The budget

[JPreston]

No threads about the budget yet?

I thought all the contractors would be wailing by now.

Or is everyone waiting while the Big Four accounting firms (and Rave) race to publish their budget analyses?

[Flibb]

I think it was a bit of a non event for the majority of the UK public. A quick bit of research at work and we will be around £5 a month better off, but council tax has gone up more than that anyway.

[dave87]

I think its a mixture of measures that doesn't really make much difference to a lot of us. The measure I noticed most was that he was reducing Corporation Tax, but increasing the other taxes on business, which seemed to defeat the object a little (I'm guessing from his proud announcement that we have the lowest business taxes in Europe, that he's attempting to increase investment and therefore boost the economy. Which would help to avoid any anticipated slow down)

Oh and the reason there are no threads on it, is because if you ask 10 people on the street when the budget comes out, 9 and a half of them don't know when, or don't care, some of them I dare say won't know what it is, and point to the low cost insurance company.

[iranu]

I still can't work out why the 10p rate has been scrapped. Surely this lower rate helped lower income people i.e the poorest. I suspect it's the same reason why the personal allowance has not risen with inflation since Broon has been chancellor.

Must be something to do with "social justice".

[JPreston]

Er....because it was an interim rate, introduced by brown in the first place? People have short memories...also, it didn't help the poorest - it was worth exactly the same to everyone regardless of earnings. Tax credits (again introduced by brown - with the upper earnings limit increased in this budget) help the poorest, because they are means tested - then things like increasing the personal allowance of pensioners target specific groups. Progressive taxation FTW!

Corporation tax is the only tax paid by companies - what has happened is the small companies rate will rise but the standard rate will fall. Small companies rate is rising to remove some of the benefit of contractors incorporating themselves to avoid tax and NI, but then the higher rate income tax threshold has increased meaning a greater proportion of dividends will be taxed at 10% rather than 32.5%, so it's all swings and roundabouts.

[chuckskull]

For the average joe, it's a bit of a none event, all the rises were pretty small.

There was no increase on Duty on spirits which was about the only thing that caught my eye.

[dave87]

Originally Posted by JPreston

Corporation tax is the only tax paid by companies - what has happened is the small companies rate will rise but the standard rate will fall. Small companies rate is rising to remove some of the benefit of contractors incorporating themselves to avoid tax and NI, but then the higher rate income tax threshold has increased meaning a greater proportion of dividends will be taxed at 10% rather than 32.5%, so it's all swings and roundabouts.

I'm sure thats not right, I'll check with dad (accountant) when he gets back. I'm sure corporation tax is not the only tax on business, but I may be wrong (it has happened before )

[dave87]

Right, it appears I was wrong, at least on the face of it.

What Gordon Brown has done is reduce the tax on the biggest companies, but increased the tax on smaller companies, thus meaning approximately no change in the revenues generated. That is, unless more large corporations invest in Britain, in which case there will be a net increase.

The other crucial bit is the change in the rate at which Higher Rate Tax cuts in, currently £38k, raised to £40k (iirc) but there has also been a change in the rules for National Insurance, which means that higher earning people pay more. So again, the net effect is Nil.

But, as a typical politician, he has publicised the cuts, and conveniently omitted the increases which means that there, in reality, is very little change. The only difference is that he is seen as encouraging investment and the wealth generating sectors of the economy, whilst simultaneously promoting the redistributional policies of the Labour Party, depending on which audience he is addressing.

Dave

(edit, so basically what you said...)