Politics The General Election 2015

[Talivar]

It sounds much better but as with every review we need to give it a few days for the analysts to go through with fine toothed combs to find all the more well hidden details

 

[Talivar]

Also lets not forget the Tax Credits changes only happened because it was blocked in the house of lords, despite today showing he didn't actually even need to do it as harshly in the first place. Also it seems to have taken a Terrorist attack in Paris to stop the planned Police cuts. Very well played by the Conservatives in a political sense but it was more responding to a changing situation and opportunistic than any act of understanding

 

[Vae]

I was watching it waiting for the stings (e.g. removing higher rate tax relief on pension contributions) but, so far, I can't see anything apart from the extra 3% stamp duty on people buying second homes (Buy to lets) from Apr 16 and potentially an additional 2% on council tax. Also turning some grants (e.g. nursing students) into loans was another potential issue.

 

[Talivar]

Yep i watched as well and it sounded almost too good to be true

 

[Scouse]

Torys are the new socialists.

They're going to hike tax big time on small companies. I've heard they're effectively going to outlaw one man IT companies (in a nice handshake deal with the big four IT outsourcers).

But yeah, the tax credits thing does appear to be a political masterstroke. Anything that happens afterwards to smaller groups of people won't raise an eyebrow in the public mind as they'll be going "at least it wasn't me"...

 

[old.user4556]

(in a nice handshake deal with the big four IT outsourcers)

Wipro, HCL, Tata and Cognizant?

 

[Gumbo]

I think they'll hike tax on companies which aren't companies. If you're one person working in other people's offices you're not a company. It's just that the tax rules have made it efficient to be one. That would be harsh on the world of IT Contracting for sure. I'd be suprised to see any massive tax hikes on companies who employ a few people producing goods or services to sell to other people. That's kind of the Tory core right there.

 

[Gwadien]

Was having this conversation with my mate, in very much laymans terms, if I'm right the Government gives tax breaks to companies in order to grow and to expand easier, thus employing more people, and contributing to the economy.

If you're a 1 man band using these same tax breaks and you have no intention to expand then you shouldn't be able to use these tax breaks?

Can someone point out the part where they're doing this, or are you speculating?

I think it's kinda silly at the same time, since a lot (I'd imagine a majority) aren't exactly truthful about their income, so they're not going to be punished - it'll be the ones that are truthful?

 

[Scouse]

I think they'll hike tax on companies which aren't companies. If you're one person working in other people's offices you're not a company.

Why not? Specifics please, not just "a feeling".

There's effectively no difference between what my mate at IBM does (works at another company) than what I do (works at another company).

This is how it works in IBM:

When his "contract" with the bank he currently works at ends he has to find, and interview for, another job within IBM at another of their clients. If he can't land one within a specified timescale then he gets laid off.

IBM charge him out, for his personal services, at about 2.5 grand a day. His salary is around 80k. That's a nice £420,000 profit for IBM for using his skills.

He used to contract (in direct competition for the roles IBM have him doing) doing exactly the same job, earning £500/day - more than he'd get at IBM but a lot less than IBM charge him out at. Personal circumstances meant he took a job with IBM, but he's leaving them soon to go back contracting.

In his words "what's the difference other than IBM make money out of me?"

What, exactly, is the difference @Gumbo?

Now, contractors pay about 20-25% of their gross income in tax, and have to abide by all of the same laws and take all of the same risks. IBM pay less than 7% on their profits in the UK.


Since time immemorial it's been perfectly normal for a man to sell his services. At the turn of the last century 96% of Americans worked in that fashion. Lawyers do it a lot today. As do architects. Is there something different about Lawyers or Architects that means that they can sell their time and skills, whereas if you work in IT you cannot?


What's normally the problem with people who hate contractors is that they haven't the balls to go out there and do it themselves. In my experience, by and large, it's the contractors who are the most competent and get the most work done. So if we are, in the end, forced into working for the man then the next round of people who'll get made redundant are the current shower of permies.

 

[Gumbo]

http://www.intelletec.com/blog/2015/11/is-the-government-about-to-kill-contracting

That's the bones of it, with some further reading from the link. I didn't notice if it came up in the statement though. It is treading on Labours toes again, they removed some of the advantages to directors getting paid in dividends in the last Budget, which is a traditionally anti Tory type of thing too. Those who aren't so blinkered by hereditary hatred, might actually see that the current lot are trying to do the best for the country, and not just laying into the poor.

 

[Gwadien]

People go for permanent jobs for ladder climbing and security - You have no commitments such as children and such so contracting work is fine.

To respond to your last point though, my Dad uses contractors quite a bit, and he finds that they're largely bone idle and lazy, until you say 'I'll pay you a set amount to finish this particular job' As opposed to 'Work on this job for 9 months.'

Even then, he's always complaining on how shit they are and most of his time is used fixing the stuff they do wrong - Different industries though I suppose.

As for taxation, I suppose the argument is that IBM employs a shed loads of people, so therefore they're contributing more to the economy than a solo contractor who's just in it for himself.

Also, is that tax level personal & business taxation?

 

[Scouse]

People go for permanent jobs for ladder climbing and security

That's idiocy, however. They just sacked a load of permies at HSBC and they're now re-hiring the contractors that they had to sack first.

Different industries though I suppose.

Yep.

As for taxation, I suppose the argument is that IBM employs a shed loads of people, so therefore they're contributing more to the economy than a solo contractor who's just in it for himself.

As explained above, they're not contributing more to the economy. They're contributing to the pockets of shareholders whilst dodging tax in a way that it's impossible for the small guys to do...

 

[Gumbo]

I didn't say I agreed with it @Scouse, I just acknowledged that an industry has grown up around a set of beneficial tax rules. Your mate will be paying tax at 40% on a fair bit of that income, instead the contractor pays 20-25%. The contractor can also massage his income with his expenditure to get that lower and lower.

I imagine, although I'm not sure, they're probably looking at those people who have been contracting at the same place, doing the same job for a long time, who in everything bar tax returns are employees.

You're right, it's brave people who go contract instead of perm, I have no doubt about that, and if it was me I wouldn't change a thing about the current arrangements, because I'm the biggest advocate of flexibility

 

[Scouse]

You made a statement about not being a proper company - and that's the lie that the governments are using to make ideological structural changes.

Flat rate tax. That's the way forward.

 

[Scouse]

He was due to announce it today, but he hasn't bothered apparently.

To be fair, he was facing a long legal battle with that one...

 

[Gwadien]

Isn't it kind of an employee-contractor argument as opposed to contractor-employer argument?

If taking in what @Gumbo said as truth; an employee paying 40% tax and a contractor paying 25% tax?

 

[Scouse]

I cba tbh @Gwadien. I've sat down with new contractors for hours trying to explain the basics of the tax system to them and they simply don't understand. Only a handful of permies understood it (the really clever ones). And you're still at Uni so don't get either side of it

 

[Embattle]

To me the tax credit cuts are fine although I question the typical fashion of most governments to normally being in the cuts almost instantly compared to the idea that is due to replace them which is often years later, in this case the living wage.

 

[Raven]

Wouldn't it be a shame if they removed a tax loophole.

A nice start in fixing the tax system, just need to go after the big dodgers too.

I would have thought you would be delighted Scouse? They are removing a legal tax dodge... Or could it be that you are a hypocrite that takes full advantage of the law, just as the big companies do.

 

[ECA]

You made a statement about not being a proper company - and that's the lie that the governments are using to make ideological structural changes.

Flat rate tax. That's the way forward.

Nope, flat tax is hugely regressive.
Tax code without all the loopholes would be a start.

 

[Scouse]

Nope, flat tax is hugely regressive.

I think the gains you make from it being undodgeable, simple and essentially fair (both in what it demands and how it's perceived) offset the negative aspects of it.

Tax code without loopholes is more Utopian than genuine equality...

 

[Scouse]

I would have thought you would be delighted Scouse? They are removing a legal tax dodge...

If they apply the tax code to everyone you won't hear a complaint from me.

But to say small companies aren't proper companies is technically (and morally) incorrect.

Either way @Raven - and this is the important bit - I'll still pay it. Without resorting to holding my assets in an offshore haven.

 

[ECA]

I think the gains you make from it being undodgeable, simple and essentially fair (both in what it demands and how it's perceived) offset the negative aspects of it.

Tax code without loopholes is more Utopian than genuine equality...

How's that different from first £15k at one rate, next £25k at a second rate and anything above that at x%?
The issue is loopholes, not structure.

 

[Gumbo]

I'm saying that companies who consist of one individual who has sat at the same desk at the same company, doing the same job for the last 4 years, isn't really a company.

But I'm also saying, I don't think it should be changed, I'm just saying I can see where they're coming from, because my mind is a tiny bit open.

 

[Scouse]

I'm saying that companies who consist of one individual who has sat at the same desk at the same company, doing the same job for the last 4 years, isn't really a company.

If an independent architect lands a job to design a big building and oversee it to conclusion, and works on that full time for a number of years, then he's not running a small independent company that sells architectural services?

You're weird

 

[Scouse]

How's that different from first £15k at one rate, next £25k at a second rate and anything above that at x%?
The issue is loopholes, not structure.

It's the start of complexity - and the idea that people should pay different rates.

If everyone pays the same percentage then the rich pay more and the poor pay less and nobody can be angry at anyone else because of what they contribute - because they all contribute the same and can't dodge it.

 

[Gumbo]

Pretty sure that in your line of work you know quite a few of the people I've just suggested might be out there

There was a big crackdown by the tax people on boatbuilders not long ago because most of them were self employed. This of course meant that the firms building the boats didn't have to pay out any PAYE etc. But, turns out, and I think the questionnaire might still be out there, none of these guys satisfied the criteria. They didn't have to provide their own tools, their own machinery or materials, they didn't work at more than one site etc. So they were employees in all but tax status.

To emphasise, I am not bitter, this didn't affect me in the least, but it is my industry so I am aware of it.

This is just an example of them taking the same rules upmarket into the clean hands industries.

 

[Scouse]

Pretty sure that in your line of work you know quite a few of the people I've just suggested might be out there

I do, but why does that make them not operators of independent companies offering IT services?

The rules were made up to try to grab tax because of "a feeling" that people were tax dodging. But about 10 have ever been done for it - because the rules are unenforceable because they're bullshit. They'd have to write them in a way that means that they could go after IBM as well - and they'd fail in court.

Why is that? It's because they ARE running companies. Proper companies. Selling services.


The few that have been done fucked up big time on the tax dodging front. The rest are legit.

 

[Gumbo]

Perhaps they're not just going to ban it, they're just going to write some more enforceable rules and get a fairer grab of the tax for the days work that the contractors are doing?

 

[Scouse]

Perhaps they're not just going to ban it, they're just going to write some more enforceable rules and get a fairer grab of the tax for the days work that the contractors are doing?

Why do you persist? Fairer grab? What's fair about unfairly penalising small businesses? Why not start with IBM then, who pay a lot less tax in percentage terms than someone on average wage?


But we know what the tories are up to. Stopping the small guy in favour of the big. So if you want one or two rental properties you're going to get hammered by the extra taxes. But not if you're the big guy:

Commercial property investors, with more than 15 properties, are expected to be exempt from the new charges