Budget Oct 24 Thread

It’d be nice if we can discuss it here without descending into a slanging match

Haha..... funny!

Salary sacrifice would be on my list of bets. It’s always struck me as a really obvious way to substantially lower your tax burden and your employers tax burden and would appear to be a workaround to some of the other policies they may be including in their budget so not restricting it in some way would make their other changes less effective.
I expect they may clamp down on it for both pension contributions and car schemes which benefit heavily from salary sacrifice.

It’d be nice if we can discuss it here without descending into a slanging match

Yeah, you've got to love a tryer...

Anyway, tax relief on pension contributions bound to be tightened (fair enough too I reckon) and employer NI up.

And there'll be loads of fuss about IHT as usual, even though hardly anyone pays it, it's just a handy scare story for the Telegraph/Mail etc

interesting to see if they look at pay per mile on cars to make up the shortfall on fuel duty/vat. VED already changing next year and also EVs will be no longer exempt from ULEZ but will they go further?

Capital gains increases seem inevitable. Bought more inline with income tax levels or someway paired up.

I'm most interested in what the vision for the future is and how any changes will impact this. I'd like a longer term plan, it takes time to build things and this would make a nice change from more recent governments.

interesting to see if they look at pay per mile on cars to make up the shortfall on fuel duty/vat.

Yeah, cause what they need right now is a vastly expensive and complicated infra project to further drain public finances....

I'm hoping they raise Employers'  NI by a few percent. A 3% rise would see me £70 a month better off 🙂

EVs will be no longer exempt from ULEZ

I think you mean Congestion Charge, not ULEZ. Even riding a bike emits more CO2 than driving an EV 🙂

Annual pension allowance to be reduced from £60k to £20k or so. With some separate allowance for doctor''s DB pensions.

Fuel duty to go up or unfreeze.

Some kind of vacant property tax.

Increase in capital gains tax. Possible reduction in ISA allowance down from £20k to £10k.

interesting to see if they look at pay per mile on cars to make up the shortfall on fuel duty/vat. VED already changing next year and also EVs will be no longer exempt from ULEZ but will they go further?

Back in 1978 my then girlfriend was doing an internship at the Department of Transport. They thought then that road pricing was inevitable. It's a shame they haven't introduced it up to now.

Pay per mile needn't be expensive to run. Mileage is logged each year at MOT time, so you could just add the mileage component to VED each year. The only additional burden would be to log mileage for cars that don't need an MOT, but that could be done for a nominal sum by taking your newish car to an MOT garage to get the mileage logged on its birthday.

I’m hoping they raise Employers’  NI by a few percent. A 3% rise would see me £70 a month better off

Huh?

Can't see them disincentivising pension contributions when the overarching narrative is that people aren't saving enough for retirement.

But if they do I hope it's truly targeted at "those with the broadest shoulders", which definitely does not mean all higher rate tax payers.

Generally if taxes have to rise then I'd prefer them to be on unearned wealth and big business, rather than the burden falling once again on middle earners.

rather than the burden falling once again on middle earners.

I think you can safely assume middle earners will always be screwed over in this country.

I missed one of the obvious ones - fuel duty unfrozen and raised by 5% or so.

I'd be surprised if the pension allowance is shrunk - that said, that plus reduction in ability to salary sacrifice would make a lot of higher earners pay a lot more tax (who wouldn't then be able to avoid the 60% + no tax free child care + losing 15 hours of child funding at 100k).

EVs will be no longer exempt from ULEZ

Really? WTF sense does that make ??

Pay per mile, hmm, isn't that called fuel duty?

But if they do I hope it’s truly targeted at “those with the broadest shoulders”, which definitely does not mean all higher rate tax payers.

I think the issue with tax breaks on pensions is that people earning under £50k get a 20% tax break on the contribution on a pension that will then be taxed at 20% anyway, but those earning over £50k get a 40% tax break on the contribution when the pension is very likely to only be taxed at 20% (as not many people will have a £50k+ pension). That's pretty unfair.

I think you can safely assume middle earners will always be screwed over in this country.

I think that very much depends on your definition of 'middle-earner' and 'screwed-over'.

FWIW, the average (both mean and median) salary in the UK is about £35-36k-ish

andy8442
Pay per mile, hmm, isn’t that called fuel duty?

For ICE vehicles yes, but not EVs.

ICE vehicles pollute more locally, but EVs are heavier and have more torque so are likely more damaging to infrastructure.

I would like a decent increase in the HMRC's budget to allow them to actually enforce the current tax rules. No point increasing tax when those with the most wealth can sidestep the rules due to the under funding of the gate keepers.

Pay per mile, hmm, isn’t that called fuel duty?

You’ve forgotten about EVs there.

I’m hoping they raise Employers’ NI by a few percent. A 3% rise would see me £70 a month better off ?

How do you work that out?

A 3% rise in the employers contribution doesn't me a 3% reduction employees contribution. It just means businesses have more costs to absorb.

I'm not against tax rises to fund public services - but I've not seen how they are going to stop the extra cash being pissed up the wall.

How do you work that out?

Also curious about this. I see no way that an increase in employers NI contributions will result in employees being better off. Quite the opposite in fact. Starmer breaking one of his primary manifesto promises is going to come back and bite him.

I thought they already signalled that higher rate relief on pension contributions won't be removed. As said it is more likely they cap the annual contribution or change the tax free drawdown rules.

get a 20% tax break on the contribution on a pension that will then be taxed at 20% anyway

Might not be, I can see my other half drawing her private pension before the state pension kicks in. It will be under the personal tax allowance.

EVs will be no longer exempt from ULEZ

Congestion charge not ULEZ, surely?

I doubt they'll hit pension annual allowance. You can't except just Doctors from their DB. What about the armed forces? Other civil servants... The list is very long. They may reduce the tax free lump sum from pensions (I'll retire!). But I think their hands are largely tied. I would apply a standard pensions tax benefit of 30% regardless of income tax rate, to help those less well off to save more. Probably cost neutral.

And as for those broad shoulders. I expect to hear that rolled out again. Despite those shoulders already upholding the vast majority of the income tax burden.

@IHN that perceived unfairness only exists because the higher rate tax threshold exists. Arguably the higher rate tax threshold itself is unfair, at least insofar as where it's now positioned.

Thanks to fiscal drag I think it's now possible to have a below average household income (eg one partner on £55k and the other part time on £10k with a few kids in tow) and yet be paying higher rate tax.

Average full time earnings are £728 per week now according to ONS, so £38k. Haven't got time to look for the stats now but I wouldn't be surprised if the average for full time males in their prime earning years of 35-50 is now upwards of £50k. These are not people with the broadest shoulders, they're just ordinary working  families who may be struggling to save enough for retirement, especially with the state pension access age going up all the time.

I’m hoping they raise Employers’ NI by a few percent. A 3% rise would see me £70 a month better off ?

Maybe Muffinman thinks that she is to add it to employer but reduce from employee in equal amounts?

I see no way that an increase in employers NI contributions will result in employees being better off.

Nope – and all us employers will be offering lower pay increases in the future to cover the additional cost to us in higher NI contributions.

Maybe Muffinman thinks that she is to add it to employer but reduce from employee in equal amounts?

Not me thinking that - it was @thegeneralist

Congestion charge not ULEZ, surely?

Depends where you are. They are ULEZ in Glasgow and Edinburgh near me.

Thanks to fiscal drag I think it’s now possible to have a below average household income (eg one partner on £55k and the other part time on £10k with a few kids in tow) and yet be paying higher rate tax.

But you'll only be paying high rate tax on £5k of that income.

Average full time earnings are £728 per week now according to ONS, so £38k. Haven’t got time to look for the stats now but I wouldn’t be surprised if the average for full time males in their prime earning years of 35-50 is now upwards of £50k.

Where are these jobs with 'average' salaries?

I don't know anyone on that sort of money

@johndoh funny how businesses never pass tax cuts on to their employees but immediately make them pay for any tax rises isn't it?!

Probably true though. Employees will have to be ready to move for more money.

and all us employers will be offering lower pay increases in the future to cover the additional cost to us in higher NI contributions.

Of course they will, which is why Reeves and Starmers claim that they are not raising taxes for workers is a transparently dishonest act of semantic gymnastics.

@johndoh funny how businesses never pass tax cuts on to their employees but immediately make them pay for any tax rises isn’t it?!

They could just close and sack all their staff.

And businesses rarely - if ever - get tax cuts.

The employers NI increase is a shit cynical move which will cost jobs.

I voted Labour but there are many things supposedly in this budget that would have made my pencil waver over the ballot paper.

But you’ll only be paying high rate tax on £5k of that income.

Saw a survey recently showing that a huge proportion of people don't understand that tax rates only apply to excess income over threshold, ie they thought that a "higher rate taxpayer" paid it on their whole salary.

I don’t know anyone on that sort of money

Unless you don't work or work for an incredibly dedicated charity I suspect you know lots of people earning £38k or more, you might not socialise with them but you do know them.

Just started...

I'd like to see benefits based on parents/household total income, rather than if one parent earns under/over X

I wouldn’t be surprised if the average for full time males in their prime earning years of 35-50 is now upwards of £50k.

I wouldn't be that surprised either but I am a teacher with almost 20 years experience and don't earn that.

funny how businesses never pass tax cuts on to their employees but immediately make them pay for any tax rises isn’t it?!

I've never known of any tax cuts that have benefitted a small business like ours.

Employees will have to be ready to move for more money.

It has, generally, always been that though hasn't it. We pay what we can afford to pay (and we pay very well) but we usually lose employees who go on to work for much bigger organisations who can afford to pay (sometimes significantly) more money.

She needs to get on with it, we all know what the last government did. Just tell us what you’re going to do next.

Might not be, I can see my other half drawing her private pension before the state pension kicks in. It will be under the personal tax allowance.

I agree, but I can't see tax rises being aimed at those currently or in the future paying none or 20% (except by a bit of fiscal drag as the state pension continues to rise up quicker than wage growth).  The only way to make your pension tax efficient is to make sure your contributions only fall into a higher bracket than you expect to draw it on.  I 'sacrifice' mine from the higher rate, and anything else I want to save I put in an ISA. Means I've paid NI on it but at least I can access it if needed which seems a reasonable trade off.

In that sense, if they did something drastic like remove anything over the 20% relief there'd be little point in anyone earning in the 40% bracket or above paying into a pension, it'd just be 20% tax now and 20% later. May as well pay the NI and have access to it whenever you need it.

@johndoh funny how businesses never pass tax cuts on to their employees but immediately make them pay for any tax rises isn’t it?!

+1

Employers will generally be forced into paying the market rate for staff. This might suppress that market rate by a bit but on the whole savy employers know that if they piss off employees by not offering a pay rise then they're just giving employees a push into finding out what that market rate actually is (and it's almost always going to be more with a new employer than what they're currently on).

She needs to get on with it, we all know what the last government did.

I think it's helpful to set the tone. Look, we didn't want to do this but the Tories have royally ****ed up everything and we're now trying to fix it...

@the-muffin-man true, my point was just that not everyone who earns above the higher rate tax threshold is well off enough to be able to afford more tax rises

I think it’s helpful to set the tone.

15 minutes so far of repeating the same lines though?

> The only way to make your pension tax efficient is to make sure your contributions only fall into a higher bracket than you expect to draw it on

The tax-free lump sum provides some benefit (6.25%) if you are in the same tax band in and out (and don't hit the lump sum allowance limit).  Assumes no rules change between now and when you get access to your pension/want to take TFLS/drawdown...

11.8bn for the blood scandal. That seems a lot - 30k people impacted, meaning £390k / person - max pay out seems to currently be 120k. Probably some detailed missing.

I would happily pay a bit more tax if it meant things were working again & we got to live in a fairer society.

15 minutes so far of repeating the same lines though?

Some of that is a pretty damning indictment though, especially covering the multiple scandals that the Conservatives mismanaged.

Plus she got in a couple of good jibes against Truss and Kwarteng.