The Big NIC U turn

[SueEllen]

Thing is, the solution is pretty simple. If I were to replace Philip Hammond, my Autumn budget would look like this:

1) Abolish Employee NICs
2) But retain Employer NICs for employed people.
3) Increase income tax rates in line with what Employee NICs were
4) This way, everyone - employee, self employed, etc, pays the same tax rate
5) Increase personal allowance for old people to compensate them (as they don't pay Employee NICs)
6) Reclassify dividends from close companies so that it would come under regular income tax. Corporation Tax relief on dividends for said close companies. Dividend tax rates for non-close companies (and no CT relief) to remain differentiated. And I mean close companies rather than PSCs.

This I think would be fair. There would need to continue be rules regarding employer NICs to ensure false self-employment isn't used to avoid them as well as other employment benefits. Some onus should be on the hiring company here, as they are the ones forcing Deliveroo drivers, Uber drivers, Amazon couriers, Cleaners etc into self employment, whilst ensuring there is a legitimate option for genuine freelancers. Wooly tests like we have for IR35 should be scrapped and replaced with something more robust.

I would also change rules on UK corporate profits being shipped to low CT economies, i.e. no CT relief on payments to overseas related companies other than legitimate supplies of goods. i.e. Starbucks couldn't say "Starbucks UK is paying £1,000,000 per Kg of Starbucks coffee beans to Starbucks Luxembourg", that price would have to be realistically fair. Thus ensuring Amazon et al pay a fair rate of tax on what they earn in the UK.


I would also scrap the barnet formula, devolve corporation tax in Scotland to the Scottish parliament, devolve council funding to the Scottish parliament (so it could choose to scrap or replace council tax and business rates if it chose), devolve further the income tax raising powers to the Scottish parliament. There would just be a fair portion of the income tax rate in Scotland to cover shared services (e.g. military and whatever). Scotland could then choose to cut tax if it wanted to, but the onus would very much be on them to ensure education, medicine, police, prisons, fire provision, roads, rail, etc etc were all funded. However, said devolution act would have a paragraph in it that if Scotland failed as a result of this (and I have no reason to believe it would), then all SNP MSPs will be exiled to a rusting off shore fort. (e.g. the 'Principality of Sealand').

Increased devolution to the Scottish parliament must, however, result in lower representation in Westminster. Scottish MPs shouldn't be able to influence non-Scottish policy. If the UK wants to scrap sunday trading rules in England, then Scottish MPs should not be able to block it. For example.

(Yes, I went off on one there, but I just started writing the next budget...)

The Tories cannot increase taxes until the next parliament as it will breach a manifesto promise.

[Bob727]

This NI is a big diversion!!!!

Honestly can people not see that this NI business is all a big con/diversion to make people look the other way and say nothing about the IR35 changes to take place on 6th April and screw a lot of hard working people out of lots of money just so the government and the HMRC can carry on pushing their snouts in the trough. NI is not the issue with the self employed! It's this IR 35 con!!!!!

[chopper]

Honestly can people not see that this NI business is all a big con/diversion to make people look the other way and say nothing about the IR35 changes to take place on 6th April and screw a lot of hard working people out of lots of money just so the government and the HMRC can carry on pushing their snouts in the trough. NI is not the issue with the self employed! It's this IR 35 con!!!!!

Most people really don't care that those tax dodging contractors are going to pay more tax in April, apart from contractors.

If anything, they probably hoped the NICs news would be buried by Brexit. As it stands, aren't the self employed now in for a tax cut in the form of abolished Class 2 NICs? (At least until the Autumn, anyway).

[eek]

Most people really don't care that those tax dodging contractors are going to pay more tax in April, apart from contractors.

If anything, they probably hoped the NICs news would be buried by Brexit. As it stands, aren't the self employed now in for a tax cut in the form of abolished Class 2 NICs? (At least until the Autumn, anyway).

+1 IR35 isn't on most people's radar and heck even as a contractor I think a lot of people (and departments) were taking the utter mickey.....

[BlasterBates]

+1 IR35 isn't on most people's radar and heck even as a contractor I think a lot of people (and departments) were taking the utter mickey.....

I have to say, I don't think "real" contractors will be affected by the changes.

[jamesbrown]

I have to say, I don't think "real" contractors will be affected by the changes.

Except where the ESS is mandated, because it's a long way from representing case law, or where no assessment is made, just a blanket decision. Were the test to solicit a comprehensive contract and WP review from a reputable review company, to be evaluated and agreed truthfully by the client (rather than in a blanket way), I'd agree. In other words, there was an opportunity to ensure that "real" contractors weren't affected.

[eek]

Except where the ESS is mandated, because it's a long way from representing case law, or where no assessment is made, just a blanket decision. Were the test to solicit a comprehensive contract and WP review from a reputable review company, to be evaluated and agreed truthfully by the client (rather than in a blanket way), I'd agree. In other words, there was an opportunity to ensure that "real" contractors weren't affected.

but as all contractors know most clients eventually do things that make no sense often resulting in positions where its sensible to make a haste but polite escape...

[jamesbrown]

but as all contractors know most clients eventually do things that make no sense often resulting in positions where its sensible to make a haste but polite escape...

IMO, the argument is about how it's designed and the associated collateral, not about those taking the mickey. I don't think you'd encounter much dissent on here about tackling the latter, but they're low-hanging fruit and very easy to catch with a more intelligent (human, not check-box) screening process that is based on case law.

[LondonManc]

IMO, the argument is about how it's designed and the associated collateral, not about those taking the mickey. I don't think you'd encounter much dissent on here about tackling the latter, but they're low-hanging fruit and very easy to catch with a more intelligent (human, not check-box) screening process that is based on case law.

Like I've said before, it's the were outside, now inside, head-in-the-sanders that will get hit first. They'll take a few years to get through. "Proper" contractors have little to worry about imho.

[RonBW]

Like I've said before, it's the were outside, now inside, head-in-the-sanders that will get hit first. They'll take a few years to get through. "Proper" contractors have little to worry about imho.

Every contractor has something to worry about if many clients adopt a blanket inside approach. You can work any way you want, bring in substitutes as often as you want, be as "real" as you want - but if the clients are taking an approach that they will only deal with you if they treat you as an employee then you have plenty to worry about.