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| Philip Hammond is Mr Clippy reincarnated for the 21st century. |
[Yes, this does sound like reading a painful stream of consciousness - that's is because it is. Just thank your lucky stars this isn't on Facebook]
At the moment the current Tory administration is basking in the glory of U-Turn more reminiscent of the handbrake turn in "The Sweeney". As you probably know, the Government recently tried to renege on a manifesto pledge to not increase taxes in the term of this Parliament. There's a couple points in this ominishambles that need to be separated out, before the murky brew which is claim, counter-claim, and pre-buttal takes hold.
Firstly, what's largely being lost is the policy wasn't actually that bad. I mean no-one likes taxes, but this was progressive. For those for whom self-employment represent the alternative to eking out a bleak existence on benefits, or stringing together a series of zero contract hours jobs - they would paid very little if anything in increased NI contributions. Everyone knows that rise in self-employment has nothing to do with a sudden flush entrepreneurial spirit in the UK, and everything to do with the way our economy nearly went to hell in handcart after the credit crunch. The only reason people become self-employed tiddlywink makers, is this now better than being demonised by the Channel4 as scrounging "Benefits Scum". Remember those, I mean "benefits". Things you paid for by the very same taxes that are meant to offer an insurance in case times are bad. That you are now made to feel ashamed to claim?
There is pyramid of being screwed in this country - and it starts with the employed who are royally screwed by HRMC. The HRMC can get to you salary at source using PAYE. They take it well before you get any chance to wire to your off-shore account in the Caymans...
The ironic thing about this is being self-employed from a taxation point of view actually sucks. The self-employed are taxed at the same income tax rate as employees despite the massive personal risks they take. Worst still self-employed people have to pay upfront money on earnings they have yet to make. Yes, that's right, the HRMC predicts using a special magic crystal ball, what they think you might make in the next 6 months, and ask you to pay upfront "on account" before you've even earned this money!
It's for this reason we have seen a ballooning of Limited Companies that employ just one person. Limited Companies in the UK are given a quite a lot of rope. They get a much reduced % of taxation, and plenty of notification and notice to pay your taxes in your own sweet time (NOTE: Within reason. Were not talking Google like ability to discuss with HMRC what level tax you feel your in the mood for paying this year...). So the more you earn as self-employed person the more you will realise you should really be a Limited Company. Anyway, I realise this sort of negates my own argument about not effecting people, but usually takes the self-employed a while to work out that paying the taxman taxes on money you haven't earned yet, isn't going to do your perilous cashflow any favours. Remember the government has been encouraging people to go self-employed. You should always be a little suspicious when the government encourages you to do something - the nearly always have their interests (or big business) at heart, not yours... Have you note noticed this yet? So the push to go self-employed simultaneously keeps the unemployment figures low, the benefits bill low - whilst supplying big business with a slew of cheap casualised labour in the so called "gig economy". By the way dubbing being low paid with no benefits a 'gig' doesn't make it sexy, and using the term just makes you look like a bit of a Shoreditch Twat. Just sayin'
It's for this reason we have seen a ballooning of Limited Companies that employ just one person. Limited Companies in the UK are given a quite a lot of rope. They get a much reduced % of taxation, and plenty of notification and notice to pay your taxes in your own sweet time (NOTE: Within reason. Were not talking Google like ability to discuss with HMRC what level tax you feel your in the mood for paying this year...). So the more you earn as self-employed person the more you will realise you should really be a Limited Company. Anyway, I realise this sort of negates my own argument about not effecting people, but usually takes the self-employed a while to work out that paying the taxman taxes on money you haven't earned yet, isn't going to do your perilous cashflow any favours. Remember the government has been encouraging people to go self-employed. You should always be a little suspicious when the government encourages you to do something - the nearly always have their interests (or big business) at heart, not yours... Have you note noticed this yet? So the push to go self-employed simultaneously keeps the unemployment figures low, the benefits bill low - whilst supplying big business with a slew of cheap casualised labour in the so called "gig economy". By the way dubbing being low paid with no benefits a 'gig' doesn't make it sexy, and using the term just makes you look like a bit of a Shoreditch Twat. Just sayin'
The truth is the HRMC have always hated self-employed people. Why? Well, years ago in a cash economy being self-employed was a great way of trousering money that Her Maj would never get to see. The young won't remember this but there was once a turn phrase that customers would use that was "How much for cash?"... There was this implicit agreement that we were all on the fiddle - and this displeases the mandarins at HRMC. However, seem quite happy to sip sparkling water at Facebook roof-top offices in the Shard... This period of self-employedness ended when people start carrying 20p in cash in pockets, and instead adopted the practise at waving bits of plastic the till instead. ANYWAY...
The reason Mr Clippy's (I mean Philip Hammond) Great NIC wheeze was good idea is that without the NIC increase a gaping hole would appear in the public finances. Although it is possible to over state this issue. The gaping hole has to be compared to the Grand Canyon Gaping Hole that is next to that makes this shortfall look like a small pothole at the end of you road. You know thing that politician's refer gnomically as "The Deficit". You may think they are talking about national debt, but they are really referring to the deficit of ideas that have around reducing it.... But anyway, the principle was right in terms of NIC contributions. The nature of work is changing whether we like it or not, and therefore HRMC had to find a new method of wringing money out of the Great British Public, whilst allowing larger corporations to continue to flog billions of pounds of goods in the UK, and reporting their tax location as some man-made atoll based in the Indian Ocean.
The trouble is they made a complete hash of the job. The current administration would like us to believe that May & Co are diligent completer finishers; tedious technocrats with an eye for spreadsheet detail. You know kind - PPE rejects from Oxbridge, who could not get proper jobs in the City hedging pork-belly futures, so instead have to grift their way up politic ladder instead whilst the learning to put one word in front of another at Oxford debating bun-fights. Unlike the current crop of "Masters of the Universe" they have to patiently polish their political careers, until they could eventually leave office, and do lecture tours in the US, and secure a one-day-a-month directors position at Goldman Sachs.
The trouble is this all a lie. Not only are they pigging useless at conditional formatting in Microsoft Excel. They can't even remember their own manifesto commitments, let alone realise that their slender majority of 13 MPs would soon rebel at the first sight of White Van Man being clobbered with more taxes. So not only are the economically inept, they also politically inept. It's like some student failing to do a spelling and grammar check on the essay they bought of the Internet. [cough]
The trouble is this all a lie. Not only are they pigging useless at conditional formatting in Microsoft Excel. They can't even remember their own manifesto commitments, let alone realise that their slender majority of 13 MPs would soon rebel at the first sight of White Van Man being clobbered with more taxes. So not only are the economically inept, they also politically inept. It's like some student failing to do a spelling and grammar check on the essay they bought of the Internet. [cough]
First they have a policy, then they kick it into the long grass for six months, and then finally they take round the back, and blow the policies head off. A policy that wasn't so bad economically, has been scuppered by their own politically uselessness. The have a majority - but couldn't even get their own budget unscathed through Parliament. And these are the people who will make sure that "Brexit mean Brexit' and how they will get a 'good deal for Britain'. And on top of that in a couple of years time we will have an even bigger debt because they were spending more than they were raising in taxes. The very thing the accuse the Labour government of doing. [Deep Breath]
And to my last point. Someone, somewhere needs to work out how to make political capital from this before the news agenda moves on, and you start watching kitten videos again. Every election since I was born has been run with the agenda that Labour "has a £N billion hole in their spending commitments" and that "Tax Bomb" waits unsuspecting in the wings to fill the gap. This is because Labour has a perception problem of being economic halfwits. But lets turn it around. The Tories have created a real hole the public finances, by the failure to introduce a hidden tax bomb they promised they would not introduce, and they did whilst millions of people were watching them....
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