The removal of the high rate income rate threshold will see a shift from saving into pensions to very highly paid employees taking more of their income as salary – and paying tax on it along the way. That increased wage packet will in turn be spent and sustain other jobs in the economy. Most of the increased spend will find its way back to the government through corporation tax on increased sales and VAT.

as someone who is in this position I can categorically state that no it won’t do any of that. I won’t put less money into my pension, I’ll maximise my sontributions as I always have (allowance premitting). The extra money son’t go to additional spending, rather I’ll either save it, invest it, or pay down my mortgage. Either way it will NOT find it’s way back to the government nor will it help the real economy much. Given the state of the countries fincances this is a BAD idea as are most of the other proposals.

Removing the tapers on personal allowance and pension allowance would have been a better idea. Not because of any tax reasons, just beacuse they’re annoying things to calculate!

Edit Actually I read with some relief that it won’t actually apply to me as I live in Scotland. The analysis is still valid though.

Many high earners it currently isnt worth working as the money gets taken straight off you.

Try and see it as what they are taking from the pot (their salary after taxes) rather than what they are giving into the pot (their taxes).
When you forget about tax and just see that £20K come into your account each month why can’t you be happy with that and why would that make it not worth working?

I earn fairly well and will benefit from the tax cut but I would rather have seen a tax increase for the likes of me while doing something to help low/no earners.

Working 40 hours a week on minimum wage puts you somewhere near the 23rd percentile of earners, ie nowhere near the poorest.

ok but the same data also suggests that even the lowest 1% still earn above the income tax threshold (12,500). I’m not sure how that can be true (surely there’s a whole bunch of students and part timers in the world??) but there ya go.

<leaving aside the fact that it’s predictably a ****’s budget aimed at benefitting rich and shafting the poor>
I’m intrigued that he has abolished the 45% tax rate above 150k but not the 60% rate between 100k and 120k.

I had naively assumed that people on that sort of wedge had more understanding of tax and stuff and so would realise that he’s smoke and mirrors….

Or is it actually that he consciously wants to help the stratospherically rich rather than just the immensely rich?
Ie, never mind that you pay 60% tax between 100 and 120, you’re now saving five grand on every £100k above £150k, which is totes awsumms innit…

Shit, I think I’ve just answered my own question.

It’s quite terrifying that for the tories their target audience is no longer the povs on £110k, it’s the ones on £230k plus.

Liz Truss’ budget means that those earning a million a year will have £54,400 extra in their pockets after tax and NICs. For those earning £25,000, the equivalent figure is about £280.

I can see why the high earners cut will help. Many high earners it currently isnt worth working as the money gets taken straight off you. Many of the high earners do drive employment and productivity.

Sorry,  but untrue -the folk who were in a financial position to be able to arbitrarily cut their working hours/pay, or even retire, because of a tax increase are very few in number, and I can’t see them being tempted to return because of the offer of a few quid extra in their pay-packet at the end of the month, when they didn’t seem to need that income in the first place.  Nor are they the types to drive employment and productivity (happy to be given examples)

It is a bloody stupid budget.
I can’t see how reducing tax on higher earners will increase the tax take as most are clever enough to be able to sacrifice income into areas that are not taxed without becoming cash poor.
Overall this is just emphasising this government’s screw the poor attitude

How is cutting corporation tax meant to promote corporate investment? Surely corporation tax is paid on profits after expenditure, which includes investment? This is how companies avoid paying it in the first place. It’s a measure specifically designed to increase investment, so I don’t see how cutting it will do that.

so when money was essentially free and interest was low the Govt destroyed public services to “balance the books” and now the opposite is true, they’re borrowing money to give tax breaks to rich people.

I think we’re going to have a labour Govt in a couple of years time

ir35 changes cancelled

So what does that mean in reality ? The whole thing is scrapped? A lot of faff has been gone through by all concerned to become IR35 compliant, is that now all undone?

I suppose we should be grateful that they’ve dropped the ludicrous pretence that they give a toss about poor people/disabled people/the north and theres at least now a degree of honesty about purely representing the interests of the rich bankers and those on the highest rates of tax and everyone else can just **** off.

So at least we’ll never hear the words ‘Levelling Up’ ever again.

It went well, didn’t it?

How is cutting corporation tax meant to promote corporate investment? Surely corporation tax is paid on profits after expenditure, which includes investment?

Risk and reward – pay less tax then the return on that investment is higher (or you need a lower expected return to take the same risk). I always look at the post-tax, not pre-tax, benefits of investment decisions.

Santa Cruz sales will the through the roof after this 😂

ok but the same data also suggests that even the lowest 1% still earn above the income tax threshold (12,500). I’m not sure how that can be true (surely there’s a whole bunch of students and part timers in the world??) but there ya go.

Fair point – the notes point out that it’s actually the 23rd percentile of income tax payers. So there are a whole bunch of part-timers who are below the first percentile

I can see why the high earners cut will help. Many high earners it currently isnt worth working as the money gets taken straight off you. Many of the high earners do drive employment and productivity.

Both these points are bollocks.

Firstly, if you earn £200k then you get a new job for an extra £100k then you still keep £50k of it and you aren’t working any more hours than you would on your previous job. So no-one’s going to say no to an extra grand a week for the same hours.

Secondly, given that most of us have to work, then the sort of people on those wages will probably go for more responsibility and power anyway because it makes your job more interesting and fulfilling.

Thirdly, the higher earners are managers and strategists etc but they are an integral part of any production, just like the poor sods who have to do the work. If you ignore or dismiss the actual workers, as you are, then your managers won’t have anything to manage. In the UK we do this a lot; the people who actually create stuff are not valued, so they get put upon but they somehow manage to keep going and then they get put upon even more etc.

Where I work, we don’t have a shortage of managers and executives, but we do have a severe shortage of skilled workers which is causing problems with innovation and our ability to deliver. And we’re not alone. We ALL know what our customers need and how we could improve – managers and leaders don’t tell us this – but we just don’t have the people to do it.

he institute for economic affairs have been grooming Truss & Kwertang for years

This is exactly what I came here to post.

The IEA are basically running the country.

It is their far right dream.

So what does that mean in reality ? The whole thing is scrapped? A lot of faff has been gone through by all concerned to become IR35 compliant, is that now all undone?

No real flesh on the policy, but I’m guessing it removes the onus on determination back to the contractor. Maybe HMRC has more confidence in its abilities to prosecute what it sees as ‘abuses’.

The IEA are basically running the country.

It is their far right dream.

Tim Montgomerie admitted as much on Twitter.

The IEA are basically running the country.

Not strictly true. The Taxpayers Alliance also has some input

Liz Truss has appointed the former head of the TaxPayers' Alliance as her chief economic advisor.

That's everything you need to know about where Britain is heading right there

— Peter Geoghegan (@PeterKGeoghegan) September 6, 2022

They are not even hiding it.

https://twitter.com/montie/status/1573238591496634370

Absolutely no point voting any more. Doesn’t matter who is in power, the vast majority of folks will just have to keep getting by the best they can as no-one cares a jot. I’m really depressed about it all frankly, and nothing will ever change. Good luck Scotland. I hope you get your independence after all.

Doesn’t matter who is in power

A decade of Tory PMs will make people feel that way, yes.

which in some cases have see huge areas transformed from low wage / high unemployment to high wage / full unemployment.

Not sure if that’s a typo

Lions led by donkeys is a phrase that comes to mind

Many of the high earners do drive employment and productivity.

James O’Brien on trickle-down economics

I have a joke about trickle down economics.

99% of you won’t ever get it.

— David Lammy (@DavidLammy) September 23, 2022

Not strictly true. The Taxpayers Alliance also has some input

Basically the same thing though just dressed up slightly differently for different jobs. Look at their joint ventures and anonymous donors.

Interesting to see how this plays out with the public the fuel bill help is great but will be overshadowed by the tax cuts , especially for the high earners

That’s not necessarily terrible for the Tories as there’s are some modest tax cuts on there for the rest, but puiblic services are in a dire state, NHS in for a rough winter, police just record crimes ratothan solve them, councils still decimated by austerity

The housing market is going to heat up but with interest rates set to rise further that’s a recipe for trouble?

Seems a mad gamble

Seems a mad gamble

It’s an experiment by the IEA and TA. They don’t care if poor get poorer.

If it completely **** the country, the truly rich will not be affected. They will just shrug their shoulders and continue eating their foie gras.

The housing market is going to heat up

I don’t think so – anedotally I hear its slowing down fast, and the cuts to stamp duty will just go some way to easing that slowdown

It is their far right dream.

I did think that most of what was said by them over the summer was so much mouth breathing for the Tory faithful…But no. At least they were being honest

I don’t think so – anedotally I hear its slowing down fast, and the cuts to stamp duty will just go some way to easing that slowdown

Mortgages may still be historically cheap, but rates have already risen enough to put off some people, and people are far more likely to stick rather than twist in times of economic uncertainty. If you’re struggling to pay for heating, you’re not going to find thousands for conveyancing, surveys and removals.

Mortgages may still be historically cheap, but rates have already risen enough to put off some people, and people are far more likely to stick rather than twist in times of economic uncertainty. If you’re struggling to pay for heating, you’re not going to find thousands for conveyancing, surveys and removals.

whilst historically cheap, I think interest rates will make a much bigger difference than fuel prices. most 90% ltv rates are hovering around 4% now and 75% are 3% – thats around double what they were a year ago, so a significant shock to the system. I’ve got a few mates buying, and they all said that if they didn’t have a mortgage locked in, they’d have to pull out

£ about to drop past $1.10. I wonder if we’ll make it to parity…

Mortgages may still be historically cheap

Interest rates might still be historically cheap, but repayments are not, because homes are far more expensive than they have been “historically”. Something felt more keenly by those who are new to home ownership (or dream of it).

Doesn’t matter who is in power

No mate, it really really does.

Governments do change, and things do change.

£ about to drop past $1.10. I wonder if we’ll make it to parity

oh how the brexit bugle crowed when the Euro hit parity…

As someone who would benefit (40% tax payer). This budget stinks for minimum wage earners and does not improve the financial health of anyone but the wealthy, bankers and big business.

a budget for spivs by spivs

Doesn’t matter who is in power

Seriously, don’t fall for this. Its a classic Tory line, pushed by right wing media. They are very happy with the status quo and don’t want that boat rocked. Things can be much better if we get rid of this current lot.