Reply to: Tories to 'reform' PAYE

[AtW]

Abolish all the other taxes, and just have a VAT hike.

UK taxes by %-tage take: http://en.wikipedia.org/wiki/File:UK_taxes.svg

VAT is 15% of total take, being at 17.5% level. If all other taxes are abolished then roughly speaking VAT would need to be at 105% rate: this assumes consumption will stay at this level, which it certainly won't.

Other than this minor issue your idea is perfectly fine!

What should happen is that any tax outside of top 5 main taxes (Fuel duty, Corp Tax, VAT, NI, Income tax) - 77% total take is abolished, with corresponding reduction in public expenditure by good 20% books can be balanced.

[Board Game Geek]

Abolish all the other taxes, and just have a VAT hike.

No need for NI, CT, or anything else.

Every pay packet increases considerably, and thus the extra VAT on all items is no more or less affordable than before anyway. It's all relative.

Simples !

[AtW]

With errors having to be corrected via a reclaim system with all of the inevitable delays and administration costs? Not very sensible.

And you can correct error with emergency tax code applied very quickly in the current system?

I personally think it is right for all people to know that Employer is paying NIC on salaries also - that's tax on employment and in effect people pay it, so they need to know total amount of tax paid from the amount that was meant to be due to them.

This way it should be harder for Govt to sneakly increase Employer NI.

[TykeMerc]

Tax code should be linked to NI number and money sent to NI account where deductions are made and then next amount is forwarded to employees account.

Accountants might not like this idea.

With errors having to be corrected via a reclaim system with all of the inevitable delays and administration costs? Not very sensible.

[HairyArsedBloke]

It's about the state having control of private wealth.

[centurian]

This is all about changing people's mindset to tax. When the tax is taken at source, the tax is less visible. However, if you see a credit of your salary, then an immediate debit for the tax, it's much more evident.

Like if you're a contractor caught under IR35, so every month you have to pay out PAYE, every quarter for VAT and every year for CT. You then realise it's your money (especially PAYE/CT) that the taxman is taking.

I guess the idea is that people will become more demanding of tax cuts and be less squeamish about spending cuts.

I think another idea would be to combine employers and employee's NI - but employers must increase salaries by the current level of employers NI. No-one is worse off, but the stealth tax of employers NI is there for all to see.

[BolshieBastard]

Why tax business accounts? In fact why tax business at all? Do away with CT, and let shareholders pay the full amount of income tax on dividends.

I love this idea of utopia!

[HairyArsedBloke]

Why are we (ahem, actually, you) still paying taxes? We beat Napoleon's arse centuries ago. It must have all been paid for by now.

[AtW]

Do away with CT, and let shareholders pay the full amount of income tax on dividends.

Then companies will pay dividends to offshore *cough* schemes *cough* so that shareholders' dividends will be out of reach.

Personally I think CT should be the only tax - dividends should be tax free as tax was already paid.

[VectraMan]

Hmm. Just thought of another snag though - Self-employed would be taxed twice, once when invoices were paid into the company account and then again when dividends and salary were paid into personal accounts. Drat!

Why tax business accounts? In fact why tax business at all? Do away with CT, and let shareholders pay the full amount of income tax on dividends.

[hyperD]

What's to differentiate between PAYE, dividend, pension, expenses and other fiscal streams into various accounts?

To be honest, it would be simpler to implement a flat rate tax system. Or simply remove tax completely.

[Doggy Styles]

How does that work with contractors?

And what happens when you dispute a demand? They've already taken what they think.

[OwlHoot]

They could streamline the process even further, and preserve complete personal anonymity, by simply taxing banks a fixed percent of all deposits into personal or business accounts, and letting the banks pass on the charges to each account holder. People, and perhaps also companies, might not even have file a tax return.

That's off the top of my head, although I'm sure there would be complications, such as how to deal with expenses and reclaimable overheads.

Of course a system like that would be more than just PAYE. It would amount to a general fund transfer tax, including payments received for anything.

Hmm. Just thought of another snag though - Self-employed would be taxed twice, once when invoices were paid into the company account and then again when dividends and salary were paid into personal accounts. Drat!

[HairyArsedBloke]

Sounds like a good idea to me.

ARE YOU FRAKING SERIOUS!


There is no hope

[VectraMan]

Sounds like a good idea to me. There's no reason why the employer shouldn't still make one payment to you, and one bulk payment to HMRC, it's the working it all out and having to keep up with the endless stream of tax code notices that is the problem. In this day and age a computer system should be able to make it all simple (cue cynicism about goverment IT projects).

They should just give businesses a choice. Large business would carry on as they do now; small business would change to this sort of scheme to save on admin; and us one man companies could change to only paying income tax once per year as part of SA.