Where do people think money comes from?

[MrsBlobbyOnLockdown]

Everyday we are hearing pay the NHS an extra 30% pay them £26 per day extra is the latest one.

I’m not disputing they deserve it of course they do & if we had an endless supply of money it’s the first place it should go.

But seriously, where do people think all this money is coming from?

What are your thoughts

We print money, that's where it comes from, it's not a natural element, it isn't food that we eat, air in the sky that we breathe or the water that we drink, its just a thing we've created.

I was surprised to find out that school admin staff haven't been furloughed. My cousin, back office admin support for finance, is sitting at home, no work, told to take it as extra holiday. She says all the back office and support staff are in the same position. She said some of the more senior staff have a little work to do but not very much at all.

I only found out as it's caused some friction in the family as others, ( not me, recently retired) working in the private sector, have been furloughed and are angry at this double standard. She works in a large academy with a lot of back office staff so there are a lot in this position. Apparently they're getting full pay as they are supporting frontline staff during this difficult period but they're not doing anything. There must be many back office staff in schools, colleges, universities etc across the country.

A lot of people do really understand how debt and inflation works. That’s why people are so hell bent on buying properties on mortgages with small deposits thinking that their property is going to grow in value astronomically.

@stellabluesky welll the finance function will surely have to do payroll & pay invoices etc?

An overhaul of the tax system, increased wages - for health care workers (I include all care assistants!) and consequently an increase in tax/ better services won't happen any time soon.

Sadly this is true.

We could simplify the tax system a lot - but there are too many vested interests (including but not limited to HMRC) against it.

Yes SunnyPeople the dividends thing again is fucking annoying.
Yes, it used to be a bit more advantageous when 'business' expenses were offset against profit and the divided ceiling was higher, but now there is really not much difference in the tax take especially for sole directors.
Any money into the company of a sole director, is taxed as profit after expenses which include salary to that sole director and legitimate business costs (not things like having your hair cut). So the profit is taxed and then when you take a dividend that is taxed. Dividends are not calculated as an expense - they come out of the profits that have already been taxed (corporation tax).
So you are paying two lots of tax on the same income.
Yes, there may be advantages in not paying NI contributions but given that NI and general taxes are not hypothecated (I think) that is a bit of a misnomer.
I appreciate that for large companies etc it is different but I do think sole directors get a hard time.
I think the problem is that people don't understand the difference between being a sole director and self-employed and there is, rightly or wrongly, a perception that those that are self-employed take income cash in hand to avoid paying tax - I want to make very clear that I don't subscribe to that train of though myself.

I used to have a friend who complained about tradespeople and cleaners etc who she considered didn't pay taxes etc etc etc. Completely ignoring that as a teacher she was doing exactly the thing that she complained of when she took cash for tutoring children to take 11+ exams. But she didn't see it in the same way because she was a middle class professional just doing some tutoring on the side - odd.
And I have no skin in any of these games - I'm a local government employee on PAYE.
But I do think it unfair that sole directors come in for so much flak on this issue.

The Govt has double standards. When the Independant Pay Review body recommended MPs receive an 11% pay increase they awarded it to themselves, (" it was an independant recommendation")

When the Independant Review Body for Nurses, Midwives and Health Visitors recommended a pay increase of 3% the Govt declined to award any pay increase. (" it is only a recommendation")

That cannot possibly be true. If it were, that would somehow suggest that the government was a bunch of shameless, arrogant, self-serving hypocrites....

@sunnypeople if you are the shareholder and employee of a company and pay yourself via dividends rather than PAYE you will pay less tax than if you were paying it as a salary (mainly because you are avoiding employers and employees NICs). That’s why many people do it. Do you really not know that? Genuinely?

If you are structuring your affairs in such a way to avoid tax, can you really complain if you are entitled to less government support as a result?

It’s shocking the misunderstandings and utter false information quite a few pps have on this thread.

It’s like banging your head against the wall sometimes.

@TheWordWomanIsTaken - you are not paying two lots of taxes on the same income either. Corporation tax is paid by the company and income tax by the individual. Even if you were to count both you are still paying less overall because you are not paying NICs on dividends.

So some shareholders of small companies are setting up their companies to avoid tax. Which is fine but can they really complain later when government money they paid less into is being dished out? I think not

@TheWordWomanIsTaken I know, corporation tax, paye. Nics is the only tiny gain and then there is no sick pay etc.

Fucking annoying fairytales.

@Sunnypeople - wouldn’t bang your head against a wall just now, NHS is pretty overstretched. If you don’t have any rational argument to give, don’t bother.

it went towards 'government admin' so not even something vital

To be fair, 'government' is pretty much a synonym for 'admin'. It could mean anything. Of course, it is also a convenient way of being coy about things - like submitting a detailed budget report and having 80% of expenditure categorised as 'miscellaneous stuff'.

Notice whenever the government is stressing to people how important paying their fair taxes is, they always couch it in terms of how many schools, hospitals or libraries your withheld tax could have funded. They never ever tell you what minuscule percentage of a ridiculous 'if-one-country-ever-used-it-it-would-be-instant-game-over-for-us-all' nuclear canard.

Cayrol
It is the same money. Yes, one is a tax on the company and the other is a tax on the individual. But it is the same money.
The sole director gets paid from the organisation/individual they have provided a service for.
Then when expenses are taken out of that amount, there is corporation tax to pay on the remainder (profit). Then when a dividend is taken out of the profit, there is tax for the individual to pay.
The differences are really quite negligible.
Yes, it would have been more expedient to the sole director a few years back when the taxable limits on dividends were more generous but at present, meh.

@Sunnypeople - you can pay yourself sick pay if you like (assuming you are sole director/shareholder). 25% NICs are not tiny (13% employer, 12% employee). It’s quite a lot which is probably why you are avoiding paying it.

@@tontie yes, they still need doing but she says it's the more senior staff doing that and processing new payments or new processes such as food vouchers as they have laptops with the correct software and encryption so can do this from home.

She also says there is a lot less of this work as they're not ordering any where near as much, they've suspended some contracts such as catering, payroll is outsourced etc plus as all the performance measures they have to send in the the education authority have ceased ( this also sat with finance as the data analysts are in the finance team) all means a huge reduction in workload. She's offered to help in other ways but it's a large academy with a lot of staff so there well covered for the key worker children still at school etc

Cazza, look for a fight elsewhere as you are googling the wrong things and being silly now.

I believe the truly self employed do pay reduced NI. That is partly because they find their own pensions without government help or employee contributions. Directors who avoid this are NOT paying their full due as others do. A £50,000 paye person would pay nearly £5000 NI this year. Avoiding it is a huge saving and should be stopped. All Directors should pay NI on dividends.

I think 11% was ridiculous and it would send a better message if MP’s took inflationary only rises as per NHS.

But it’s a huge fiscal undertaking to give 3% to every one of the many thousands of nurse and it has knock-on effects for other NHS workers. It’s a question of scale, and I am inclined to give them the benefit of the doubt on that decision.

Oh, yes - we have to be realistic and understand that 3% to thousands of people is by no means peanuts, but they absolutely shouldn't exploit the fact that there are only 650 of them and that they get to make the decisions. They also have their many expenses - I know a lot of the most outrageous ones were exposed and stopped, but they still have a very generous amount of money available to them over and above their pay which isn't purely passed on to a third party with no personal benefit to themselves. Even the £10K just given to them as a lump sum without any receipts or accountability whilst ordinary folk are told to wait two months and then join the back of the very long queue to apply for UC.

Caryrol,given changes in dividend tax and particularly for those unable to share income with a spouse, loads of people have disincorporated by the way as there is veyr little material difference between being a sole trader as I am and having a limited company in terms of tax unless you are rich enough to keep the money in the company (most people need the profits to buy food of course).

It has been a massive change. Also the new IR35 rules from April 2021 only apply to those with companies. Lots of reasons not to have a company these days (although if you are honest enough to declare profits over £50k we are the one group not getting any furlough or self employed bail out as obviously Sunak hates those who are honest and neither evade nor avoid tax.)

@TheWordWomanIsTaken - not relevant if it’s the same money or not. A great many of us who are employed work for businesses that pay corporation tax. We don’t get to include that as part of our tax paid. Because it’s not.

As for the “difference being negligible” it depends on the circumstances but people are setting up their remuneration like this to avoid tax. Doesn’t really matter how much they have avoided. In my view they can’t complain if their actions to deliberately pay less tax leads to them getting less benefits from the government. Seems entirely reasonable to me.

And posting lists of tax paid on dividends doesn’t add to the debate, just shows you don’t understand it.

It counteracts the idiots who claim that paying dividends avoids tax, maybe read what the other, less lazy poster than me have bothered to explain.

Otherwise stop perpetuating the myth about people who pay large amounts of tax who don’t get government support anyway. So I have no idea what your issue is.

printing money -
The gov print toytown money and use that - people get paid it and then buy stuff. Unfortunately the stuff comes from China, The Chinese don't want toytown money that has been recently printed, they want real money from the gov, To pay them the gov has to borrow real money - which we don't have so they clock up a large debt. To pay back the debt which has been clocked up the people must give some of their money back to the gov in taxes etc etc.

I have to say I don't really understand why Mrs May decided we had to cut our debt and must go through austerity for years. There, imv, was no explanation of how long we needed to be in austerity, what the debt was or how it had clocked up (my guess is it was the money given to the banks to prop them up during 2008). Nice not letting the bankers suffer
Can anyone enlighten me?
Now we are giving lots of money to businesses, unemployed etc etc etc (though much is loan) so we are going to be in HUGE debt after this. And to make it worse many many people and their busiinesses will not bounce back, so if people are on benefits and not contributing taxes it will be decades, possibly, before we recover from this. So that could mean, imv, years and years of austerity, cuts to everything.
Everyone is demanding money/ loans/ financial assistance - it ALL has to be paid back in the future by tax payers.