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Frank Hovis

UK Government Income

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Here are the charts for 15/16, 16/17 and 17/18 forecast and I think we're seeing here what we're picking up upon generally:

  • VAT - people buying things - goes up steadily: 133, 138, 143 - increasing population buying increasing amounts of tat
  • NI - people having jobs no matter how low paid - goes up steadily - 115, 126, 130 - increasing population albeit in monkey jobs
  • Income Tax - people earning over £12k a year - is actually projected to fall - 170, 182, 175 - increasing population but less tax = less good jobs

So more people buying things, more people in work, but the wages over £12k pa are actually reducing.

 

For the second time today I will say it: Atlas Shrugged.

 

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58627_Chart_2.jpg

 

 

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Just now, TheNoSnowMan said:

Other (taxes) are increasing by £11 billion.

Can't they be a title more specific so I can avoid them?

Stamp duty has gone up - EAs have been squealing about this - and they've whacked up VED on new cars.

It's that income tax drop that really gets me; how can that happen when we're not in a recession?

I confess that I'm not helping their books with my minus £6k income tax payment last year but I doubt many are similarly playing the system despite my explaining how to do it.

https://www.dosbods.co.uk/topic/6297-pensions-sipp-tax-avoidance/

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I regularly look at HMG press releases as part of my contract work. They are spunking millions on aid to Africa, and on crackpot diversity schemes in the UK. 

A particular favourite is a scheme to get more bammies and women into the Fire Brigade. There's also a scheme to get more bammies into computer programming - they've obviously never met any Indian IT contractors!!

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More people than ever working 16hrs and claiming full working tax credits.

Bloke I work with has decided to leave and go it alone as a sparky. Told him to get his misses up the duff just in-case it doesn't work out. He seemed quite shocked when I showed him how much he could earn that way. Shocked and angry is probably the better description.

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1 minute ago, ad_ceng said:

I shrugged I went from being an executive in a large engineering company paying 50-60K in tax total between bonuses, and my consulting sideline. However a few months ago I quit the full time job and just work of and live of my consultancy side of things. They are getting hardly anything from me now and I could not be happier. 

 

It's only anecdotals and from here but I am hearing this again and again.

We had a senior manager's job come up this year; I would say three maybe four people could have successfully gone for it (including me) but there was not one single internal applicant.

Everyone is on a reasonable salary anwyay so the additional hours, stress and work weren't justified by the gross pay differential which was about £10k - £15k depending upon the person; and more particualry what that differential would mean in terms of buying a better house.  £10k * 3.5 = £35k so sod all difference.

 

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Posted (edited)

For me it was a mix of things. I am really fed up being a free range tax slave and I could not stand the organisation I was working for there was no ability to make decisions and the politics was out of this world. Of course it was  defence company milking tax payers money. 

Now I am working in autonomous vehicles and travelling a lot and working out how to minimise further the money I give to the government.

I think most people are realising the stress and hassle is just not worth it, do what you love you are only here once. It does cause a problem for the government though they some how seem to think they have a right to our money. 

Edited by ad_ceng

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1 minute ago, Austin Allegro said:

IMO this is also partly why it is in the interests of the government that house prices are kept high, because it keeps people on a treadmill of having to earn a big salary to pay a big mortage, and therefore pay a big wedge of that in income tax.

But if one's house is fully paid for, one does not need to earn a high salary because with care and living frugally, one can get by with earning on or just over the tax-free allowance (around £1000 a month, say). 

Exactly and the way the world is going the ability to have paid of your house etc would be the sensible thing. Infact it is totally counter intuitive what they are doing 

I am kind of hoping the Q turns out to be then I am done paying taxes or obeying statute laws 

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I've paid close to zero income tax this year. In fact I even got an extra £1000 back thanks to the LISA so I'm circa £750 up. Shame there's not much I can do about this damn NI at the moment

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Yep, you have a mix of:

- lower/mid earners finding out they can do just as well if not better by playing the Tax Credit game, hence paying no tax

- mid/higher earners finding out the juice aint worth the squeeze and turning down those 'crippling stress for an extra 7K after tax' type jobs

- people fucked off with the government and finding ways to give them less money, i.e. living more frugally and reducing working hours, or using every (legal) trick in the book to stop paying tax

And when you see Treason May busting moves with the Africans and promising them loadsamoney, who can blame them...

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9 minutes ago, Austin Allegro said:

IMO this is also partly why it is in the interests of the government that house prices are kept high, because it keeps people on a treadmill of having to earn a big salary to pay a big mortage, and therefore pay a big wedge of that in income tax.

But if one's house is fully paid for, one does not need to earn a high salary because with care and living frugally, one can get by with earning on or just over the tax-free allowance (around £1000 a month, say). 

Yep, saw and looked for a way around that with tax avioidance.  It still works when on a pension because you can draw well over the £12k and put enough into something tax deductible like VCTs so no income tax.  The income stream from VCTs is also tax free unlike the other big reliefs:

Scheme Maximum annual investment you can claim relief on Percentage of investment on which you can claim Tax relief on income from dividends
EIS £1 million 30% No
SEIS £100,000 50% No
SITR £1 million 30% No
VCT £200,000 30% Yes

https://www.gov.uk/guidance/venture-capital-schemes-tax-relief-for-investors

This means that you can supplement your spending money of £12k of tax free personal allowance with VCT dividends which run at about 8 - 10% of the gross investment; so of the 70% net you are actually paying they are actually 11 - 14% though I don't tend to think of them in those terms.

You can draw pension up to the 20% band limit of £46,350 (maximum, for example!) which would mean 20% tax on the £34,500 taxable or £6,900.  To offset this put £23k of that money in VCTs.

So you have drawn £46,350, invested £23,000 in VCTs and are left witrh £23,350 or c. £2k a month; all tax free.

Plus you get the dividends off the £23k investment next year - c. £2k again tax free.  And after five years of holding them you can sell them outright; tax free.

If you're not going to spend that £23k then put the unspent bit into an ISA.  With money in a SIPP you basically want to run it down as soon as you can after retiring, without paying tax, and get it all into an ISA where there is no tax to be paid on withdrawal in the first place.

And without a job you're not even paying NI.  Sorted :)

 

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Posted (edited)

There won't be snow in Africa this Christmas - instead, it'll be raining cash!

Here's what our government is doing with our tax pounds this week (insert your own 'ker-ching' cash register noise before each bullet point): 

  • £5.5 bn to 'support UK-Africa trade'
  • £56m for battery storage technology in South Africa.
  • £20m for a jobs creation scheme in Ghana.
  • £21m for Somalia including training their army using British officers and NCOs.
  • £8m to support UK-southern African Economic Partnership agreement
  • £3.7m to train Africans in radio astronomy. 

Now, I'd like to believe this is all helping to boost British trade and creating jobs etc but I'd be very interested to see whether all this actually achieves anything, or whether it's just going to line the pockets of a bunch of Idi Amin lookalikes sitting on their backsides and waving fly whisks around. 

Edited by Austin Allegro

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1 hour ago, Frank Hovis said:

Yep, saw and looked for a way around that with tax avioidance.  It still works when on a pension because you can draw well over the £12k and put enough into something tax deductible like VCTs so no income tax.  The income stream from VCTs is also tax free unlike the other big reliefs:

The only thing that concerns me a little about VCTs is that they have suddenly become massively popular because of the tax breaks.  I wonder how many of them will actually be wearing any clothes when the tide goes out?

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£40k was considered a good wage in the 90s, £40k is considered a good wage in approaching the 2020s (I say this from the public perspective and hearing people talk, not my own view). Therein lies the problem. A quick read of JDs and employers are basically asking for your soul at £40k and above yet 30 years of inflation has killed the goose that laid the golden egg. I still think some idiots think they are a big deal because they earn £40k+, almost laughable when a well informed and efficient tax crediter can be netting not far off the same when deducting for work expenses/commuting etc. Really is a mugs game. I am dangerously close to the not earning enough threshold to justify the hassle and last time I checked IFS figures I was in the top 2% of earning "households" as a single earner. I live in the SE and live fairly modestly - in fact I couldn't actually afford to live in housing befitting of a top 50% earner here let alone top 1-2%. So much phoney wealth in the UK and SE it is untrue. Factory op was telling me the other day how he and his partner (recently divorced the pair of them and selling a house to live together) were looking to buy a brand new range rover and he'd probably retire in less than 5 years (51 or 52 I think he is). Banking several hundred k from a dilapidated s**thole in Reading, life has been good to them. And here the mug I am, managing many of these types with multiples of net worth who drive fork lifts on part time hours.... while they complain of how overpaid management is and how s**t their wages are. It takes a lot of strength to stomach that on some days. The youngsters are f**ked though, all decent benefits and wages paid out to the older guys so have to make savings off those guys' backs.

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I think the Social Contract is close to being broken.

People see the public sector and government pissing the money taken off them against the wall on all sorts of bollocks. Mostly of benefit to other people,

Hardly give a shit myself any more.

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9 minutes ago, Fischer said:

I think the Social Contract is close to being broken.

 

it was  broken a long time ago, in fact it never existed 

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3 hours ago, Austin Allegro said:

IMO this is also partly why it is in the interests of the government that house prices are kept high, because it keeps people on a treadmill of having to earn a big salary to pay a big mortage, and therefore pay a big wedge of that in income tax.

But if one's house is fully paid for, one does not need to earn a high salary because with care and living frugally, one can get by with earning on or just over the tax-free allowance (around £1000 a month, say). 

I've thought that for a long time. I was chatting with a work collegue once and was trying to explain that as things work today, the majority of the population have to be kept poor. He was struggling to understand so I said, lets just imagine by some form of magic, everyone was suddenly gifted a million pounds, would that be good or not? He said it would be great, everyone would be rich and there would be no poverty. So I said who would do the menial jobs though? What would happen with inflation?  How much would you have to pay a plumber to unblock a drain?

He still couldn't get it so I gave up in the end. Fiat money, currency vs money, wealth and what creates wealth are things that people on forums like this understand. Out in the real world many just dont get it.

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1 hour ago, Libspero said:

The only thing that concerns me a little about VCTs is that they have suddenly become massively popular because of the tax breaks.  I wonder how many of them will actually be wearing any clothes when the tide goes out?

I've stuck with the same two managers for nearly twenty years and the frequency of their issues has actually declined; primarily I think owing to Osborne tightening the rules.

The effect of their popularity has been that the new subscriptions are usually fully subscribed well before the deadline so I always need to keep a pile of cash ready for the issues as there may be only one a year between the two managers.  That the issues have dropped in frequency suggests to me that they're maintaining standards.

It's certainly possible that new managers have sprung up that aren't as good and are sucking money up because of the tax benefit but as I just stay with my same two I don't think that my risk has increased.

(I'm not naming the managers because my research is twenty years' old so I wouldn't want anyone else relying upon it.)

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Posted (edited)

I remember my first job (2nd actually, but first wasnt a real job) back at the university press in Cambridge in 2000. Basic warehouse work, and they paid £6.19 an hour. I still did some summers there over the next five years between college and uni, and it was up to about £9ph by 2005. Then the eastern europeans came in and pay stagnated. Then they shut the press, and outsourced to DHL who essentially moved the same job to Rushden and re-hired a 99% Eastern European workforce on minimum wage.

This was great work for students in Cambridge. Once all done by British people, few hours a week, and a good hourly rate. Then they figured they could get Poles and Hungarians to do the same work for 30% less.

https://www.dhl.co.uk/en/press/releases/releases_2011/logistics/100611.html

Im sure the same has happened in thousands of businesses up and down the country.

Edited by PatronizingGit

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1 hour ago, SillyBilly said:

£40k was considered a good wage in the 90s, £40k is considered a good wage in approaching the 2020s (I say this from the public perspective and hearing people talk, not my own view). Therein lies the problem. A quick read of JDs and employers are basically asking for your soul at £40k and above yet 30 years of inflation has killed the goose that laid the golden egg. I still think some idiots think they are a big deal because they earn £40k+, almost laughable when a well informed and efficient tax crediter can be netting not far off the same when deducting for work expenses/commuting etc. Really is a mugs game. I am dangerously close to the not earning enough threshold to justify the hassle and last time I checked IFS figures I was in the top 2% of earning "households" as a single earner. I live in the SE and live fairly modestly - in fact I couldn't actually afford to live in housing befitting of a top 50% earner here let alone top 1-2%. So much phoney wealth in the UK and SE it is untrue. Factory op was telling me the other day how he and his partner (recently divorced the pair of them and selling a house to live together) were looking to buy a brand new range rover and he'd probably retire in less than 5 years (51 or 52 I think he is). Banking several hundred k from a dilapidated s**thole in Reading, life has been good to them. And here the mug I am, managing many of these types with multiples of net worth who drive fork lifts on part time hours.... while they complain of how overpaid management is and how s**t their wages are. It takes a lot of strength to stomach that on some days. The youngsters are f**ked though, all decent benefits and wages paid out to the older guys so have to make savings off those guys' backs.

Im not familliar with it., so cant confirm, but a lot of posters on blogs say in the 1990s programmers in silicon valley could quite easily clear $150-160k a year. Now the Indians have taken over, apparently $30-40k is the reality for many. 

 

IIRC falling income tax receipts isnt unprecedented, the US experienced such I believe for about 5 years following the GFC.

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