How will it affect us and our clients?

How will it affect us and our clients?

Didn't find your answer?

A new government and a new broom - hopefully. But how will it affect us professionally?

It seems that the government intends to try to repay our debts primarily from savings in public expenditire, rather than by increasing overall taxation. 

It also seems that they (thanks to the Liberals) are committed to taking lower paid out of tax by increasing personal allowances to £7,500 next year and £10,000 over the next couple of years.  Obviously this reduction has to be paid for by increases in tax elsewhere. 

So far the changes to capital gains tax etcetera wont get anywhere near to paying for the proposed increase in personal allowances.  Where do you think they will recover the shortfall? 

It also seems that they intend to roll back Labour's stealth taxes with such measures as the fuel duty equaliser. 

All of these measures will affect us and our clients - one way or another. 

On a different note, they are also introducing a "Repeal Act" to scrap the ID card scheme, road pricing, etc.  They are ensuring that speed cameras are no longer "cash raisers" for councils, and generally starting to dismantle Labour's surveillance society - should the also repeal, or at least drastically change, the money laundering regulations? 

  

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By User deleted
14th May 2010 11:17

the policy

think tank said recently that income tax would have to rise by 6p over the next 10 years to pay for this that is about right...

Dismantling labours monolithic public sector structures is not going to be easy which is why the bulk must come from higher taxes...VAT is an absolute no brainer and will go to 20% possibly higher for luxury goods...CGT will (and should for non business gains) be aligned with the IT rates....even the cabinet are chipping in bless them by taking a 5% pay cut that will cover about 5 minutes interest on our debts...

Part of the problem here is this "something for nothing" philosophy that has emerged over the last 20 years and what created this mess in the first place ...basically we get the country we deserve and if that means paying more taxes then as long as they are properly directed then so be it...therein of course was the problem in the past although this time the direction is pretty self evident being to reduce our debt mountain ASAP...once that is achieved you can only hope the lessons of the past have been learnt...

pembo

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By User deleted
14th May 2010 11:29

I ownder

if the income tax savings for the lower paid will be greater than increase in the overall vat these low earners will pay.

Also winder the impact of increased fuel  prices on the prices of everyday goods on the lower paid.

on the other hand freezing of IHT threshold will have nil impact on the lower paid or on indeed the very rich as they the very rich would have taken steps to mitigate or avoid IHT.

Masion Tax would have hit the very rich.

It would appears that the tory and lib dems have gone back to the old tpry trick of sparing the very rich from any pain.

 

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By Steve Holloway
14th May 2010 11:51

What nonsense anon ...

... there will never ever ever ever be a greater redistribution of income from tax payers to the low paid / public services than has occured in the last 13 years. What staggers me (as a non Labour supporter) is how having spent the huge amounts they have that they do not receive more credit from the recipients!? I still do not believe that the vast majority in this country actually realise, let alone appreciate, just how good they have had it. There are a whole generation who do not remember the 70's and 80's and assume that someone will always pick up the tab regardless of the decisions they make personally.

As for the super rich .. dur! They don't pay taxes in the way that most people do .. that's how they got to be super rich in the first place. You won't catch them either ... they are quite clever (and mobile)!

 

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By User deleted
14th May 2010 12:01

Sparing the very rich from any pain

I think it's all relative.

'Pain' for a rich person is not being able to repair a leak in his yacht. 'Pain' for a poor person is not being able to repair a leak in his only pair of shoes.

The cabinet's pay cut is a good thing, but they are not really inflicting any pain on themselves because they are all pretty well heeled. Will the captains of industry and the bankers follow their example? I don't think so.

And if I'm right, will the trade unions follow the example of the cabinet...or the example of the fat cats? You decide.

On fairness - well I don't think it's possible to devise a tax change that everyone thinks fair. Inevitably the loudest protests come from the biggest losers, so it always seems like the changes are hugely unpopular, even when the majority think they are, well, not too bad. So I leave the last word to Edmund Burke, a Tory but a sensible chap nonetheless:

'To tax and to please, no more than to love and be wise, is not given to man'.

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By User deleted
14th May 2010 12:21

dilemna

This rich pay more tax thing is an interesting philisophical debate...at the super levels its self defeating as they employ PWC or whoever to not pay tax...

For the rest however say though you've got 2 guys. One earns £200000 so pays say £80000 tax/NIC. The other earns £20000 so pays say £4000k tax/NIC. The rich guy therefore pays 20x the tax the other guy does although only earning 10x more not to mention all the additional VAT he pays, fuel duties with his fleet of 4x4s etc etc. Who however is more likely to need and use the basic stuff these taxes pay for ? The rich guys kids will probably go to private school and he will more than likely have private health cover etc...the other statistically is going to use the NHS and other public facilities far more often...

This is why the people of this country and got to wake up to the fact that if you want a rolls royce country then we all have to pay for it without trying to hammer the ones who earn more who already pay far more than their fair share...

pembo

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By User deleted
14th May 2010 12:37

#pembo

...the point surely is that if you hit the rich guy with an extra £1,000 a year in tax he shrugs and asks his missus to stop pouring champagne down the sink.

Do the same to the poor guy and he's in trouble.

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By User deleted
14th May 2010 12:49

Pembo is correct

If you tax the wealth generators to much they will move to different countries and pay lesser taxes there, they will take jobs and therefore additional taxes with them leading us to pay higher unemployment benefits.

If you were earning £1m could you be bothered working extra to earn an extra £100,000 if most of it was going to taken off you in tax?

It is not only the wealth generators but the essential service providers. Two of my three doctor clients have said that they will not work as hard and restrict their income to £150,000pa - who is going to do the work that they are no longer prepared to do?

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By User deleted
14th May 2010 12:51

state aid

@ Pembo

 

while you're right saying that the rich usually avail themselves of private education and health care you miss a valid point or two.

Most if not all qualified teachers will have trained in a state school at no additional cost to them. Those skills are then brought to bear in the private sector.

Private health care doesn't usually cover emergency care. If a millionaire drops to the floor with cardiac arrest he will almost certainly be taken to an NHS hospital and cared for by NHS staff. He may be moved into a private room, perhaps even a private hospital later, but initially the NHS picks up the tab and doesn't recharge the insurance company. Same goes for those rich as Croesus but with existing conditions or conditions their insurers decline to cover.

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By cymraeg_draig
14th May 2010 13:51

Taxing the rich

Quite simply if you over tax the wealth creators, they will go somewhere else and create it.

A simple example -

I go and work for Pembo - he pays me £100k a year - the government gets £30k in tax.   or,I start my own firm and employ say 10 staff. The government gets £20k x 10 staff plus £40k off me + saves 10 lots of unemployment benefit.Tax levels reach the point where I consider Im over taxed - I close the busines, 10 employees are redundant and this costs the government 10 lots of unemployment pay and the loss of 10 x £20k taxes no longer collected.

Now, should the government be taxing me to the point where I figure its easier to just work for a salary and avoid the stress,

or,

Should it encourage me to put my house at risk and put up with the stress to build my own business.

 

I know thats a simplistic example, but it makes the point, if tax reaches the point where it stifles the desire to build your own business then it actually costs the country, in more ways than one.

 

ps - Pembo actually offered me £5.50 an hour (cheapskate) but Im holding out for more :)

 

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By Peter Bonetti
14th May 2010 14:17

It's magic

Absolutely, to think we nearly lost Paul Daniels when Labour came in!!

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By User deleted
14th May 2010 14:32

clarification

when I said £5.50ph CD that was conditional on an 80 hour week and no holidays....

Point well taken on a couple of respondents (although the rich guy is statistically far less likely to need emergency intervention).........but the thing that strikes me is the inherent dishonesty in the whole system...nobody points out the obvious facts but seems to adopt a "well you earn more so you should pay more" approach...well they do...far more in fact but as CD says theres far more to it than that..

I have about 40 NHS consultants all of whom bar 4 (on principle being left leaning) route the private income through a company...until now...2 have now said stuff this I'm not having that lot earning more than I do and have now instructed me to incorporate ...I've had others who earn over £150k on NHS alone saying they are cutting back their sessions to keep the income under...what a stupid brainless thing to do...if they'd made it 48% tax then with the 1% NIC you would still have the upper hand but no they had to be greedy...

What happens when this lot sack loads of civil servants not least at HMRC when computers totally rule...they end up paying them more through benefits etc....it seemed to pass labour by that a huge % (70% in Wales actually) of the revenue raised through their now doomed hikes would be paid by...er...themselves...smoke and mirrors ladies and gentlement

never mind its almost the weekend

pembo

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By WhichTyler
14th May 2010 15:21

Not quite like that...

Tax levels reach the point where I consider Im over taxed - I close the busines, 10 employees are redundant and this costs the government 10 lots of unemployment pay and the loss of 10 x £20k taxes no longer collected.

Surely this stage goes: I sell my (obviously succesful) business for which there is proven demand  and a valuable customer base for a large capital gain, and the staff stay employed. Or if I close it, my customers go elsewhere, creating revenue for other businesses and employment for myformer staff.

Notwithstanding the future alignment of CG and IT rates...

 

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By User deleted
14th May 2010 15:53

@ Whichtyler

Yes possibly for an accountancy firm but not say for an engineering firm where the initial capital costs (either set up or acquisition) make the succesful firm unsellable and the production is moved abroad.

Or even possibly (I know one in my area) the accountancy firm sells up to an Indian Company which llays off all but one of the staff and does 90% of the work in India - still 9 lots of unemployment benefit/loss of income tax 

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By cymraeg_draig
14th May 2010 16:09

In an ideal world............

The bottom line on this, in my view, is that everyone should pay the same %'age of their income as tax over a basic level of exemption.

Why should someone be penalised for working harder, taking more risks, and being more succesful?

 

THe basic level of exemption should be set at the point where you move out of "poverty" - currently I believe around £9,000.  It's clearly immoral to take tax of someone who is still below the poverty line.

Similarly it is immoral to pay basic state pensions, sick pay, unemployment etc that is below the poverty line, so all these benefits should pay a minimum of £9,000 pa.  

Once people move above the poverty line then all taxes should be set at a single flat rate.

 

After all if a pensioner buys a gallon of petrol and a millionaire buys a gallon of petrol, they both pay VAT at the same rate, so why is it acceptable to have the same rates of purchase taxes, but differing rates of earnings taxes?

 

 

 

 

 

 

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By carnmores
14th May 2010 19:55

ther are simple answers

put VAT on food as per scandanavian progressive regimes cough cough

or put a monolith tax on all companies with a turnover in excess of £100m of 2% of turnover and reduce their CT by 5%

we will be home free in no time and combined with a well managed state asset bank sale we will all be on holiday in greece - large ones all round 

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By zarathustra
14th May 2010 20:33

Public sector surcharge

They could start by imposing   a tax surcharge on public sector employees in order to fund their ridiculous pensions and "early retirement" options where they finish ten years early and still pickup a full pension (like a teacher friend of mine who's school needed to reduce staff numbers - why shouldn't he have to find a job for the next 10 years and think about topping up his own pension with his stat redundancy pay like someone in the private sector would instead of sitting on his a**e at home effectively picking up half pay for the rest of his natural).

I'll stop as this is turning into a rant.

 

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By cymraeg_draig
14th May 2010 23:37

Rant????

I'll stop as this is turning into a rant.

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Posted by zarathustra on Fri, 14/05/2010 - 20:33

 

It's not a rant - you're just saying what the rest of us are thinking.

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By Ken Howard
15th May 2010 20:47

Scrap tax free lump sums and surcharge occupational pensions

Easy to get a few billion quid.

Firstly, scrap the £30k tax free lump sum allowance - what's the point in having it at all?

Secondly, either have a new tax rate for occupational pensions paid to the retired or extend employees national insurance to occupational pension payments.

True, these proposals would probably hit public sector workers hardest, by hey-ho, what a shame?  It's surely better to pay say 30% on your lump sums and pension than being in the private sector and having begger all lump sum and pension so nothing to tax anyway!

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By WhichTyler
15th May 2010 21:31

Comparators...

When you consider the salary levels, are public sector workers really that well off? This salary survey suggests a pretty big disparity in pay rates that more than offsets the pension difference

http://uk.hudson.com/documents/uk-AF-SalarySurvey.pdf

For instance an FC with 4-6 years experience in London would earn £40-60k in Public Sector (if anyone is hiring, which is unlikely), compared to £55-90k in Retail or IT, £55-70k in Media, £60-80 in Utilities, £60-75 in property. So a significant premium even at the lower ends of the scale. And there are precious few bonuses and company cars in the public sector too. Of course there may be a perception that the private sector is more volatile, so there is a risk premium implicit in the salary, but the opportunities are probably greater there too.

If anyone has better information, I'd be interested to see it...

 

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By cymraeg_draig
15th May 2010 23:26

Civil servants

Since we seem to have strayed into the cost of the civil service in all its forms, I will air my pet grievance about the vast majority of these public employees.

A large proportion of them move straight from school/university into the civil service. There they make decisions which affect the viability of businesses.  Planning, Health & Safety, transport, parking, and of course HMRC - ALL have powers which can drastically affect businesses.  But the people wielding this power are totally ignorant. They have never had experience in "the real world". (And actually I would include a lot of accountants in that description too).

The things that can make or break a business, particulartly a fledgling business, are the seemingly small, but vital, decisions made by these civil servants.  A simple example is the small one man TV repair business which suddenly finds double yellow lines outside it's premises and can no longer collect and deliver TV sets because of this, or the business subjected to a totally unjustified tax investigation which results in no extra tax being assessed, but takes months of the businessman's life to deal with.

We recently encountered a business which leases the lake in a local park from the council and hires out rowing boats on it. The council's health & safety demanded that signs were erected stating "Danger of drowning".  Its a LAKE for God's sake, how dumb do they think people are?  Oddly enough the council then had a bonfire on the park but I didnt see a single sign saying "Danger of getting burnt" - maybe they were short of wood - or maybe its one rule for them and another for the peasants.  

In other words, perhaps people wouldn't object to civil servants/local council officers getting nice pensions if it were not for the fact that most civil servants - and I include many HMRC staff in this, are so dumb they really shouldnt be allowed out alone.   

 

 

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By WhichTyler
16th May 2010 12:24

Mr Motivator

that most civil servants ... are so dumb they really shouldnt be allowed out alone.

Council staff must have loved you when you were a councillor...

(intended in a lighthearted way, btw)

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By andypartridge
16th May 2010 13:16

Real world

"They have never had experience in "the real world". (And actually I would include a lot of accountants in that description too)."

In response to the blogger, some people have too much experience.  (And actually I would include a lot of barristers in that description too). Life for most isn't quite the Kafkaesque vision described.

-- Kind regards Andy

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By User deleted
16th May 2010 13:26

What nonesense anon...

time will tell.

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By cymraeg_draig
16th May 2010 14:06

WhichTyler & andypartridge

Council staff must have loved you when you were a councillor...

(intended in a lighthearted way, btw)

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Posted by WhichTyler on Sun, 16/05/2010 - 12:24

 

The ratepayers did when we delivered better services with less staff and lower rate increases. It's amazing just how much dead wood there is in the average council. They really can give all the services people want from their council without the need for "breast feeding consultants, cycling to work advisors" and the like.

 

_________________________________________________________________

In response to the blogger, some people have too much experience.  (And actually I would include a lot of barristers in that description too). Life for most isn't quite the Kafkaesque vision describedtooltip();

Posted by andypartridge on Sun, 16/05/2010 - 13:16

 

Your sarcastic attempt to inflame accompanied by what is clearly intended to be a personally offensive reference to the works of Franz Kafka are duly noted. Thank you for again providing evidence of your intention to attempt to inflame and harass other posters, which I am sure the moderators will note.

I would doubt that you actually know any barristers as we tend to be discerning about the type of friends we make.

 

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By cymraeg_draig
16th May 2010 23:09

Much worse than we thought...............

"David Cameron readied Britain for deeper spending cuts and higher tax increases today, accusing Labour of making crazy spending decisions during its final period in office.

The new coalition Government will tomorrow call in independent auditors to establish the true scale of official debts, the Prime Minister said.TIMES 16-5-10

http://www.timesonline.co.uk/tol/news/politics/article7127950.ece

 

It seems that some spiteful and deliberate sabotage was carried out by Labour.  Perhaps Brown & Co should lose their pensions - or worse.

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