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Education wanted re NIC & self-employment
OK – So I get the furore in the newspapers about this ‘awful’ Tory budget. A big part of me thinks the papers just see budget now and go looking for disaster, after the omnishambles budget of 2012
But genuinely, some of the readers here must be self-employed. How much is this hit going to actually cost you? I just can’t see the hit outside of taking away egregious tax benefits.
How big is this storm – a teacup or a hurricane.
As pointed out yesterday, the issue is we cannot trust the press as they are made of many people who are affected by this change directly to the sense of proportionality is lost in a way that say a change on capital allowances would go totally unnoticed.
For example, Business Rates has been a big theme running pre-Budget – but as soon as journalists income is potentially hit, out this goes an in comes RAGE (as written by Sarah Vine).
Personally, many people I know earn a living through self-employment. They try optimize their earnings to around £40k per year. Between expenses and dividends, make their wives/husbands directors etc, contributing to pensions etc, they manage to pay no tax at all, bar NIC’s which they need for their state pension entitlements. Their is no contribution at all to the state in real terms.
In a PAYE job to net £40k you would need to earn £63k. This gap at a base level is c.57%.
5 weeks holiday (which the company pays for, not the Government) is worth 10% of wages, so that would take the PAYE earnings needed down , plus pensions contribution from employer perhaps another 5% and other bits add can on another 1 or 2%. So being generous let us say it is worth 20% overall to be employed.
That still leaves a huge gap and also, not unimportantly, a big hole in revenues for the Government. We have not even considered employers NIC here. No wonder employers are keen to get everyone onto consultancy and zero-hours contracts. Self-employment, even up to a mid-level of income is a huge issue for the Government. As the gig economy kicks-in I can quite see why the Government is going to make a stand on this issue.
If only MP’s would think of the numbers rather than the headlines.
Source: http://www.cityunslicker.co.uk/2017/03/education-wanted-re-nic-self-employment.html
