to ask how you will be affected by the budget announcements?

[manicinsomniac]

Sorry if there's another thread about this, I can only see lots of speculative ones.

Now that it's announced ... I admit I'm struggling to get my head around it. I don't think it's as bad as I thought? I don't think it can be that good though? I don't think there's a single thing in it that affects me. I'm not sure about any of that though because I find it all quite confusing!

So, ordinary people from ordinary families/households - how are you going to be affected, if at all?

Talkin I am self-employed (and employed), so am aware of all the drawbacks. But I also know that I can offset a lot of my everyday expenses e.g. travel against my income, which employees cannot. My rates are higher to compensate for the sick pay, holiday etc.

I don't pay a lot of attention to my tax calculation, but I have some vague idea that the tax rate I pay is less than the equivalent I would pay if I were employed.

Also I can choose to increase my income, as presumably o can you by taking on more clients, expanding my operations. That's not an option available to some of those employed on here whose circumstances prevent them from doing so.

Yes there is risk and reward, but in bad years, you carry forward your losses. You only ever pay anything if you make a profit and if you do, why should it be less than someone who works equally hard if not more, simply by dint of the fact that they are employed. If it was more lucrative for you to be employed, then you would be and so would I.

Actually Chief I suspect you may be entitled to some housing benefit now...one sec....yes. Right now you can claim and get around £35 per week Housing Benefit and £6 per week Council Tax Benefit, so get that claim form in!

Am I missing something so the poster is paying £600 a month rent. It is going up to£1200, but she can get £953 back in HB?

mistressmia
If it was more lucrative for you to be employed, then you would be and so would I.
Nope.
If I worked for a firm I'd earn a lot more than I do being free range.
But I took the decision to have more freedom and less income.

The tax rates on the self employed are identical to those on the employed.
The NI rates are lower because they cover less.
And the fact that employers provide office supplies that the self employed have to get for themselves is neither here nor there.
The employer takes a tax deduction for buying that stuff after all.

Mistress, wasn't there something about the ability to offset expenses such as you describe being eliminated in 2016? That would be a pain.

Nope, you're not missing anything pinkstrawberries. Chief currently pays £600 in rent each month (£138 per week) but should/could actually claim £152 in housing benefit each month (£35 per week). Now the government is saying that 'high earners' earning over £30000 must pay market rent.

However, as the government sets rates that people should be able to live on, and Chief already qualifies for housing benefit, the rent increase will simply increase her housing benefit by the same amount.

Old rent - £600; Old HB £152
New rent - £1400; New HB £953

So it will make no difference at all to Chief.

The tax rates on the self employed are identical to those on the employed

So what is your complaint then ?

Are you saying with the budget changes that you will now be significantly worse off than the equivalent person employed ? I don't see how that's the case when you stated the tax rates you did.

And the fact that employers provide office supplies that the self employed have to get for themselves is neither here nor there. The employer takes a tax deduction for buying that stuff after all Not sure what the relevance of this is, but presumably you are also deducting your stationary expenses before arriving at your profit figure, so same situation (actually better as this subsidises some personal use).

Mistress
The problem is the change in the dividend rules - it will have SEVERE unintended consequences on business owners of all sizes.
It is a real disincentive to wealth creation.

I do not compare myself with an employed person because the way I work is not comparable with any employee.
The same applies to DH

The problem is the change in the dividend rules - it will have SEVERE unintended consequences on business owners of all sizes. It is a real disincentive to wealth creation

I disagree. If you're going to set up a business that aims to be a genuine wealth creator by employing people to produce goods and services, then you will do so regardless, providing the tax rates are not prohibitively punitive and don't exceed those paid earning an equivalent amount as an employee. The driver is usually more than simply money.

If you're only setting up a company as a wrapper for self-employed activities in order to minimise tax, then you may opt to stay as a sole trader if the tax benefit has been removed.

It's debatable how many companies owned by contractor types and professionals are actually 'wealth creators'. Most don't employ anyone other than themselves or family members and are simply vehicles to minimise tax and liabilities.

But the new dividend rules are going to hammer ALL shareholders

including lots of pensioners who have investments

bosses are going to lay off staff as the structure of their accounts has just been turned upside down with 9 months notice.

egosum
A lot of tax dodging going on there.
Yup, but mainly by the people who hire those contractors as they save

• 13.8% ERS NI
• holiday pay
• sick pay
• pension costs

Hence why the BBC and quangoes like the CSA encouraged it.

Thanks Lougle. We never even considered HB on what we deem as a decent household income but we are seriously struggling even with tax credits now we have all 5 living with us.

I do wish the government would make proposals and plans for tightening the child maintenances policies to force non resident parents to co tribute financially for their children. We wouldn't need anything fron tax credits or HB if my ex and his ex stepped up and co tributes half towards the cost of raising their own chikdren :(

About £400 a month worse off. Single parent with a 1 year old, working full time

I do wish the government would make proposals and plans for tightening the child maintenances policies to force non resident parents to co tribute financially for their children. We wouldn't need anything fron tax credits or HB if my ex and his ex stepped up and co tributes half towards the cost of raising their own children.

There's the elephant in the room.
Maybe threats to remove their drivers licence, followed by threats to incarcerate would encourage fathers to pay towards their children. And it would make huge inroads into cutting welfare dependency in some households.

I agree that ex partners should pay adequate levels of maintenance for their children and efficient systems and consequences should be put in place to facilitate and achieve this.

Can I ask what may be a daft question?
I thought housing benefit was for people on low incomes, so how can you have a high enough income to have to pay market rent yet still be eligible for it? Surely there should be some tie in between the two? Surely you can't be a high earner and a low earner at the same time?

I wondered the same. How can somebody earning £30K plus be entitled to housing benefit. Seems you can be both a high earner and a low earner. The system went crazy.

I don't understand that part either... But it's £40k in london! No one could argue the sense in that.

Well I'm not a fan of the Tories (understatement) so my prejudice is declared, but I think the basic situation is that GO wanted to tell the shafted lower earners that he'd do something about the situation of fat cats in council houses. SO he told us all that those 'high earners' (quotes) on more than £30000 would have to pay market rent.

So, you have an income of £30000 - market rent.

Except that he forgot to mention that the way housing benefit is calculated is dependent on your family make up. You get allowances as listed here, but for example, each child in the household is entitled to £66.90 per week of your net income, before the taper of 65% is applied.

A wage of £33000 (gross) (£634 per week) is equivalent to around £490 net per week.

A family with 5 children would get the following allowances:

Couples allowance £114.85
Child allowance £66.9 x 5
Family premium £17.45
-
£466.80

So they have an excess of (roughly) £490-£466.80 = £23.20

65% of £23.20 = £15.08

So they must contribute (roughly) £15 per week towards their rent, but the state will pay the rest, because it is deemed that the family need the rest for living costs.

But it doesn't sound so good to say 'We'll make those high earners without high living costs pay to stay in their council houses....' and it probably hasn't occurred to them that people would realise that all they're doing is shuffling numbers. After all, housing benefit is paid by the council and rent is collected by the council.....in fact it doesn't even leave the account. It's just a number on a screen.

I pressed post too soon. I've forgotten to add in the tax credits that someone on that wage would receive. That takes it up to about £101 they would need to pay each week towards rent.

SO on a rent of £136 per week, they'd pay around £101 towards it and the remaining 35 would be paid by HB.

By increasing the rent by £800 for Chief, they are just increasing her HB by £800, because they've already calculated that the family doesn't earn enough to meet their full rent.

Also, as tax credits will go down, HB will go up, because HB is always calculated on net income.

Well I've just discovered we cannot claim HB just yet as we do not receive Child Benefit still for MH partner's two children as his ex has refused to agree to us having it and so we have to go through an appeal process which it appears will take months and months. It's been suspended so she's not receiving it but we can't get HB until the appeal process is consigned and CB awarded to us.

His ex claims not to work yet she has her own business and advertises it online. She claims no benefits at all (CSA told us) but rents a large house by herself, runs a car, has overseas holidays and a busy social life. Why is nobody asking her to show how she affords to live if she isn't working. CSA won't investigate anything just told us if she doesn't register her earnings with HMRC then they can't take anything from her. It's just a complete joke.

Oh that's annoying!! Hopefully it will be fairly straight forward once you do though.

But you can't have found that out from your council because it's a Sunday? In which case, they may have special consideration for cases like yours and the fact that you have the CTC etc., and SS were involved would tip heavily in your favour, I would think. Worth a call on Monday.

I found it out from our local councils's website and their HB application form which I looked at earlier this evening. I will still call them Monday of course :)