The Positive Blog
BIG Majorities Mean Big Changes and That Means Tax
Andy gets his crystal ball out and peers into the future …
I don’t generally ‘do’ politics; if I’m honest I’ve always felt a bit sorry for politicians. The changes they can make are usually quite minimal… Well, that was until Mr Trump came along. Like him or loathe him, he’s embarrassed a number of previous presidents with the speed in which he has made so many changes.
Anyway, I digress… I originally wrote this blog about eight weeks ago, just after the budget when our Prime Minister announced that the Government intended to increase National Insurance contributions for the self-employed. Whilst, in itself, it was nothing major – potentially a couple of hundred pounds, an extra cash job for most tradesmen – that was until The Sun decided it was an affront to ‘White Van Man’ and threatened a national campaign of opposition. You have to hand it to the media – brilliant at making something relatively minor sound like a major catastrophe.
Whilst the increase in itself was relatively minor, this positive accountant was rather upset by our Prime Minister’s comments as to the reason for the increase, her comments being: “It is vital to close the gap between the self-employed and those employed on a traditional basis.” To me, she completely misunderstands self-employment.
When I say self-employed I mean all of us that run our own business, whether operating as self-employed, a partnership, or a limited small company. We don’t have the luxury of relying on the fact that our ‘wages’ will definitely be there on the last day of the month through factors that are largely out of our control. If their customers do not pay the self-employed they still have the same problem as everyone else, whether it be suppliers, their mortgage company, even their employees expecting to be paid on time. Being self-employed is a totally different mind-set and one that should be acknowledged and supported rather than attacked.
However, before I get too carried away, the proposed changes only lasted a week before they were withdrawn. To much attention from the press!
I didn’t think much more about the episode until I attended an interesting tax course last week. I appreciate that the words ‘interesting’ and ‘tax course’ are not usually used together, and my previous experience would normally back that up, but bear with me.
Our speaker appeared to model himself on Michael McIntyre, regaling us with various tales for the three-hour duration, and to be fair it was quite enjoyable. A tax specialist, the speaker seemed to enjoy the sound of his own voice and allied with a healthy ego, he was keen to share! He explained to us that he is contracted to give advice to both the Treasury and also the main political parties on current and proposed legislation. His view of our current tax system was that it is, quite simply, a shambles; the problem being that due to the small majority that the present government has, nothing of real substance has been achieved, as it will not be supported. Indeed, this is exactly what happened with regards to the proposed National Insurance increase. Currently, the Conservative Government has a majority of six and, when the proposals were issued, 10 of the Conservative MPs confirmed that they wouldn’t be supporting it, hence why our Prime Minister and her Chancellor (anyone seen him recently?) backed off.
What is perhaps more interesting, however, is that tomorrow we all troop out to vote and it is very possible that the Conservatives could win by a large majority – potentially 150 seats. The last time that this happened was in 1997 when Labour won a landslide victory and soon after that election there were massive changes to the tax system.
So, why that is relevant? Well, it is widely acknowledged that the tax collected each year by our Treasury is approximately 15 billion pounds short of what is needed to run our country and this has meant that our deficit has increased year on year. At some point this has to be reversed and the only way to do this is to increase our taxes. Previous governments haven’t been able to do so due to their small majorities, so this election could be the first time in 20 years that an opportunity to make drastic changes presents itself.
And what could that mean for us? It is all crystal ball gazing right now and we certainly can’t say for sure, but IF there is big majority I will be very interested to see whether the Government calls a quick additional budget in July. If they do, we could be in for a bumpy ride…
Hang on, let my get my cloth out and give that crystal ball a polish.
I can see the mist clearing. An image is forming… It has a door, four windows and a roof…
If you are asking yourself:
“Why not me?
“Why not now?”
The answer is “no reason whatsoever”, so, talk to me and let’s change your business for the better.
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