Rishi pays tax at 22% and NI.

[GPTec1]

This really, £5m in earnings, tax 1m, rate at 22% and no National insurance.

Not bad is it? yet all we get from the 'right is "the wealthy pay enough already"

Do they?

I bet all those on/or have been striking in NHS, education, rail would love an overall rate of 22%.

Should we all pay tax at 22% ? regardless of earnings?

This is goody reporting.

I can’t be bothered to do 100% accurate figures but:

• Someone earning £25k has a tax rate of 10% of total earnings. First £12,500 tax free (Rishi loses this as over £125k) second £12,500 @20% so averages at c10%. This doesn’t take into account NI and pension contributions which lower the %.

• Someone earning £50k averages at less than c15%, again NI and pensions lower the %.

• Plus if you have income (interest) on ISAs, premium bonds your % tax goes down further.

• If you receive Child Benefit and earn over £50k and reduce your pay to £50k by making pension contributions you get to keep the extra CB income, reducing your % tax rate.

All Rishi has done is use the legal tax efficient rules that already existed. I use them as do many people on here.

Another bash the rich thread!!!

Isn't most of his reported "income" actually capital gains? CGT is 20% for higher/additional rate taxpayers, so an overall rate of 22% seems about the right ballpark.

Why no national insurance?

Meanwhile, someone earning above the tax threshold but on such a low income that they're entitled to UC not only loses 33.8% in tax and NI, but then loses 55% of the remaining 66.2% in UC clawback.

If they do a load of overtime and earn an extra £100, they end up less than £30 better off.

And the government wants people to do more hours to ease the labour shortage...

What a load of rubbish, he pays tax on his income at the same rate as everyone else.

All Rishi has done is use the legal tax efficient rules that already existed. I use them as do many people on here.

But unlike most of us, he was responsible for making those rules until a few months ago, and still has considerable influence on what those rules are.

The rest of us just have to suck it up.

The biggest part of his income was from capital gains. So the top rate for that for everyone is 20% (28% if residential property)

He also will get relief for tax paid elsewhere which will lower the effective rate he has actually paid here.

It's about looking beyond the click bait headline and reading the substance of where the figures come from.

He pays far more tax than the average person because he is incredibly successful.

@Foreversearch so you earn £5m a year and pay 22% tax? Get real. He's not on PAYE at all! He is paying himself no salary and taking every penny as dividend payments because he already gets a salary as the PM and pays paye on that.

The rich dodge tax better than any benefit cheats dodge being caught. That's why the country has no money, its tax dodging!

Exactly.

Tories look
after their own …as usual. They care for older people (usually their voters) and the wealthy. Everyone else paying tax and working like donkeys is seen as cannon fodder. We can be worked to death as we are not in the rich elite and older safe votes clubs.

@LakieLady exactly which new tax rules did Rishi introduce that benefitted him and not the lower paid?

I also very much doubt if the figures include the amount of VAT he paid. Higher earners typically spend more and so pay more VAT and he is hardly likely to pay cash in hand to avoid VAT.

@Mateyduck you are mistaken, the tories have done a huge amount to protect the truly poor but they also believe there should be an incentive for success. Don't forget higher paid people generally pay more tax for the benefit of everyone. If they do accumulate wealth they have to pay for their own social care, nursing homes and then 40% on death duties. We live in a very high tax country for everyone earning.

It's about looking beyond the click bait headline and reading the substance of where the figures come from.

Exactly this. Earned income (ie from his job) is a drop in the ocean for the PM. The vast majority of his income comes from dividends on investments and capital gains. For right or wrong these attract a lower rate of taxation. FWIW I believe Labour are considering taxing capital gains at an individual’s marginal income tax rate which would obviously impact people like the PM whose income relies on capital gains.

Taking dividend from a company as income (and therefore subject to a lower tax rate) is far from uncommon - very many self employed people set themselves up as a Ltd company to take advantage of this benefit.

@Dibbydoos I never said he was on PAYE for all his earnings. I actually believe everyone, including sole owners should be paid/take their drawings, dividends etc via PAYE.

One of the benefits of society going cashless is that it is all tracked so cash in hand to evade tax can no longer happen.

No NI? Is that true if so how come?

Absolutely so

People will defend the rules. But in reality the amount of tax they would have paid would make very little difference to their lifestyle or hoarding of wealth. It would have made a difference to our society, though. These people don't have their wealth because they are massively successful. They inherit wealth, then continue to amass it because of unfair wage structures, exploitative investments and generous tax rules. The interview with a financial expert this morning ended with "the man who is the only person who can change this, immensely benefits from there not being change". Let's see what happens.

Capital gains rates have always been lower than income tax rates. It’s not something Rishi invented. I doubt it would be possible to pay more tax on capital gains even if you wanted to - it would just be a donation to HMRC in the same way that I can’t randomly decide to pay 50% tax on income because I think that’s what the rate should be.

There’s a discussion to be had about whether capital gains rates should be higher but it’s complex as people have control over when they dispose of capital assets so if rates were too high they would just hold them and that’s bad for the economy. And capital gains tax isn’t payable on death so assets can currently pass on at that point though potentially subject to IHT instead. And a lot of a capital gain is just inflation which arguably isn’t real increase in value so should people be taxed on an inflationary gain?

He will pay NI on salary but no one pays NI on dividends, savings interest etc.

The problem is so many people have no idea, and no interest, in how the tax system works so goody headlines create anger and division based on twisted facts.

There are hundreds of thousands of people taking a wage as dividends in this country, those who are not massively rich do it all the time. They kicked up a stink during furlough as their dividends weren't factored into the calculations so their tax avoidance bit them on the arse on that occasion.

I suppose you'll grumble too that his mega swimming pool that he paid for had to have the electricity supply upgraded. You won't think that a) he paid for it to be upgraded with his own money and b) installing the pool kept a lot of people in paid employment outside of London.

The OP clearly hasn't grasped the nuances of HMRCs taxation system
He will have paid what he had to legally pay

National Insurance contributions do not reduce taxable income. Whoever told you that is wrong. National Insurance is just another tax and should be regarded as such.

With inflation still at over 10% and income and CB charge thresholds continuing to be frozen. The idea that people earning £50-£60k can all afford to shove lots of their income into their pensions to avoid tax is also wrong.

Tax "efficiency" is something that increases in benefit the richer you are, a system that allows lots of tax efficiency (i.e. loopholes) is not progressive.

He is paying less % in taxes than many ordinary people and that is before we even consider the outrageously high VAT rates we have and the fact that again wealthy people can use businesses to reduce their VAT liabilities.