2021 Budget Predictions

[Craigyp79]

amgmcqueen said:

Toll the Channel tunnel.

Are you under the impression that it's free at the moment?

[Flooble]

The MO of this government is to trail various options in "leaks" and then select those that cause the least uproar. Together with spinning campaigns against any targets they have pre-selected. I haven't noticed many leaks yet nor do the BBC seem to be running any stories about how little corporation tax is paid by large multi-nationals etc. Which does seem to imply the status quo may be maintained.

My wholly without basis suggestions would be:

1) "Sin" taxes.
a) Increase in duty on alcohol drunk at home ("To assist the pub trade get back on its feet")
b) Increase or introduction of taxes on sugary drinks/fatty foods/fast food ("To fight obesity and put us in a better place to withstand the third wave"
c) Usual cranking up of tax on cigarettes ("To protect the NHS")
d) Big jump in duty and tax on fuel - while lots of people are not driving and the price of oil is depressed it will be a lot less noticeable. ("To encourage a green recovery"
e) Big increase in Air Passenger Duty or even a new tax entirely. ("To encourage more sustainable options in the future now we have shown video conferencing can work")

2) "Fiddling round the edges"
a) Freezing of all the allowance bands so people are caught by fiscal drag ("Now is not the time to be making changes").
b) Removal of higher rate tax relief on pensions ("Level playing field")
c) Alignment of tax on dividends and PAYE income ("Furlough has shown us we need to ensure people receive their income in a way government can support"). This will be the biggest surprise if they do it - or something lose to it such as adjusting the bands - but while a lot of small businesses are on the ropes it's probably the easiest time for him to hit them. The other impacts (to pension funds, regular investors etc.) are I feel hidden from the bulk of the population, much like the tax raid on pensions in the early 2000s.
d) Resetting of Corporation Tax to just below the OECD average - they might even squeak it up to 25%. If they did both c and d I'd be surprised but you never know
e) Some tweaking to VAT. Maybe a "Super Luxury" tax, although no idea how they could easily implement it. Given the way government goes, maybe something a bit mad like any shoes/suits/handbags/whatever over £500 count as "super luxury" and attract the higher rate. Cue lots of interesting avoidance schemes (This suit is £499 when you buy our £1000 plastic cufflinks).

Any other suggestions?

[CraigyMc]

Macron said:

Wednesday March 3, Rishi Rich will be telling the rest of us how much poorer we need to be to pay for Covid, £280bn and rising...

What are your predictions (ie how much lube, and where?)

I can see a lot of stealth, eg freezing allowances, and the fuel duty escalator coming back in, before we've thought about CGT as discussed in the Finance folder perhaps being aligned with income tax.

This year? Not much. As others have opined, you can't stall a recovery by taxing it to death unless you're happy to kill the patient.

The first budget after the pandemic will not be so much "lube" as "David Cronenberg movie". Wholly new orifices will be created.

[CraigyMc]

Flooble said:

Any other suggestions?

Taxes for online purchases, unless you want Amazon to own everything.

Taxes for online services based on their value rather than price. Tax Google and Facebook, in other words.

TL;DR tax big businesses that are profitable but which currently pay no taxes.

(Anyone wailing "but you can't" -- it can be done, even if their servers and staff aren't in the UK)

[Gecko1978]

CraigyMc said:

Flooble said:

Any other suggestions?

Taxes for online purchases, unless you want Amazon to own everything.

Taxes for online services based on their value rather than price. Tax Google and Facebook, in other words.

TL;DR tax big businesses that are profitable but which currently pay no taxes.

(Anyone wailing "but you can't" -- it can be done, even if their servers and staff aren't in the UK)

They do pay tax though perhaps not in the UK but they will pay tax. Also if you add a tax they will just pass it on to the consumer. So you have a choice amazon can hire staff and pay them or they can hire less staff an pay more tax. Making goods more expensive so we use the high st is like hoping the sun wont rise. Long run robots in warehouse replace humans and how does the high st compete with that. Plus the steess test that is covid will have caused many to shop online who dod not before and they wont all switch back.

Tax hampers growth, growth is the key to paying back debt. Or we could tax way more an the debr will be hear for generations and the uk becomes a poorer country

[Drezza]

One thing that I'm surprised they haven't hit yet is Stocks and Shares ISA allowances, if the government want people out spending, why encourage them to save in ISAs? That's where all my spare money is going at the minute.

[Macron]

There's money in UK FS from you paying into an ISA, and it's money they've already taxed once. Easy to stop raising the limits though.

One off wealth tax anyone? Let's hope this numpty's stupid short termism is ignored. She's senior. God knows how.

https://www.independent.co.uk/news/uk/politics/wea...

[Flooble]

Drezza said:

One thing that I'm surprised they haven't hit yet is Stocks and Shares ISA allowances, if the government want people out spending, why encourage them to save in ISAs? That's where all my spare money is going at the minute.

Good point, I have thought for a while the £20K limit was a tad excessive. The vast majority of people couldn't use the full allowance (certainly not in conjunction with the £40K pension allowance - that would be £120K for a couple before you even get into also availing yourself of VCT allowances and the like).

I have no idea why they set it so high or raised it so quickly after it had been "stuck" at £7K for ten years.

It will be interesting to see how they spin all their increases. Oh, I guess Insurance Premium Tax may go up too - with people driving less miles I suspect that the increase may again be masked by the underlying premiums having reduced.

[brickwall]

Flooble said:

Drezza said:

One thing that I'm surprised they haven't hit yet is Stocks and Shares ISA allowances, if the government want people out spending, why encourage them to save in ISAs? That's where all my spare money is going at the minute.

Good point, I have thought for a while the £20K limit was a tad excessive. The vast majority of people couldn't use the full allowance (certainly not in conjunction with the £40K pension allowance - that would be £120K for a couple before you even get into also availing yourself of VCT allowances and the like).

I have no idea why they set it so high or raised it so quickly after it had been "stuck" at £7K for ten years.

It will be interesting to see how they spin all their increases. Oh, I guess Insurance Premium Tax may go up too - with people driving less miles I suspect that the increase may again be masked by the underlying premiums having reduced.

The £20k ISA allowance was put in originally to compensate for a cut to pension tax relief (that then never happened). The idea was people would save out of taxed income and get tax relief on the way out - govt gets more money up front, individuals get more flexibility on how they use it. Government then bottled it on the pensions relief, so we end up with both.

Net result (combined with the personal savings allowance) is that most people can save up to £60k a year in tax-sheltered wrappers.

[CraigyMc]

brickwall said:

The £20k ISA allowance was put in originally to compensate for a cut to pension tax relief (that then never happened). The idea was people would save out of taxed income and get tax relief on the way out - govt gets more money up front, individuals get more flexibility on how they use it. Government then bottled it on the pensions relief, so we end up with both.

Net result (combined with the personal savings allowance) is that most people can save up to £60k a year in tax-sheltered wrappers.

The allowance limits changed recently for this. Until last year you'd have lost allowances if you made more than ~110K (threshold) and more than £150K (Adjusted). The relevant limits are now 200 and 240K.

The amount of allowances hasn't changed (20K ISA, 40K pension) but the limits at which you start to lose those changed.

This affects loads of people in the city, doctors etc.

[snuffy]

elanfan said:

I have personal knowledge of several friends who are self employed and they pay virtually no tax as their accountants somehow manage arrange it so. How about the self employed start paying their fair share would be a start!

I have known people who work contract who have claimed to me that they don't pay any tax. What they actually meant was that they did not pay any income tax, but failed to point out their limited company was of course paying corporation tax. It was almost like they are trying to show off for some odd reason.

Self employed people do pay tax, but also the media likes to claim they don't. And then people believe those people/the media when it's simply not true.

[nammynake]

Stamp Duty extension...which has the opposite effect and just inflates the existing bubble.

[PeteinSQ]

Flooble said:

The MO of this government is to trail various options in "leaks" and then select those that cause the least uproar. Together with spinning campaigns against any targets they have pre-selected. I haven't noticed many leaks yet nor do the BBC seem to be running any stories about how little corporation tax is paid by large multi-nationals etc. Which does seem to imply the status quo may be maintained.

My wholly without basis suggestions would be:

1) "Sin" taxes.
a) Increase in duty on alcohol drunk at home ("To assist the pub trade get back on its feet")
b) Increase or introduction of taxes on sugary drinks/fatty foods/fast food ("To fight obesity and put us in a better place to withstand the third wave"
c) Usual cranking up of tax on cigarettes ("To protect the NHS")
d) Big jump in duty and tax on fuel - while lots of people are not driving and the price of oil is depressed it will be a lot less noticeable. ("To encourage a green recovery"
e) Big increase in Air Passenger Duty or even a new tax entirely. ("To encourage more sustainable options in the future now we have shown video conferencing can work")

2) "Fiddling round the edges"
a) Freezing of all the allowance bands so people are caught by fiscal drag ("Now is not the time to be making changes").
b) Removal of higher rate tax relief on pensions ("Level playing field")
c) Alignment of tax on dividends and PAYE income ("Furlough has shown us we need to ensure people receive their income in a way government can support"). This will be the biggest surprise if they do it - or something lose to it such as adjusting the bands - but while a lot of small businesses are on the ropes it's probably the easiest time for him to hit them. The other impacts (to pension funds, regular investors etc.) are I feel hidden from the bulk of the population, much like the tax raid on pensions in the early 2000s.
d) Resetting of Corporation Tax to just below the OECD average - they might even squeak it up to 25%. If they did both c and d I'd be surprised but you never know
e) Some tweaking to VAT. Maybe a "Super Luxury" tax, although no idea how they could easily implement it. Given the way government goes, maybe something a bit mad like any shoes/suits/handbags/whatever over £500 count as "super luxury" and attract the higher rate. Cue lots of interesting avoidance schemes (This suit is £499 when you buy our £1000 plastic cufflinks).

Any other suggestions?

Could see quite a few of those things being in there. From a selfish point of view it's the pension changes that would really hurt me. It's only in the last three years or so that I've managed to get promoted into earning enough money to really take advantage of this and I've been saving into my pension like mad. It would really change how I'd go about saving for retirement.

[Murph7355]

snuffy said:

elanfan said:

I have personal knowledge of several friends who are self employed and they pay virtually no tax as their accountants somehow manage arrange it so. How about the self employed start paying their fair share would be a start!

I have known people who work contract who have claimed to me that they don't pay any tax. What they actually meant was that they did not pay any income tax, but failed to point out their limited company was of course paying corporation tax. It was almost like they are trying to show off for some odd reason.

Self employed people do pay tax, but also the media likes to claim they don't. And then people believe those people/the media when it's simply not true.

This is the danger in focusing on one type of tax. It's not dissimilar to those who fixate on the amount of Corporation Tax a company pays, seemingly thinking that is the only means through which a company's endeavours are taxed (and who pays it).

No self-employed person will be paying no tax. Unless, possibly, they are making a bonafide loss year in, year out. Which would make not paying any tax somewhat pyrrhic). Or they are entering into tax evasion and/or something that will be considered tax evasion once the HMRC are onto it. And that is illegal.

[CraigyMc]

Gecko1978 said:

CraigyMc said:

Flooble said:

Any other suggestions?

Taxes for online purchases, unless you want Amazon to own everything.

Taxes for online services based on their value rather than price. Tax Google and Facebook, in other words.

TL;DR tax big businesses that are profitable but which currently pay no taxes.

(Anyone wailing "but you can't" -- it can be done, even if their servers and staff aren't in the UK)

They do pay tax though perhaps not in the UK but they will pay tax. Also if you add a tax they will just pass it on to the consumer. So you have a choice amazon can hire staff and pay them or they can hire less staff an pay more tax. Making goods more expensive so we use the high st is like hoping the sun wont rise. Long run robots in warehouse replace humans and how does the high st compete with that. Plus the steess test that is covid will have caused many to shop online who dod not before and they wont all switch back.

Tax hampers growth, growth is the key to paying back debt. Or we could tax way more an the debr will be hear for generations and the uk becomes a poorer country

Gecko, Amazon don't pay corporation tax in the UK. Corporation tax of £6m on £13bn of sales -- is functionally sod all.

Warehoused delivery of goods is obviously cheaper than retail in shops, one of the main advantages is that shops are taxed more than warehouses. I'm not trying to get people to shop in shops any more. I'm trying to tax the shopping people actually do fairly.

Just as a wild example, compare Amazon with Tesco you have Amazon with 13bn in sales at 6m in corporation tax against Tesco with 28bn in sales and 1.9bn in corporation tax.

Capiche? Not fair.
Tax Warehouse-based companies the same as shop based ones, not far less.

[Biggy Stardust]

CraigyMc said:

Gecko, Amazon don't pay corporation tax in the UK. Corporation tax of £6m on £13bn of sales -- is functionally sod all.

Warehoused delivery of goods is obviously cheaper than retail in shops, one of the main advantages is that shops are taxed more than warehouses. I'm not trying to get people to shop in shops any more. I'm trying to tax the shopping people actually do fairly.

Just as a wild example, compare Amazon with Tesco you have Amazon with 13bn in sales at 6m in corporation tax against Tesco with 28bn in sales and 1.9bn in corporation tax.

Capiche? Not fair.
Tax Warehouse-based companies the same as shop based ones, not far less.

1 Please define 'fair'
2 Consider all the taxes paid plus all benefits which accrue
3 What does capiche mean? I'm unfamiliar with street slang & unsure of its place in this forum.

Edited by Biggy Stardust on Monday 15th February 13:42

[vulture1]

nammynake said:

Stamp Duty extension...which has the opposite effect and just inflates the existing bubble.

You know why they do that.

People moving homes hire vans, buy new furniture to match, which will need new curtains. and our blue towels don't match this yellow bathroom. etc

[snuffy]

CraigyMc said:

Gecko, Amazon don't pay corporation tax in the UK. Corporation tax of £6m on £13bn of sales -- is functionally sod all.

That's another thing the media likes to do; they take a company's turnover instead of profit, then look at the amount of corporation tax paid, and then conclude (wrongly) that a company has only paid 0.0001% corporation tax when other companies pay 20% or whatever.

Every company pays the same rate (I know there are two different rates for large and small businesses), but the media likes to make out they don't.

[Murph7355]

Biggy Stardust said:

1 Please` define 'fair'
2 Consider all the taxes paid plus all benefits which accrue
3 What does capiche mean? I'm unfamiliar with street slang & unsure of its place in this forum.

"Capiche" is a bit of a bdisation of Italian, meaning "do you understand". Favoured by those who watch gangster movies.

The rest are very interesting questions always ignored by those bringing up the topic.

snuffy said:

CraigyMc said:

Gecko, Amazon don't pay corporation tax in the UK. Corporation tax of £6m on £13bn of sales -- is functionally sod all.

That's another thing the media likes to do; they take a company's turnover instead of profit, then look at the amount of corporation tax paid, and then conclude (wrongly) that a company has only paid 0.0001% corporation tax when other companies pay 20% or whatever.

Every company pays the same rate (I know there are two different rates for large and small businesses), but the media likes to make out they don't.

Exactly.

Of course some modern forms of business allow plenty of offsets to minimise profits. There may be a case for the government looking into those (transfer pricing etc) but care is required not to invoke the laws of unintended consequences.

[Biggy Stardust]

Murph7355 said:

"Capiche" is a bit of a bdisation of Italian, meaning "do you understand". Favoured by those who watch gangster movies.

Similar to "capisci" but for the more 'street' amongst us? Excellent.