do you define "fair"?

Wiganer Elaine wrote:

I would just like to state my support for Monty Python's point of view.

If everyone pays tax at a flat rate on all income above a prescribed tax free allowance (to help the lower paid) everyone will pay the same proportion of their income to the government. How is this unfair in any way??

Surely if we live in a so-called equal society everyone should be treated equally?

And how do you define "equality"?

If we live in a so-called equal society there are those (not me, I hasten to add) that might advovcate that we should all have the same after-tax income.

Is it fair that a bank boss, responsible for [***] up the economy, is able to take home £1.5m per year when someone who can't get hold of a mortgage has to make do with £12k per year - both paying tax at 25%? Doesn't sound very equal to me.

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By Monty Python
20th Sep 2011 15:05

Everything has a price.
 Fidget PM | Tue, 20/09/2011 - 14:47 | Permalink

It would be very unpatriotic to move abroad, especially if it was the UK that helped them become successful.

 

 

Agreed, but I'm afraid patriotism has a price.

Would I be unpatriotic to save a few hundred pounds, no.

Would I be unpatriotic to save a few thousand - maybe.

Would I be unpatriotic to save a million - dam right I would.

When it reaches a choice between staying here and paying lots of taxes, or moving somewhere warm & sunny and never having to work again, then I don't think most people would have to think very long to make a decision - and head for the airport.

 

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By Fidget
20th Sep 2011 15:21

It wouldn't be equal taxes

I have seen claims that the less highly paid have to pay out a much higher % of their income on essentials, therefore they pay a proportionally higher rate of indirect taxes. Just think how much fuel duty has increased and is causing many people to struggle to pay their bills.

If they were paying the same rate of income tax as the higher paid then overall they would be paying more tax.

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By Fidget
20th Sep 2011 15:34

Comparable

http://en.wikipedia.org/wiki/Tax_rates_of_Europe

The UK doesn't come out too bad. 

Montenegro, Albania and Macedonia look to be best for those who want to pay the least tax.

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By Wiganer Elaine
20th Sep 2011 15:44

"Utopia"

If more direct tax was collected through a flat rate tax set at an appropriate rate on all income, then  indirect taxes could be reduced or abolished particularly on "essential" living costs.

If people were fully aware of how much of their income was paid to the government in order to fund whatever particular policies they favoured, then when election time came around people could (theoretically) make a more informed choice of who they wanted to be in charge of the country.

As I said in the title, "Utopia"

 

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By chatman
20th Sep 2011 17:12

Just remembered

you can hide comments from specified users. That's going to save me hours!

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Replying to Flying Scotsman:
By Hans Zarkov
20th Sep 2011 17:25

Hiding comments

chatman wrote:

you can hide comments from specified users. That's going to save me hours!

But only if you remember to update your ignore list every time the user returns under a new guise ;)

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Replying to User deleted:
By BillyBob
20th Sep 2011 17:47

Time-savings

Hans Zarkov wrote:

chatman wrote:

you can hide comments from specified users. That's going to save me hours!

But only if you remember to update your ignore list every time the user returns under a new guise ;)

 

Which will then take hours ;)

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Teignmouth
By Paul Scholes
20th Sep 2011 17:12

The UK or Warm & Sunny

Just to pick up on a couple of points here, I think all too often we (and other money people) get hung up on the £s without considering the wider picture of working & living in the UK. 

It really is quite a good place to be and if someone uses the excuse of personal tax rate to move lock stock & barrel elsewhere then sod 'em, they are the sort of people who are concerned more with personal wealth accumulation than growing business to benefit all, so let them go and screw what they can out of another country.

I wouldn't mind so much if they did go somewhere "warm & sunny" to spend their money in retirement but they won't.  As any psychiatrist will tell you they are as addicted to making money as any gambler and will be on the phone to their broker (or some of you) the day they drop.

I have no doubt that there is a healthy number of wealthy people who build & run companies, creating employment and wealth for the country but I cannot avoid the impression that their numbers are over sold and that the majority of people build wealth & influence for number 1.

This is not me being envious of the people involved it is more about how our system allows such huge inequality and also the risks of relying on a small number of super-wealthy to pay the lion's share of the country's tax burden.

On balance I would favour a flat rate & high personal allowance but, as written elsewhere, I can't see any government here brave enough to take the risk and do the work and marketing  needed.

 

 

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Replying to carnmores:
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By frustratedwithhmrc
20th Sep 2011 17:50

Eastern European countries have implemented flat taxes

Paul Scholes wrote:

On balance I would favour a flat rate & high personal allowance but, as written elsewhere, I can't see any government here brave enough to take the risk and do the work and marketing  needed.

Plenty of countries have implemented flat taxes and are seeing the benefit, unfortunately, they are primarily former Eastern Block countries (i.e. those who have had their fill of socialist class war). It will take an extreme amount of effort for a high tax / high spend country to move from the reliable extortion of progressive taxation onto a fairer and more importantly simpler flat tax.

Far better for the politicians in developed Western European countries to implement their current tax systems which are subject to the special pleading from various different trade bodies and corporation that pour lobby funds into the pockets of politicians. That is probably the reason why we will not see a wholesale move from progressive (and therefore disproportionate) taxation to a flat tax.

http://en.wikipedia.org/wiki/Flat_tax#Eastern_Europe

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By Monty Python
20th Sep 2011 17:51

.

Paul Scholes

"This is not me being envious of the people involved it is more about how our system allows such huge inequality and also the risks of relying on a small number of super-wealthy to pay the lion's share of the country's tax burden.

On balance I would favour a flat rate & high personal allowance but, as written elsewhere, I can't see any government here brave enough to take the risk and do the work and marketing needed ""

 

 

Yes there is inequality - but isn't that exactly what makes the system work?  Why would someone risk losing everything to start and expand a business if the rewards were not there to be had?  Whatever you might like to see, the truth is that greed is the best motivator their is.  Why else would people buy lottery tickets?

You refer to Britain being a great place to live, maybe it is, maybe not, that rather depends on your outlook and indeed on which bit of it you happen to be in. It also probably depends on how much money you have.

I agree with your conclusion that our political masters lack the courage to bring in a flat rate system although there does seem to be an intention to increase personal allowances to £10k which will quite rightly take an awful lot of part-time and low paid workers out of tax altogether.

 

 

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By User deleted
20th Sep 2011 17:52

Just chipping in ...

... the basics such as staple foods, housing, childrens clothes and light and heat are not subject to VAT and adult clothing can be obtained cheaply at low prices stores or even charity shops.

On the other hand, is the CEO of Barclays (for instance) of any more value to society than the guy who unblocks his drains?

I do have more of a problem with foreign owners asset stripping British firms and sucking profits out of our economy (Kraft, Santander etc) and large (effective) monopolies holding UK producers to ransom (Tesco) and destroying the traditional high street; and also how tax receipts are spent - i.e. benefits paid to non UK workers which go straight out the UK economy to help sustain economies in other countries. To my mind these are far more serious issues than the issue of 50% tax, but would be happier if tax receipts were spent responsibly and efficiently.

I would also be quite happy if there was a 50% rate of CT for companies that are owned more than 50% overseas, or alternatively a 30% witholding tax on dividends paid overseas!

 

 

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Replying to WhichTyler:
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By frustratedwithhmrc
20th Sep 2011 18:12

Sorry, but VAT is charged on heat and light

Old Greying Accountant wrote:

... the basics such as staple foods, housing, childrens clothes and light and heat are not subject to VAT and adult clothing can be obtained cheaply at low prices stores or even charity shops.

Sorry, but you don't seem to have checked your VAT notices or Electricity / Gas bills for a while

http://www.hmrc.gov.uk/vat/forms-rates/rates/goods-services.htm#4

VAT is charged on heat (Gas) and light (Electricity) albeit at the reduced VAT rate of 5%.

I vaguely remember that it was charged at the full standard rate of 17½ % during the dying years of the previous Conservative administration.

 

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Replying to Flying Scotsman:
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By User deleted
20th Sep 2011 18:51

Domestic heat & light

frustratedwithhmrc wrote:

I vaguely remember that it was charged at the full standard rate of 17½ % during the dying years of the previous Conservative administration.

No - it used to be zero-rated, the Tories increased it to 8% and it was subsequently reduced to 5%.

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Replying to carnmores:
By Monty Python
20th Sep 2011 19:25

.

BKD wrote:

frustratedwithhmrc wrote:

I vaguely remember that it was charged at the full standard rate of 17½ % during the dying years of the previous Conservative administration.

No - it used to be zero-rated, the Tories increased it to 8% and it was subsequently reduced to 5%.

 

 

Not to worry, if the EU gets its way, it will soon be at standard 20% rate like everything else.

 

 

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Replying to coolmanwithbeard:
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By User deleted
20th Sep 2011 19:43

Fact or fiction

Monty Python wrote:

Not to worry, if the EU gets its way, it will soon be at standard 20% rate like everything else.

Says who? The Daily Mail?

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Replying to User deleted:
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By thisistibi
20th Sep 2011 20:19

Standard rating energy bills

BKD wrote:

Monty Python wrote:

Not to worry, if the EU gets its way, it will soon be at standard 20% rate like everything else.

Says who? The Daily Mail?

Actually I think C_D has a point on this one, the EU want harmonisation of VAT across the whole of the EU.  Currently, the EU only allow reduced VAT rates on a specific range of products & services - for example, France had to campaign very hard to get restaurants on that list.  The UK accounts for most of the lost VAT revenue in the EU which is forgone due to reduced rates on domestic energy.  The EU don't like it.  

One reason they don't like it is because it counteracts the effect of carbon taxes which are designed to reduce energy consumption.  The UK introduces carbon taxes with one hand and then gives away state aid (in the form of reduced VAT) with the other hand.  

The EU believe that the effect on poor households of standard rating energy bills could be counteracted with other grants/tax credits.

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Replying to User deleted:
By Monty Python
20th Sep 2011 20:19

.

BKD wrote:

Monty Python wrote:

Not to worry, if the EU gets its way, it will soon be at standard 20% rate like everything else.

Says who? The Daily Mail?

 

 

The prioposal is to equalise VAT throughout the EU all at the standard rate.  Not the Mail - the Times.

 

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Replying to samson 01:
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By frustratedwithhmrc
20th Sep 2011 20:32

The Times has become an irrelevance since the paywall.

Monty Python wrote:

The proposal is to equalise VAT throughout the EU all at the standard rate.  Not the Mail - the Times.

No wonder no-one has ever seen it if it was in The Times. I haven't read a single article of theirs since the paywall went up.

Shame really as I did enjoy some of the columnists (Clarkson et al), but quite obviously not enough to pay for them.

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Replying to FirstTab:
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By thisistibi
20th Sep 2011 20:41

The Times

frustratedwithhmrc wrote:

Monty Python wrote:

The proposal is to equalise VAT throughout the EU all at the standard rate.  Not the Mail - the Times.

No wonder no-one has ever seen it if it was in The Times. I haven't read a single article of theirs since the paywall went up.

Shame really as I did enjoy some of the columnists (Clarkson et al), but quite obviously not enough to pay for them.

It's well worth the money.  Especially if you have an iPad or iPhone (or both), as the apps for those devices are brilliant.

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Replying to samson 01:
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By User deleted
20th Sep 2011 20:35

It must be true, then

Monty Python wrote:

BKD wrote:

Monty Python wrote:

Not to worry, if the EU gets its way, it will soon be at standard 20% rate like everything else.

Says who? The Daily Mail?

The prioposal is to equalise VAT throughout the EU all at the standard rate.  Not the Mail - the Times.

Can you provide a link?

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Replying to jimmercy:
By Monty Python
20th Sep 2011 22:25

Link

BKD wrote:

Monty Python wrote:

BKD wrote:

Monty Python wrote:

Not to worry, if the EU gets its way, it will soon be at standard 20% rate like everything else.

Says who? The Daily Mail?

The prioposal is to equalise VAT throughout the EU all at the standard rate.  Not the Mail - the Times.

Can you provide a link?

 

 

Yes.

 

www.parliament.uk/briefing-papers/SN02683.pdf 

 

Annex !!! on page 22 lists goods and services to which reduced rates of VAT may be applied.  Guess what's missing from that list.

 

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Replying to carnmores:
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By frustratedwithhmrc
20th Sep 2011 19:38

My recollection fails me, but it was announced at 17.5% in 1993

BKD wrote:

No - it used to be zero-rated, the Tories increased it to 8% and it was subsequently reduced to 5%.

Nope - it was announced in the 1993 budget that VAT would be charged on domestic fuel (including the standing charge element) at 8% from April 1994, rising to 17½% in April 1995.

Although the finance bill was passed, due to massive protests from pensioners and fuel poverty action groups the second increase from 8% to 17½% was either never implemented or reversed soon after it was implemented. I don't remember which.

It was the first New Labour budget in 1997 that lowered the VAT charged on domestic fuel from 8% to its current 5%, which was the minimum legally allowed with the EU for VAT-able supplies.

http://www.guardian.co.uk/uk/1999/mar/03/budget1999.budget6

[UPDATE]

Found it. Effectively repealed before implementation in December 1994. Isn't Google wonderful on the forth attempt?

http://www.independent.co.uk/news/rebels-defeat-major-on-fuel-tax-1386971.html

 

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Replying to Flying Scotsman:
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By User deleted
20th Sep 2011 20:11

You're right ...

frustratedwithhmrc wrote:

Old Greying Accountant wrote:

... the basics such as staple foods, housing, childrens clothes and light and heat are not subject to VAT and adult clothing can be obtained cheaply at low prices stores or even charity shops.

Sorry, but you don't seem to have checked your VAT notices or Electricity / Gas bills for a while

http://www.hmrc.gov.uk/vat/forms-rates/rates/goods-services.htm#4

VAT is charged on heat (Gas) and light (Electricity) albeit at the reduced VAT rate of 5%.

I vaguely remember that it was charged at the full standard rate of 17½ % during the dying years of the previous Conservative administration.

 

... I have a wife for that sort of thing, I have no idea what is on my personal utility bills, too much of a busmans holiday!

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By User deleted
20th Sep 2011 19:40

?

Is that not exactly what I said? It used to be charged at 0%, it was increased to 8% and then reduced to 5%. It was never charged at 17.5% (non-implemented rates don't count as far as I'm concerned).

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Replying to petersaxton:
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By frustratedwithhmrc
20th Sep 2011 19:47

It's my memory - I've got goldfish DNA I think.

BKD wrote:

Is that not exactly what I said? It used to be charged at 0%, it was increased to 8% and then reduced to 5%. It was never charged at 17.5% (non-implemented rates don't count as far as I'm concerned).

Yes - quite right. My recollection is a bit dim and distant due to increasing decrepitude. I knew the 17.5% rate for domestic fuel was in the mix somewhere, but couldn't exactly remember where why or how.

My apologies for ever doubting you.

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By User deleted
20th Sep 2011 19:49

No worries

You had me doubting myself, that's all :)

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By User deleted
20th Sep 2011 22:29

As they were wont to say on the original Monty Python ...

... I never expected the Spanish Inquistion ...

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By User deleted
20th Sep 2011 22:48

???

I asked for a link to the Times article(s). I am well aware of, and have responded to, the Green Paper.  The consensus amongst more knowledgeable advisers is that a single rate across the EU is highly unlikely (and if it does come it will be considerably lower than 20%) - particularly in light of the Government's own response to the Green Paper. But I'm always interested to see what spin the media put on things, which is why I asked for the link.

I'm not sure what point you are trying to make by referring to Annex III - heat and light has never been on that list.

 

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Teignmouth
By Paul Scholes
20th Sep 2011 23:22

Monty Python

You say above:

"Yes there is inequality - but isn't that exactly what makes the system work?  Why would someone risk losing everything to start and expand a business if the rewards were not there to be had?  Whatever you might like to see, the truth is that greed is the best motivator their is.  Why else would people buy lottery tickets?"

I presume you talk for yourself but this is certainly not what motivated me to start my own business.  If I had been convinced, then or now that starting or running my business would naturally lead to others suffering I would stop tomorrow.

I agree, and have stated, that greed is what motivates many in how they conduct themselves but it is unhealthy and destructive and should not be accepted as the norm.

Do you honestly believe that greed is the "best" motivator?  How about fear and hatred which is what it motivates in others, are they also part of "what makes the system work"?  Does greed make the rioting more efficient or help a government official in a developing country better distribute the aid we give them?

The system does not work and probably never has but we hold onto it because it feels too much like hard work to consider the alternative, which is to stop obsessing on number 1 and consider others.

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By chatman
20th Sep 2011 23:23

@Paul Scholes

Great post.

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By Monty Python
20th Sep 2011 23:30

.

Whether people choose to bury their heads in the sand or not, the fact is that the EU is moving towards the formation of a single european state.  It is already pushing for a single unified treasury, has taken the first steps towards a single foreign policy with "EU embassies" and is attempting to dictate defence policy. More of our laws are already made by the EU than are made by our own government.

Unification of VAT rates and laws across the EU is on it's way, and that will mean a basic 20% levy on everything. On heating it is dressed up as some form of "green" tax, on food it is already being touted as a way to combat obesity. The EU is good at inventing excuses for [***] it's citizens.

While you might rely upon newspaper articles, some of us have a more active interest and involvement in politics, and there is a growing anti-EU movement within all the mainstream parties whilst the "leaders" try to sleep-walk us into a federal europe.

When that happens a 50% tax rate will be the least of our worries.

 

 

 

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Replying to Monas:
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By User deleted
21st Sep 2011 08:19

Misunderstanding

Monty Python wrote:

Whether people choose to bury their heads in the sand or not, the fact is that the EU is moving towards the formation of a single european state.  It is already pushing for a single unified treasury, has taken the first steps towards a single foreign policy with "EU embassies" and is attempting to dictate defence policy. More of our laws are already made by the EU than are made by our own government.

Unification of VAT rates and laws across the EU is on it's way, and that will mean a basic 20% levy on everything. On heating it is dressed up as some form of "green" tax, on food it is already being touted as a way to combat obesity. The EU is good at inventing excuses for [***] it's citizens.

I agree - to an extent. A single VAT rate may yet come - I never said it wouldn't (although I don't know where you get a 20% rate from - at the moment, the maximum rate being proposed is more like 15%). But I don't think anyone is burying their heads in the sand - those that are against a single rate are lobbying hard against it - if it does come, it will not be for want of resistance and it is wrong to say that people are burying their heads.

Monty Python wrote:

While you might rely upon newspaper articles, some of us have a more active interest and involvement in politics, and there is a growing anti-EU movement within all the mainstream parties whilst the "leaders" try to sleep-walk us into a federal europe.

I don't rely on newspaper articles - quite the opposite in fact. Wasn't it you that initially said that your source was the Times? And I'm not the one that continually references the Daily Fail. All I said was that I was interested to see what spin the Times had put on the matter. But you are right - some of us do have a very active role in fiscal policy.

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