Budget 2015: Your thoughts?
- Thread starter RPower
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Another thread on the maths of the dividends tax here....
http://www.ukbusinessforums.co.uk/t...vidend-tax-credits.345579/page-2#post-2562913
(I'm guessing not many of us venture into the Accounts section, unless we need something. Bit like real life really...)
http://www.ukbusinessforums.co.uk/t...vidend-tax-credits.345579/page-2#post-2562913
(I'm guessing not many of us venture into the Accounts section, unless we need something. Bit like real life really...)
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slclark17
The bit which concerns me most is changes to working tax credits.
I'm self-employed and my business makes a small profit, but I rely heavily on tax credits (just the working kind, not the child kind) for my day to day life. It is not clear whether they come under the tax credit freeze, or whether the reduced income threshold applies (everything seems to mention families, so is this just for child tax credits?), and if the taper does start earlier, how much I will have to live on. Also, when will these new measures come into effect?
If the KPMG calculator is correct, I will be over £1,200 worse off. As I'm lucky my business is going quite well now, that will leave something like £6,500 to live on including estimated reduced credits. Better than many, but am galled they'd take it away and use it to subsidize inheritance thresholds for rich people.
Some might say tax credits shouldn't subsidise small businesses, but the £200 a month of tax credits enables me to live and continue my business, which pays a few thousand pounds a month into the local economy plus more into the national economy then more into the European economy. Much of the local money would not be generated at all if the shop did not exist.
I'm self-employed and my business makes a small profit, but I rely heavily on tax credits (just the working kind, not the child kind) for my day to day life. It is not clear whether they come under the tax credit freeze, or whether the reduced income threshold applies (everything seems to mention families, so is this just for child tax credits?), and if the taper does start earlier, how much I will have to live on. Also, when will these new measures come into effect?
If the KPMG calculator is correct, I will be over £1,200 worse off. As I'm lucky my business is going quite well now, that will leave something like £6,500 to live on including estimated reduced credits. Better than many, but am galled they'd take it away and use it to subsidize inheritance thresholds for rich people.
Some might say tax credits shouldn't subsidise small businesses, but the £200 a month of tax credits enables me to live and continue my business, which pays a few thousand pounds a month into the local economy plus more into the national economy then more into the European economy. Much of the local money would not be generated at all if the shop did not exist.
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The tax credit thing is quite a savage cut. They are increasing the rate at which the amount you earn reduces your credit and also lowering the level a which it starts.
Simpy, if you have credits now, it will reduce by at least £1233 per year. Every £1 above the £3850 earnings threshold also reduces the credit by 48%, rather than the 41% it did before.
Simpy, if you have credits now, it will reduce by at least £1233 per year. Every £1 above the £3850 earnings threshold also reduces the credit by 48%, rather than the 41% it did before.
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silvermusic
Sorry, but to my mind if an established business can't generate £10k profit a year it's not a proper business, it's a hobby or lifestyle business, I really don't see why it should be subsidised by other tax payers.
As for the subsidising inheritance tax. I worked hard for several decades to be able to pay off and out right own my property. I've generated significantly more money to the economy than many to be able to do so.
For what it's worth I no longer have many expenses and don't need to work too hard to support myself and the wife, I can work a few hours a day and I earn more than 10k, less than 20k. Work to live don't live to work. BUT, in order for me to be in this position I worked hard, damn hard and long hours doing some pretty crap jobs in the past as well.
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I wonder how many of these people losing £1200 a year were actually claiming what they were entitled to in the 1st place?
Tax credits was so complicated it was probably the biggest unclaimed benefit - £7billion+ unclaimed.
I wonder how many people used the budget calculator, and realised they should have been entitled to a few thousand £ for the past 15 years but haven't claimed it?
When I was working I had a reasonably low paid job, had 2 kids, but never knew anything about Tax credits until about 5 years ago.
From a rough estimation I would say I am about £30k out of pocket had I known I was entitled to it.
Tax credits was so complicated it was probably the biggest unclaimed benefit - £7billion+ unclaimed.
I wonder how many people used the budget calculator, and realised they should have been entitled to a few thousand £ for the past 15 years but haven't claimed it?
When I was working I had a reasonably low paid job, had 2 kids, but never knew anything about Tax credits until about 5 years ago.
From a rough estimation I would say I am about £30k out of pocket had I known I was entitled to it.
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silvermusic
I know at my lowest point after the 2008 crash I probably could have claimed tax credits. However, I'm not wired that way, I looked around and did something about it, including taking the most mind-numbing job I've ever done for a few months at one point to make ends meet. I've never claimed a penny off the state since the day I left school in the 70s. I don't understand the mind set of a lot of people thinking the world owes them a living when they're capable of doing something about it. I could probably claim all sorts of benefits as I'm not in the best of health by a long way, but I'm able to work from home doing my own thing.
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silvermusic
I'm single with no kids.
"The wife" is actually not in law but we've been together so long it just makes things easier rather than explaining things to folk everytime.
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at last a Government has grasped the nettle! I'm amazed they have actually done this. Good point about triplets though - how does that work out then? ie a couple make a decision to have a 2nd child and no more then suddenly they are expecting 3
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at last a Government has grasped the nettle! I'm amazed they have actually done this. Good point about triplets though - how does that work out then? ie a couple make a decision to have a 2nd child and no more then suddenly they are expecting 3
If you have triplets or already have a kid and then have twins you still receive what you would if you had 3 kids now. I personally have no issue with that as its not a personal choice to have twins, triplets etc its just the luck of the draw so to speak.
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I think it's for the best. It's time businesses like yours started paying their own way. If you can't survive then unfortunately that's just how business is, business is tough, that's how it always has been and always will be.
When I think things are against me I remind myself of those market traders you see on the tv in those war torn countries. They can have daily bombings going on yet they still set up shop and continue to trade. We in the UK are incredibly lucky compared to businesses in other countries, we've got it easy in comparison.
As my dad says 'if you aren't making enough money, try harder'.
Chris.
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if i've understood this correctly then, we pay ourselves a small salary & the bulk is dividends. 2016 onwards, if we do the same, we'll each have personal tax bills of £1900 approx., instead of £0 at present.
standard response to that seems to be "you've had the benefit of Ltd Co. for x years, welcome to the real world of tax etc.". fair enough, i suppose!
we still qualify for NI/Employers allowance, so an extra £1000 'credit' there. CT rate falls in 2017 & 2020 too.
we already pay our employees well above any minimum level, current or proposed, so that doesn't come into play. one of our lads will be losing £45 per week due to the tax/benefit changes. his choice to have a big family i know, but that's a massive chunk of their weekly budget (that they already struggle with).
this will definitely be a budget that brings in many changes that will have an impact on nearly all of us in one way or another, mainly negative from what i can see...
standard response to that seems to be "you've had the benefit of Ltd Co. for x years, welcome to the real world of tax etc.". fair enough, i suppose!
we still qualify for NI/Employers allowance, so an extra £1000 'credit' there. CT rate falls in 2017 & 2020 too.
we already pay our employees well above any minimum level, current or proposed, so that doesn't come into play. one of our lads will be losing £45 per week due to the tax/benefit changes. his choice to have a big family i know, but that's a massive chunk of their weekly budget (that they already struggle with).
this will definitely be a budget that brings in many changes that will have an impact on nearly all of us in one way or another, mainly negative from what i can see...
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ah, i'm not very up on the benefits bit, i've obviously missed that vital bit of info! thanks
well, some better news that i thought then
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silvermusic
I have no idea who "Brenda" is or what my post has to do with the Royal family. But please stop twisting my posts to fit whatever it is that's rattling your cage.
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we probably know as much as each other at the moment! i'm not getting too 'twisted knickers' about it at the moment as we'll have to wait for the nitty gritty on the rules & regs to come out before we'll know exactly where we are
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slclark17
For an established business, I think you'd have a point. But my shop is a fairly new and still growing business, with large business loan expenses to pay off. Once the loan is paid, I will just about be in the £10K plus profit. But there has been no mention of a safety net for businesses which need a safety net whilst they grow - leading to starting a new business only being an option to rich people.
Silvermusic, you are very lucky to be able to earn £10K* a year for a few hours work a day. I work 45 -50 hours plus a week. Not exactly a hobby. It makes a lot of people very happy though.
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That's what I'm thinking. I agree with you Bovine It will be interesting to read the small print.
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silvermusic
How hard in this day and age should it be to earn £40-£50 a day with the right product and knowhow and decades of retail experience.
I have zero debt / mortgage, etc. either in the business or personally, that's a huge freedom that makes a great way of life. It may not be for everyone, but I'm happy and content with my lot in life as it is, time is the most valuable resource that you can never get back.
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£200 a month to subsidise somebody whilst they attempt to establish a profitable business is money far better spent than the £329 per month (averaged) he'd get in JSA if he decided to sack off the business and sit on his backside watching daytime telly whilst doing minimal statutory job hunting on a miserable failure of a website which contains mostly fake jobs posted by recruitment agencies hoarding CVs. Especially as at least a small proportion of those subsidised businesses will become successful and pay back into the system.
And I bet he is learning more and costing less whilst getting stuck in to his business than he would on some government funded re-training scheme (what a gravy train that industry has become).
Although I don't entirely disagree with your point, because self-employment + tax credits has long been abused as a loophole to avoid job centre meetings, and something needed to happen to swing the pendulum back a little.
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Presumably you won't be waiving your right to your state pension or the NHS? We all end up hooked up to the morphine drip at some stage in our lives, some of us require daily carer visits, one in three will get cancer. That's when we'll get our tax back, when we spend a decade or more being completely useless and unproductive members of society, it happens to us all.
We all take something from the state, every single one of us. I'd taken from the state long before I paid a penny in tax, in fact in my case from the very moment I was born, in an NHS hospital. And does your criticism of state subsidisation extend also to profitable businesses? Plenty are benefiting from small business rates relief.
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silvermusic
I don't have a problem with helping people into self-employment if it's a genuine attempt at starting a viable business, I'm happy for the government to support people with tax credits and other help in the first year or maybe a little longer even. Where I have a problem is with the many that aren't even a viable idea from day one, seems the Job centre's are keen to dump anyone with half a brain cell or crazy idea into the "self-employed" world to get them off their unemployed figures.
There's far too many small business that will never work from day one, the basic maths doesn't add up to start with. But these deluded folk carry on regardless encouraged by family and friends and those without the slightest idea of how to run a business properly. A lot end up as zombie businesses, never making any worthwhile profit and their owner ticking along partially supported by the state for far too long.
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