2021 Budget Predictions

[m3jappa]

I wonder if the new 'super deduction' will apply to someone like me, want to buy a new digger and a truck, probably a used truck but if theres a 130% deduction.....might be new!

In fact i need a whole load of new equipment, interested to find out what applies.

[Cyder]

J4CKO said:

So corporation tax goes to 25 percent, from 19.

How does that fit in with us PAYE folk paying 40% once we get to 50 grand or so, and 20 percent past the personal allowance ? Plus NI ?

I get the impression that costs will just be passed on but it doesn't seem that unfair based on what salaried folk have to pay unless i am missing something ?

Plus, obviously, the accountants will be working overtime to reduce it for their clients, if you claim that its hit you for five figures then you are still doing alright and were really doing all right before.

With the Furlough payments based on declared income, its almost like the govt are having a proper go at those who are self employed and perhaps playing a bit fast and loose with the old tax stuff.

I think Rishi is doing a decent job, I think the mark of his stewardship would be if he could coerce some of the local takeaways to maybe accept cards as their reluctance seems to be mainly based on tax evasion.

We 40% mob get reamed as usual.
In the eyes of the low earners, we in the 40% bracket are ‘rich’ and fair game, in the eyes of the MP’s we’re just a cash cow to be relentlessly milked as a popularity contest to win the low earners votes.
In our eyes we’re the ones flogging ourselves to death with high mortgages, childcare costs and low/middle management stresses.
Bend over chaps, I reckon we can squeeze a bit more out of us.

[snuffy]

People seem to believe that if you work as a contractor/single person limited company, you only pay corporation tax at 19%. But they fail to understand that once you take out dividends over the higher rate threshold, you will pay tax at 40% just like anyone else.

But the media constantly tells people that "they only pay 19%" and forget to mention the 40% you will pay if you exceed said threshold and also forget to mention the 7.5% additional dividend tax as well.

[DeejRC]

You aren’t getting reamed at all. In fact Rishi explicitly *didnt* ream you yesterday. The 40% tax start line is in fact increasing to 50k...it was only 42k a few yrs ago! All the duty escalators are stopped, furlough schemes extended, etc, etc.

The only ppl who took a potential reaming yesterday are company directors and owners who are looking at 250k of pre tax profits. And that’s in 2 years. And that stick is mitigated by the carrot of massive tax deductions for company investment.

[richardxjr]

m3jappa said:

I wonder if the new 'super deduction' will apply to someone like me, want to buy a new digger and a truck, probably a used truck but if theres a 130% deduction.....might be new!

In fact i need a whole load of new equipment, interested to find out what applies.

I think that's exactly what it's meant for. Awaiting exactly what plant is approved for this, but it does start next month. A mate of mine has £1m of plant paid for and about to ship from the US right now so he's kinda interested in this!

[richardxjr]

DeejRC said:

You aren’t getting reamed at all. In fact Rishi explicitly *didnt* ream you yesterday. The 40% tax start line is in fact increasing to 50k...it was only 42k a few yrs ago! All the duty escalators are stopped, furlough schemes extended, etc, etc.

The only ppl who took a potential reaming yesterday are company directors and owners who are looking at 250k of pre tax profits. And that’s in 2 years. And that stick is mitigated by the carrot of massive tax deductions for company investment.

Absolutely this.

[768]

There's a sliding scale of reaming from £50k up to £250k.

[Digga]

JagLover said:

ant1973 said:

According to the Budget report, the cost of the "super deduction" will be just under £25bn.

That is more than the increase in corporation tax is estimated to raise by 2025 - 2026 (c. 17bn).

So this is in effect a tax transfer from non-capital intensive businesses to capital intensive businesses.

Which is reasonable from a "rebalancing" perspective.

Critically important.

You have to understand how poorly the UK has done in terms of productivity which is a direct function of investment in machinery, technology and training.

My simple analogy is give a person a shovel and see how much muck they can shift, then give them a mini digger, then invest in a 20 tonne excavator and (with commensurate investment in training) they can fill 8 wheel tipper trucks all day, every working day.

Investment in manufacturing in Italy is staggering. Not only do they have a lot of SMEs, like the UK, a great many of them are extremely well equipped. The reason? They've long understood the long term benefits of generous investment allowances. It has not been uncommon for them to be over 100% in Italy - this is the first time the UK has tried it.

Moreover, I am not sure the £1m limit is really necessary or wise, Italy were at 2.5m EUR even in 2019. Even as a very small firm, we invest in machines that would mop up a decent chunk of that in one go.

[RichB]

I see, in their desperation to put a negative slant on what has widely been seen as a good budget, the BBC are running with an puff piece predicting that it will pull half a million people into poverty, including 200,000 children. I am guessing none of the lovies in the BBC have been to Africa or other poor countries where kids scour refuse heaps looking for plastic bottles to sell? Half a million more people in poverty today? Get real... This nonsense seriously pisses me off because it distracts from those who are genuinely suffering poverty.

[Chris Type R]

Cyder said:

We 40% mob get reamed as usual.
In the eyes of the low earners, we in the 40% bracket are ‘rich’ and fair game, in the eyes of the MP’s we’re just a cash cow to be relentlessly milked as a popularity contest to win the low earners votes.

Things get very uncomfortable should you be unlucky enough to find yourself within the personal allowance taper. Like the 40% - fiscal drag & inflation will ensure more people find themselves affected.

[PeteinSQ]

Cyder said:

We 40% mob get reamed as usual.
In the eyes of the low earners, we in the 40% bracket are ‘rich’ and fair game, in the eyes of the MP’s we’re just a cash cow to be relentlessly milked as a popularity contest to win the low earners votes.
In our eyes we’re the ones flogging ourselves to death with high mortgages, childcare costs and low/middle management stresses.
Bend over chaps, I reckon we can squeeze a bit more out of us.

Yes, but fortunately they're not going to be taking that much more off us are they really? I was really worried they'd get rid of top rate pension relief and they didn't. From what I can see the additional cost to someone like me is the freezing of the thresholds and whilst that will cost me it won't be that bad.

[Eric Mc]

The personal tax allowance is over double what it was 10 years ago. It grew very rapidly from 2011. In the intervening years, there have been a few occasions where it hasn't been increased. It's not that unusual for it NOT to be put up automatically.

[Chris Type R]

PeteinSQ said:

Yes, but fortunately they're not going to be taking that much more off us are they really? I was really worried they'd get rid of top rate pension relief and they didn't. From what I can see the additional cost to someone like me is the freezing of the thresholds and whilst that will cost me it won't be that bad.

I think it was less bad than it could have been - I was prepared for Corp. Tax going up - but using phased increments. Certainly I'm relieved about then pension relief being left unaffected.

Personally I'd have been happier seeing some additional taxes that everyone would pay - an increased online sales VAT rate / luxury VAT rate for example. It would seem fairer that the majority of the population who have benefitted from financial support will also be contributing to repaying the debt.

[98elise]

JagLover said:

ITP said:

They, and by they I mean Rishi and his henchman Jesse Norman, have some kind of vendetta against ltd company contractors. They just want to ‘win’ against them, because they keep getting beaten in court, apart from the odd case. Everyone is telling them what they are doing is wrong but they just want to prove a point. They say what they are doing with IR35 will bring in more tax. It won’t, it will bring in less, but that’s not really their motivation.

Anyone with any wish to bring the public finances into balance would be moving against "ltd company contractors" for the simple reason you pay significantly less tax and NI (including the employer NI borne by the employer) than when you were on PAYE (often doing the exact same job and hours).

Labour brought in IR35 and the Tories gave it some teeth. As contracting via a limited company grew it creates the seeds of its own demise IMO, as once it reaches a certain size it becomes unaffordable.

Do you pay Employers NI or does your employer? If contractors are disguised employees then the employing company should be paying it?

[ant1973]

JagLover said:

ant1973 said:

According to the Budget report, the cost of the "super deduction" will be just under £25bn.

That is more than the increase in corporation tax is estimated to raise by 2025 - 2026 (c. 17bn).

So this is in effect a tax transfer from non-capital intensive businesses to capital intensive businesses.

Which is reasonable from a "rebalancing" perspective.

I think that is slightly presumptuous for two reasons. Firstly capital investment may lead to higher levels of automation which, although positive in the long term, can drive short term unemployment. That is unfortunate given what awaits us this year. Secondly, non capital intensive business are significant employers and payers of payroll taxes. I realise that people are disparaging about the service sector but it encompasses the professions, financial services and the creative industries. These are non capital intensive businesses who will not meaningfully benefit from the tax change. Might have been sensible to have split the benefits.

[ant1973]

snuffy said:

People seem to believe that if you work as a contractor/single person limited company, you only pay corporation tax at 19%. But they fail to understand that once you take out dividends over the higher rate threshold, you will pay tax at 40% just like anyone else.

But the media constantly tells people that "they only pay 19%" and forget to mention the 40% you will pay if you exceed said threshold and also forget to mention the 7.5% additional dividend tax as well.

The only difference is really the Employer's NI. Post the CT increase, div+salary will increase by 8%, so the gap will diminish further.

[JagLover]

ant1973 said:

I think that is slightly presumptuous for two reasons. Firstly capital investment may lead to higher levels of automation which, although positive in the long term, can drive short term unemployment. That is unfortunate given what awaits us this year. Secondly, non capital intensive business are significant employers and payers of payroll taxes. I realise that people are disparaging about the service sector but it encompasses the professions, financial services and the creative industries. These are non capital intensive businesses who will not meaningfully benefit from the tax change. Might have been sensible to have split the benefits.

Automation is inevitable. What we need to ensure is that we do not have an excess of unskilled workers unable to find work in the new economy. We can do this through our education and skills policies and our immigration policy.

I am not disparaging about the professional services sector, I work in it. What is the case is that "rebalancing" means building an economy for more than just the "knowledge" workers.

[anonymous-user]

98elise said:

Do you pay Employers NI or does your employer? If contractors are disguised employees then the employing company should be paying it?

Aren’t you employed by your Ltd co? Go perm and get all the perks that go with it.

[ant1973]

Interesting article from CEBR:-

https://cebr.com/reports/dont-expect-higher-corpor...

The headline rate comparison does not really work, apparently.

[98elise]

wormus said:

98elise said:

Do you pay Employers NI or does your employer? If contractors are disguised employees then the employing company should be paying it?

Aren’t you employed by your Ltd co? Go perm and get all the perks that go with it.

No I retried. The ultimate tax avoidance scheme. I really must check what benefits we get now we're a low income family