National insurance - people have short memories

[MumofCandR]

I don't understand the outrage over the national insurance increase in the budget. Only 2 years ago (April 2022) Rishi Sunak increased employee NI to 13.25%, 5.25% higher than it is today - fact. Only in January this year it was 12%, today it sits at 8% - fact. This was a very clever move by the conservatives to pull the wool over everyone's eyes. On the one hand, best case scenario it would increase their vote share as they floundered in popularity (didn't work), worst case they would leave the next government with an impossible hole to fill and the NHS underfunded laying the foundations for privatisation, and setting the conditions for any subsequent government to fail - very, very devious. And people seem to have fallen for this machivelian move, memories are incredibly short. So much consternation over a 1.2% increase for employers? This doesn't even bring NI near to where it started out less than 12 months ago, if businesses are this sensitive to a minor % increase in NI then there's far more to worry about the sustainability and viability of these in the first place, surely - AIBU?

I thought if you employed fewer than 5 employees you were exempt? Or did I read that wrong?
So you could take on one? Or take on some part time workers because part time workers are exempt?
Or have I got that wrong too?
Apologies if I have got it wrong of course.

So you're advocating that people shouldn't be paid a fair wage? Suspect you're on more than that. The threshold for NI... Yes glad you mention that, that's another short memory issue, it was half what is is now only 12 months ago... Part of the last governments deviousness. Short memories.

IMustDoMoreExercise

Don't worry, they will all be on benefits soon as there won't be any jobs left. So it will be very fair for them as they will be paid for doing nothing“

Employers are desperate to recruit here (NW England coast), they can’t attract workers. Lots already paying above NMW and they still can’t fill their vacancies.

It is obvious that they are a disaster, there is no maybe.
Have you read the hatred on here for the private sector and for anyone who is rich??

We’re comfortably off. Will be paying more taxes. That’s fine, we can afford to and something needs to be done to fix public services. No hatred for the private sector/wealthy here.

I’ve said it in another post but I’d have rather paid extra NI myself than hit employers at the moment. We’ll all pay for it indirectly anyway as prices will have to rise. At least a personal tax rise feels more transparent and honest. The sums that employers have to absorb are massive after a period of energy rises etc. not every company is maxing £££&& lots of very well known retailers for example are making a loss or very small profit at the moment. Care homes and nurseries will need to raise fees- that will hit a lot of people more than a tax rise would have done.

The whole tax system needs simplifying and step one is getting rid of employees nic and acknowledging it is just income tax. Also simplify the bands so the cliff edges aren’t there (get rid of losing the tax free allowance once you hit 100k etc) and increase the income tax rate to compensate accordingly. At least it is more transparent

Sorry I think you live in lala land.

But it isn't just a 1.2% increase is it ?

You're conveniently omitting to include the fact that the 15% will be charged on an additional £4,100 of all employee salaries due to the fact that they've also lowered the charging threshold. That right there is a cost increase to the employer of £565.80 per employee.

It doesn't seem as though you understand.

The point is, though the tax is on paper coming from a certain quarter, in reality it will affect everyone anyway. And the fact that the public sector is exempt, while it may make sense I guess, just looks really really bad.

It would have been far fairer and less damaging to put a percentage point on everyone's tax. But they boxed themselves in with their idiotic manifesto pledges.

How do you think nurseries and care homes (to name just two) are going to cope with this, along with the increase in minimum wage?

I think the problem was not everyone wanted to pay extra themselves so Reeves tried another tack.

I have seen several posts now of people saying they would be happy to do that but I think if Labour had campaigned with that in their manifesto they probably wouldn't have got very far.

They then had to stick to their pledges as they didn't want to start their time in Government being accused of going back on pledges. This was particularly important as they had spent a lot of their campaign saying they would be different to the Tories who had been accused of cover ups, lies etc.

If they had said they were going to up everyone's income tax would you have voted for them?
Do you genuinely think they would have go in with that in their manifesto?

And there do seem to be a depressing number of people who keep saying things like "if you can't afford it, maybe you shouldn't be in business".

It reminds me of the charmers who at the start of Covid told me that if my business couldn't cope for a few months with no income it proved how crap my business was and I deserved to have to go under.

You can't have a private sector without the services the public sector provide. Those services are provided at a fraction of the cost that the private sector could supply.

No economists are arguing against investment in the public sector, even the markets are starting to settle after the post-budget hissy fit. Most people would rather the extra funding had come from those who can most afford it. Unlike the last 14 years when the poorest have shouldered the burden for our neoliberalism.

I didn't vote for them!

I voted for the LDs who have always been completely honest about the need to put up income tax in order to pay for the public services we need.

I know you didn't vote for them.

My question was if they had said they would up income tax would you have voted for them?

That's not how payroll works, a lot of people don't understand payroll. Employees NI comes out of employees wage. That's why it's gross pay minus PAYE and employees NI equals net pay (take home pay)

Employers NI is ADDED to the gross pay that an employer pays someone. So no, your comment is incorrect. This new increased NI and reducing of threshold is a new cost to the employer. It has absolutely no bearing on employees NI and how it has dropped

So you contradict yourself - if it makes no difference how it's badged it makes no difference right? So are you saying a) There should have been no increase to 'anything' at all whatever the label as some sectors can't cope with any increase (and where is the viability if that's your argument) or b) There should have been an increase in 'something' despite some sectors still being affected. Your argument is completely incoherent.

I think the whole system of taxation needs streamlining and making more straightforward and transparent. Abolishing the nonsense that is "national insurance" would be a start.

What are we insuring ourselves against exactly?

Lol. You're missing the point somewhat.

I was correcting your incorrect comment that an employees cost is an employers cost, and that because employees NI was decreased, employers are back where they are and shouldn't complain. What am I missing?

@IMustDoMoreExercise "I'm sure you are clever enough to find the cash from somewhere, just as clever as all the entrepreneurs who will be leaving the UK and setting up elsewhere."

All of the clever entrepreneurs who could started leaving the UK in 2016 when the country was conned into voting for Brexit and businesses were cut off from the largest unified market on the planet, cut off from a supply of well-qualified staff, had supply chains disrupted and had higher costs of doing business imposed on them - the complete opposite of what Boris promised.

There's always many reasons not to start a business, there's no perfect time to do it. You do it anyway.

The barriers are actually very low, especially for online businesses. You could start one today for under £500, or less even. There are also various investment opportunities and funding options out there.

But no I wouldn't recommend hiring staff or renting premises from day 1 unless you've done it before and know what you're doing or you have strong investment and a long term plan.

I was under the impression the budget was all about facilitating economic growth. I was looking forward to investment in public services and infrastructure - I am happy to pay more tax/NI if I see an improvement in roads/rail etc I find travelling pretty painful going anywhere these days if it's by car or rail. But I didn't see anything that would encourage growth. In fact it seems to have clobbered small business and farmers. Who would want to start a small business these days?

I think the employer Ni on wages from about 5k to £10k and the 1.2% extra of NI together (for employers who are above the employer NI exemption and those with a nanny where there is no exemption) costs about £1k per employee on minimum wage. if the minimum wage increase is about £1 an hour roughly (it is a bit less) that is about £1800 a year per minimum wage employee so that is about £2800 a year extra. So someone I heard about yesterday has about 800 staff - kind of care business and they probably are mostly on the minimum wage. 800 x 2800 = £2.24m a year extra so presumably that means redundancies. That is quite a high increase.

I would much rather we had many many fewer public services. I have seen a doctor twice in 15 years - I call them my £100,000 NHS appointments for 7 minutes a time and would rather have no NHS or one where people pay at point of use and in return pay half my tax bill.

It depends what they said they were planning on doing with the increased tax revenue. And it also depends on the constituency I am in doesn't it? Here Labour had no chance so I wasn't going to waste my vote on them. This isn't a gotcha moment.

I don't know how you know I didn't vote for them before I said I hadn't!

I'll say what I've said elsewhere. I own and manage a small business which supports 2 full time workers and two part time. We have been in business for 20 years and have weathered the financial crash, Covid and the aftermath, so we must be doing something right. We are too small for the new measures to affect, however I am able to look at the bigger picture and see that it is bigger than just me. Majority of the burden falling on a minority shouldn't be how it works. Everyone should pay their way to the best of their ability.

The system the UK has fallen into is crazy.

Take prescription charges as a small illustration. Most people pay nothing. A large percentage of prescriptions are dispensed free of charge. If many more people paid a much smaller amount rather than the £9.90 per item that some people have to pay, it would generate more revenue surely. I was in the surgery the other day and a woman was making a fuss that her prescription wasn't ready. It was ibuprofen. She was asked if she paid for her prescriptions. "No" was the answer.