Moving pensions onto an ISA-style tax model (from EET to TEE, to use the jargon) would do the following:
1) effectively remove the tax advantages of the tax free lump sum for pensions
2) take higher rate tax relief away from all higher rate taxpayers but only give tax relief at that rate to those of them whose pensions would also be taxed at the higher rate
I'm sure none of this has entered the Chancellor's head.
Dividend taxation sounds much more complex, despite being sold as a simplefication...
It's much simpler for those that earn less than 5k pa from divis.
Sounds like the aim is to stop the tax dodge where people form companies and pay out as dividends rather than salary. Have to do my sums to see how it affects my own finances.
I guess he has to do that because Britain has this ludicrously huge difference between the tax you pay on salary and the tax you pay on dividends, and he's making it even ludicrouslier huger.
As I've argued ad nauseum, the difference between tax on salary and tax on dividends is because if you're receiving dividends you are:
a) risking capital (which will already have been taxed at some point) b) not receiving the same employment benefits as the employed
c) are paying Corporation Tax.
That is being reduced, you need to look at it as a whole package of reforms.
And changes to thresholds too. My accountant is going to earn his fee the next couple of years/
It is going to be infinitely more complex for those receiving >5k in dividend income each year.
Details needed, because, IIRC, he didn't mention doing anything with the notional 10% tax credit that comes with dividends.
Dividend taxation sounds much more complex, despite being sold as a simplefication...
It's much simpler for those that earn less than 5k pa from divis.
Sounds like the aim is to stop the tax dodge where people form companies and pay out as dividends rather than salary. Have to do my sums to see how it affects my own finances.
I guess he has to do that because Britain has this ludicrously huge difference between the tax you pay on salary and the tax you pay on dividends, and he's making it even ludicrouslier huger.
As I've argued ad nauseum, the difference between tax on salary and tax on dividends is because if you're receiving dividends you are:
a) risking capital (which will already have been taxed at some point) b) not receiving the same employment benefits as the employed
c) are paying Corporation Tax.
That is being reduced, you need to look at it as a whole package of reforms.
And changes to thresholds too. My accountant is going to earn his fee the next couple of years/
It is going to be infinitely more complex for those receiving >5k in dividend income each year.
Details needed, because, IIRC, he didn't mention doing anything with the notional 10% tax credit that comes with dividends.
My accountant issues a budget update doc/guide... I think it may take a bit longer to publish than usual
Dividend taxation sounds much more complex, despite being sold as a simplefication...
It's much simpler for those that earn less than 5k pa from divis.
Sounds like the aim is to stop the tax dodge where people form companies and pay out as dividends rather than salary. Have to do my sums to see how it affects my own finances.
I guess he has to do that because Britain has this ludicrously huge difference between the tax you pay on salary and the tax you pay on dividends, and he's making it even ludicrouslier huger.
As I've argued ad nauseum, the difference between tax on salary and tax on dividends is because if you're receiving dividends you are:
a) risking capital (which will already have been taxed at some point) b) not receiving the same employment benefits as the employed
c) are paying Corporation Tax.
That is being reduced, you need to look at it as a whole package of reforms.
Fag packet calc - the increase in Div tax is a multiple of any benefit from the reduction of Corp tax for the average small business.
Dividend taxation sounds much more complex, despite being sold as a simplefication...
It's much simpler for those that earn less than 5k pa from divis.
Sounds like the aim is to stop the tax dodge where people form companies and pay out as dividends rather than salary. Have to do my sums to see how it affects my own finances.
I guess he has to do that because Britain has this ludicrously huge difference between the tax you pay on salary and the tax you pay on dividends, and he's making it even ludicrouslier huger.
As I've argued ad nauseum, the difference between tax on salary and tax on dividends is because if you're receiving dividends you are:
a) risking capital (which will already have been taxed at some point) b) not receiving the same employment benefits as the employed
c) are paying Corporation Tax.
That is being reduced, you need to look at it as a whole package of reforms.
Fag packet calc - the increase in Div tax is a multiple of any benefit from the reduction of Corp tax for the average small business.
Hi Watford, what does that mean? (Serious question not being funny)
Dividend taxation sounds much more complex, despite being sold as a simplefication...
It's much simpler for those that earn less than 5k pa from divis.
Sounds like the aim is to stop the tax dodge where people form companies and pay out as dividends rather than salary. Have to do my sums to see how it affects my own finances.
I guess he has to do that because Britain has this ludicrously huge difference between the tax you pay on salary and the tax you pay on dividends, and he's making it even ludicrouslier huger.
As I've argued ad nauseum, the difference between tax on salary and tax on dividends is because if you're receiving dividends you are:
a) risking capital (which will already have been taxed at some point) b) not receiving the same employment benefits as the employed
c) are paying Corporation Tax.
That is being reduced, you need to look at it as a whole package of reforms.
Fag packet calc - the increase in Div tax is a multiple of any benefit from the reduction of Corp tax for the average small business.
That was my initial gut and first spreadsheet reactions show too...
I struggling to think of a budget with as much major new stuff in it. Astonishing given that this same Chancellor has already presented a budget this year.
The dividend tax changes need some analysis - for people paying themselves by dividends from a small or service company, there is presumably a benefit from the £5K tax-free allowance offset by a loss on the higher rate thereafter. So I think that whether you are a gainer or loser will depend on the amount you take out.
So largely as expected, cuts to inheritance tax, fuel duty frozen, income tax for middle and low earners and corporation tax. Also welfare capped to £20,000 and working age benefits frozen for 4 years, tax credits reduced and capped to 2 children, housing benefit cut and ended for under 21s and social housing charged at market rent for wealthy, 1% cap on public pay increases for next 4 years. BBC to pay cost of free TV licenses themselves. A commitment to defence spending too. Icing on the cake the increase in the living wage, but with scrapping of some NI payments for small business care needs to be taken to ensure state pension and contributory JSA entitlements are maintained
Delighted that everyone now believes the Living Wage is a good idea. How swiftly views change, eh? If the Tories implement Labour policies that's not a problem for me.
Delighted that everyone now believes the Living Wage is a good idea. How swiftly views change, eh? If the Tories implement Labour policies that's not a problem for me.
I reckon there's two major Ed Miliband policies George appropriated today, the living wage and non doms.
Delighted that everyone now believes the Living Wage is a good idea. How swiftly views change, eh? If the Tories implement Labour policies that's not a problem for me.
Personal complications aside and the attack on smaller and esp. family owned businesses aside, am very supportive of the efforts to make individuals less reliant on the state.
(:-) Just wish the state was a little less reliant on me as a result, but can't have it all ways!)
Delighted that everyone now believes the Living Wage is a good idea. How swiftly views change, eh? If the Tories implement Labour policies that's not a problem for me.
I reckon there's two major Ed Miliband policies George appropriated today, the living wage and non doms.
Labour should bring back Ed.
Quite a few Labour policies were actually reasonably popular - the country just didn't trust Ed, Ed and Alex at the tiller.
Something to remember, £9/hr by 2020 isn't that much over an inflation rise in minimum wage every year.
2014 NMW: £6.50/hr
6 years at say 3% inflation (High side estimate) = £7.76
A fair bit over actually.
£9/hr only for over 25s though.
So basically it is just another band to the minimum wage. I would prefer to see it based upon time worked. Seems highly unfair that somebody joins the workforce at 16, works hard, gets trained and 3 years later an employer can still pay them £6.50.
Delighted that everyone now believes the Living Wage is a good idea. How swiftly views change, eh? If the Tories implement Labour policies that's not a problem for me.
I think you will find there are those of us on the right who have been calling for a much higher minimum wage for over two years now.
Glad to see the Chancellor take up the cause as well.
Delighted that everyone now believes the Living Wage is a good idea. How swiftly views change, eh? If the Tories implement Labour policies that's not a problem for me.
I reckon there's two major Ed Miliband policies George appropriated today, the living wage and non doms.
Labour should bring back Ed.
Yep, non-doms too.
It's not really credible to say the LDs held the Tories back on either, so this is clearly something the Tories feel they have to do.
Delighted that everyone now believes the Living Wage is a good idea. How swiftly views change, eh? If the Tories implement Labour policies that's not a problem for me.
Except only the Tories have the strong economy that makes it viable.
Does anyone seriously believe we are going to be in surplus in 2019-2020? As always with Osborne, this was politics over economics. One of the most captivating and game-changing budgets for many years, however.
Something to remember, £9/hr by 2020 isn't that much over an inflation rise in minimum wage every year.
2014 NMW: £6.50/hr
6 years at say 3% inflation (High side estimate) = £7.76
A fair bit over actually.
£9/hr only for over 25s though.
So basically it is just another band to the minimum wage. I would prefer to see it based upon time worked. Seems highly unfair that somebody joins the workforce at 16, works hard, gets trained and 3 years later an employer can still pay them £6.50.
Those are minimum wages, not targets or the amounts expected for trained workers.
Delighted that everyone now believes the Living Wage is a good idea. How swiftly views change, eh? If the Tories implement Labour policies that's not a problem for me.
Companies will be happy to pay higher wages if taxes are cut which is the balance Osborne strikes.
Expecting companies to pay higher wages while increasing their taxes (as Ed proposed) was bonkers.
Delighted that everyone now believes the Living Wage is a good idea. How swiftly views change, eh? If the Tories implement Labour policies that's not a problem for me.
Something to remember, £9/hr by 2020 isn't that much over an inflation rise in minimum wage every year.
2014 NMW: £6.50/hr
6 years at say 3% inflation (High side estimate) = £7.76
A fair bit over actually.
£9/hr only for over 25s though.
So basically it is just another band to the minimum wage. I would prefer to see it based upon time worked. Seems highly unfair that somebody joins the workforce at 16, works hard, gets trained and 3 years later an employer can still pay them £6.50.
Those are minimum wages, not targets or the amounts expected for trained workers.
I know, but we know what has happened and does happened with any of these things. It becomes the level of the ceiling give or take a bit.
Out of interest, I took a look last week at random jobs in the local paper across a wide variety of sector just out on interest and they all had something in common, £6.50/hr.
Does anyone seriously believe we are going to be in surplus in 2019-2020? As always with Osborne, this was politics over economics. One of the most captivating and game-changing budgets for many years, however.
Yes absolutely I do (so long as we're not in recession).
Delighted that everyone now believes the Living Wage is a good idea. How swiftly views change, eh? If the Tories implement Labour policies that's not a problem for me.
George's campaign to smoke out the cheerleaders and astroturfers.
Delighted that everyone now believes the Living Wage is a good idea. How swiftly views change, eh? If the Tories implement Labour policies that's not a problem for me.
I reckon there's two major Ed Miliband policies George appropriated today, the living wage and non doms.
Labour should bring back Ed.
Yep, non-doms too.
It's not really credible to say the LDs held the Tories back on either, so this is clearly something the Tories feel they have to do.
Three areas where the Tories are weak have been addressed today:
Rich mates - hit the non-doms On the side of landlords - hit their offsets Hate the poor - introduce a living wage
All in all, it was a good budget, just need to delve into the detail.
Something to remember, £9/hr by 2020 isn't that much over an inflation rise in minimum wage every year.
2014 NMW: £6.50/hr
6 years at say 3% inflation (High side estimate) = £7.76
A fair bit over actually.
£9/hr only for over 25s though.
So basically it is just another band to the minimum wage. I would prefer to see it based upon time worked. Seems highly unfair that somebody joins the workforce at 16, works hard, gets trained and 3 years later an employer can still pay them £6.50.
Those are minimum wages, not targets or the amounts expected for trained workers.
I know, but we know what has happened and does happened with any of these things. It becomes the level of the ceiling give or take a bit.
Out of interest, I took a look last week at random jobs in the local paper across a wide variety of sector just out on interest and they all had something in common, £6.50/hr.
A lot of jobs put in the local paper are unskilled/starter jobs though.
This is a HUGE budget. It does two things: 1. The centre ground has moved significantly towards 'sound money' macro-economics; and 2. The individual benefits as the state retreats, shifting expectations of what you get vs what you give.
There'll be acres of wailing and gnashing from Polly. But by 2020 the facts on the ground will be well established. The UK will be a freer, more competitive, more self reliant place.
No, Ed Miliband had the bonkers idea of abolishing non-dom status altogether, which would have been counter-productive. This is a tightening up of the criteria to avoid abuse - not the same at all.
On the 'living wage', what Osborne has actually done is announced a significant increase in the Minimum Wage with some re-branding. The most important thing about it is that he has, thank goodness, avoided the disastrous effect that this would have had on employment for the young if it had applied to under-25s.
It's a fairly standard response from LotO. It's a toughgig to respond to the budget. This one perhaps more so given some of the tanks placed on Labour's lawn.
Something to remember, £9/hr by 2020 isn't that much over an inflation rise in minimum wage every year.
2014 NMW: £6.50/hr
6 years at say 3% inflation (High side estimate) = £7.76
A fair bit over actually.
£9/hr only for over 25s though.
So basically it is just another band to the minimum wage. I would prefer to see it based upon time worked. Seems highly unfair that somebody joins the workforce at 16, works hard, gets trained and 3 years later an employer can still pay them £6.50.
Those are minimum wages, not targets or the amounts expected for trained workers.
I know, but we know what has happened and does happened with any of these things. It becomes the level of the ceiling give or take a bit.
Out of interest, I took a look last week at random jobs in the local paper across a wide variety of sector just out on interest and they all had something in common, £6.50/hr.
A lot of jobs put in the local paper are unskilled/starter jobs though.
Yes, sure, but we know there has been a real affect that minimum wage has anchored the top end of pay for unskilled and semi-skilled jobs. I am just saying that employers if they want can take on 16 years old and never pay them any more until 25.
It might also have a perverse affect that 25 year olds become less attractive to employ.
Comments
1) effectively remove the tax advantages of the tax free lump sum for pensions
2) take higher rate tax relief away from all higher rate taxpayers but only give tax relief at that rate to those of them whose pensions would also be taxed at the higher rate
I'm sure none of this has entered the Chancellor's head.
2% target met for the next 10 years. Big one there.
WOW.
Details needed, because, IIRC, he didn't mention doing anything with the notional 10% tax credit that comes with dividends.
Small firms Emp NI cut. 4 employees tax free.
8% surcharge on bank profits from 2017.
6 years at say 3% inflation (High side estimate) = £7.76
A fair bit over actually.
https://twitter.com/AmberSkyNews/status/618762139428388864
No one is listening either.
The dividend tax changes need some analysis - for people paying themselves by dividends from a small or service company, there is presumably a benefit from the £5K tax-free allowance offset by a loss on the higher rate thereafter. So I think that whether you are a gainer or loser will depend on the amount you take out.
Icing on the cake the increase in the living wage, but with scrapping of some NI payments for small business care needs to be taken to ensure state pension and contributory JSA entitlements are maintained
£1 more per hour...so ~£1800 per year. Depends how much is being taken away from all the other things.
Labour should bring back Ed.
(:-) Just wish the state was a little less reliant on me as a result, but can't have it all ways!)
This is smart politics by George.
Glad to see the Chancellor take up the cause as well.
It's not really credible to say the LDs held the Tories back on either, so this is clearly something the Tories feel they have to do.
Those are minimum wages, not targets or the amounts expected for trained workers.
Expecting companies to pay higher wages while increasing their taxes (as Ed proposed) was bonkers.
Big difference. Lower taxes = higher wages.
Out of interest, I took a look last week at random jobs in the local paper across a wide variety of sector just out on interest and they all had something in common, £6.50/hr.
Rich mates - hit the non-doms
On the side of landlords - hit their offsets
Hate the poor - introduce a living wage
All in all, it was a good budget, just need to delve into the detail.
https://twitter.com/BenMackenzie/status/618760752258793472
Perhaps they should have the powers devolved to block this ?
A lot of jobs put in the local paper are unskilled/starter jobs though.
Umm...
1. The centre ground has moved significantly towards 'sound money' macro-economics; and
2. The individual benefits as the state retreats, shifting expectations of what you get vs what you give.
There'll be acres of wailing and gnashing from Polly. But by 2020 the facts on the ground will be well established. The UK will be a freer, more competitive, more self reliant place.
On the 'living wage', what Osborne has actually done is announced a significant increase in the Minimum Wage with some re-branding. The most important thing about it is that he has, thank goodness, avoided the disastrous effect that this would have had on employment for the young if it had applied to under-25s.
It might also have a perverse affect that 25 year olds become less attractive to employ.