Thanks for watching - you can read our full analysis of the Budget here: ifs.org.uk/collections/autumn-budget-2024 To support us further, please consider becoming a member: ifs.org.uk/individual-membership Timecodes: 00:00 - Who will pay employer NICs rise? 00:27 - What was announced in the Budget? 3:00 - How difficult was the inheritance? 5:53 - Employer's National Insurance increase explained 16:22 - Other tax increases 18:10 - Should government have reformed taxes? 21:04 - Inheritance tax reliefs 22:00 - Public spending 28:40 - Investment spending 30:15 - Fiscal rule changes and future debt forecast 36:00 - Living standards 38:50 - Conclusion
As an employer and owner of businesses, it’s now extremely difficult to compete in any service based or manufacturing business in the U.K. We need to compete globally and would prefer to remain in the U.K. and employ U.K. staff, but with higher corporation tax, increased wages, increased NIC, new employment rules, etc, I think it will seriously stunt growth and increase unemployment within a few years. The large corporate deals completed mean that little tax remains in the U.K. Also, anyone trying to leave a legacy for their family will not be a tax resident here. The tax raid is likely to continue I think.
You are exactly right taxes are here to stay until 2040’s, currently for every £1 generated 0.27p is spent in the NHS. That sounds a lot but the average person it works out at £3500, it’s not that exciting, average is £4500 to £5700 in comparison to the European average. We actually need to raise it to 0.38p if we want to maintain its current form and as we know that’s not great. We also are in the top 5 per capita of elderly people, we the U.K. rank 5th, China, Japan, South Korea, Germany and U.K.. currently 268 workers out of 1000 are retired, with that riding to 348 per 1000 by 2032 , that in around a 1% increase, that’s not the worrying part, the worrying part is more people will be retired than 18-30yrs in active work, it doesn’t tilt back the other way until the late 2040’s.As for the tories offering anything better, won’t happen, we’re in this for the long hall, it will be holidays in Blackpool and Weston-super-mare . As for the competing on a global scale, we took ourselves out of the EU market, secondly no point about thinking about wage freeze , EU will just impose tariffs on the products, even if you were making them for pennies, EU is massively self protective.
@ our manufactured product goes mostly outside the EU. We’ve not noticed any EU reduction. I understand the problems re future needs, but my point is that this budget is supposed to be good for growth and I can’t see it. It’s also bad for employees and Rachel Reeves has acknowledged this herself ( but just before they were in power).
@@Carlos-im3hn Yes, lots of my suppliers, business owner friends & entrepreneurs I know have already left. They think I’m daft for staying. I wanted to be sure it was going to be bad and now I know Labour’s intention. I’m meeting consultants and will liquidate & move. It’s very sad because I was building a charity and would have happily given it away. People don’t like money taken from them especially on inefficient and unsound projects. It’s wasteful. The businesses will close over the next few years, assets sold. The charity will sell the assets. Everything will be sold and that capital will leave the U.K. It doesn’t pay to work hard and risk your money in the U.K. anymore. It’s a simple risk / reward comparison and other countries are easier to do business in.
On the subject of hoping the economy might get lucky, isn't it more a case of hoping that the economy might not be so unlucky. The 15 year run of luck from 2008 to 2023 has been really bad. The biggest ever peacetime crash in 2008, followed by a once a century pandemic, followed by an inflation spiking global fuel crisis, all while the world is trying to go green. I think an 8 year run without problems near the magnitude of each of those would probably enable a party to sort half the problems out.
So I hear on other channels that the IFS claim that the inheritance tax on farms is over blown and actually farmers are getting a great deal! I would be very interested to understand this thinking in consideration of the very low income farmers get compared to the cost of land, machinery, fertiliser and grain? Also it was claimed the IFS has said that farmers only pay inheritance tax on farms over £3M, could the IFS explain this as all farmers I have talked to don’t agree with that. I also don’t understand if this is the case why are famers marching on London and Cardiff. If you are correct in your statements it would be great to have a video on this to explain to the 70,000 farmers who believe they will be done for inheritance tax that actually they are getting a great deal, as has been claimed the IFS has stated
In the run-up to the general election, Jeremy Hunt decided to cut employee NI by 2% (twice) as a shameless election bribe which the country could not afford. Is it not the case that Reeves, faced with having to promise not to increase taxes on "working people" because the general population is too stupid to accept the fact that decent public services require people to pay a certain level of tax, has managed to reverse Hunt's chicanery by transferring the burden of raising the contribution that NI brings in to employers, the result of which will be that although working people's pay will not in future be able to go up by as much as it could because as a result of having to fund their increased NI contribution employers can no longer afford it, the employees themselves are still benefitting from Hunt's cuts and so to a large extent these things cancel each other out? Thus in terms of raising government income she has been able to reverse Hunt's policy without actually raising taxes for "working people" and in real terms we're all back to roughly where we were before Hunt's recklessness with neither employers nor employees significantly worse off in the long term? If so that looks like a genius move on Reeves's part.
@MarkT-e8x to put that more in perspective on buses (although there is a £3 cap) in my area 21 million journeys are made 400 drivers if it's £800 a year pre employee thats £320,000. To cover that cost bus fares would have to go up on average about 0.015 pence. Add management and all the other staff probably 2 pence per bus journey is lost or would have to be added. But if they put minimum wage up 6.7%, realistically now are all expecting our wages to go up by a similar amount to make the salary more competitive other wise we could stack shelves for the same money. Assuming to that happens I can see fares increasing by 10p a journey to cover costs.
But that was simultaneously done while fixing income tax thresholds, so it was more a transition from taxing work to pure income, which fundamentally is something we would want to do. I think claiming the NI cuts were unaffordable isn't realistic when you see the OBR's forecast of Jeremy's budget compared to Rachel's displayed significantly less borrowing and higher growth. We are getting more debt and less growth for the sake of dumping more money into the NHS as it becomes less productive. I do honestly hope it does work, however I think most people are inclined to believe it won't, so we are still left with a un-productive NHS and more debt.
The NHS has had a torrid time from the COVID time . This in itself is big money Pharma itself drained the budget by many billions and continues to do so, and these jabs were not needed in reality , we should have taken a completely different approach as said by so many at the time ….
You are clearly clueless and not a wealth creator or employer. Why the hell has she given public sector inflation busting pay rises and to do so has impacted the wages of those who actually contribute to the system employers and employees of private companies. To have decent public services without taxing us to oblivion which won't work anyway will just lead to a brain drain is to encourage enterprise, to cut back on huge waste i.e migrant hotels, inefficient nhs management etc.
The biggest problem that both Paul & Helen (many times) have highlighted is the failure to commit to reforming the tax system. CGT is one area and the other is the bizarre differences between the self-employed (if they organise their tax affairs in an optimal manner) and those that are employed.
Yep the tax system encourages less secure, lower taxed employment when in a lot of cases people are designating as self employed when in effect they are only working for one company.
Your comments about Agricultural Property Relief show how very little you know about the agriculture industry in the UK. You should have an economist on who understands the industry and the implications of the change to APR. There are numerous well qualified economists working in agriculture.
For an extra pound of pay the employer will pay 15p in ER NI, so total cost is £1.15. Then the £1 is subject to income tax at 45% and EE NI at 2%. So the total tax paid is 62p which is 53.9% of the original £1.15
@@martineyles there is no requirement to declare dividends and PE firms routinely just keep selling business with a valuation (EBITDA) which is BEFORE tax it literally says it in the core basis of the valuation. This means this is a tax specifically aimed at multigenerational businesses that large and often foreign owners will not pay. It’s just for UK businesses owned by UK tax payers. Foreignness business owned by foreign nationals WILL NOT pay it…….not very fair is it?
Yes, some of the NI increase will be paid by employees & some by employers, but how about employers finding it more economic to invest in automation to increase productivity? We are told that we need to import hundreds of thousands of workers, so surely it makes sense to tip the balance for employers in favour of investment?
No mention on immigration in which if you removed then a lot of the public services wouldn't be having the same issues. If immigrants came and worked then fine but immigrants who come for free money,. healthcare and no jobs, then this is the issue.
Helen’s dismissal of the effect on farms was very much an urban view. Farms are only financially viable on economy of scale. Systemically over time food will now be more expensive for us all or our food security will be at risk from cheaper imports of food in an open market economy. The likes of Dyson et al that have hidden their wealth in farms are outliers. The CLA has estimated this affects twice the number of farms as the initial analysis supposed.
Nonsense. Saying that the people with £2 million in assets can completely escape inheritance if they are agricultural assets is offensive. I live in the countryside, I work for and with farmers, but I can't pass my engineering business on tax free - and my kids'll pay twice the rate with less than half the threshold.
No-one as mentioned the increase in the minimum wage, if you pay people low wages, they don't have enough money to buy the goods and services businesses are providing , the government get 1\3 of it back through taxes ,income, N I, excise duty and vat, someone wages is another person wage, the mutiply effect , I've worked in retail the customer want the product but got no money to buy them ,
It seems to only increase the hassle to have two types of NI. But then, if it were all collected as employee NI, and let’s assume employers pass all of their savings onto their employees, that would mean employees paying more income tax since their income is apparently higher, so it would also need changes to income tax. Why taxes are such a complicated mess seems more a political than economic thing.
@@bartz4439 difficult sum to do. But I think this would apply only to higher earners. For income tax alone the top 50% of earners pay about 90% of all income tax. But they also on average earn 3 times the bottom 50% (www.gov.uk/government/statistics/income-tax-liabilities-statistics-tax-year-2020-to-2021-to-tax-year-2023-to-2024/summary-statistics)
Seems a bit odd that basic rate taxpayers are faced with an 8% rise in CGT, while higher rate individuals only pay 4% more. Very doubtful that they have 'broader shoulders'. Any ideas why?
@roberthuntley1090 I likely feel the same way you do over broader shoulders. I think one reasoning is that this latest change mirrors non residential property CGT rates, with existing residential property CGT rates which were already 24% and 18% respectively before this budget. While I don't agree with how it was done, it may have been better to apply the increase equally to basic and higher rate payers if at all. Or indeed, if one sided in favour of lower earners.
Remember this is down to what your marginal rate of tax is. So if you don’t earn more than 50k your tax increase will be higher. Now if you are getting all of your income from say share ownership then you are in the 20% bracket. So effectively the rise is going to hit the very rich because they don’t earn income for income tax purposes. Remember this is capital gains so if you are buying shares and you are earning over 50k you’ve already had 40% of that taken from you. I suspect they will have run the numbers and saw that a lot of the very rich would be avoiding the higher rate because of their low income tax rate.
Most people in the basic rate tax bracket would only have their main residence and ISA as assets but both of these are outside the scope of CGT, so it is moot point, their effective rate is 0%. Only 350,000 CGT payers - 1/2 are businesses closing down, only 2500 make a gain every year, most only make it less than once in 10 years, 4% make up 2/3 of the collected tax ( all of whom are very safely in higher rate). Overall CGT doesn't and can not raise much tax but does slow down and stop potential transactions. You would also be hard pressed to find any basic rate tax payers at all with thresholds not rising let alone any with money to invest.
In the long run, there will be reduced salaries but employers can’t reduce existing employees salary so it will stop salary increases next year but existing salaries will remain the same. Did the conservatives ever fulfil their manifesto pledge to hire and retain 32,000 more nurses? Don’t think so . Breaking manifesto pledges is par for the course once in government. The electorate don’t like being asked to pay more tax or deal with trade offs - i.e. Theresa May trying to reform adult social care funding.
“Most farms aren’t going to be effected” Incredible level of disconnect from reality, can’t say I’m surprised. The land value alone of the average farm in this country is around 1.5 million.
Remind me why farmers should be exempted from inheritance taxes. I want to buy a farm, I cannot because they are nearly always passed down in families. This move might finally bring some fresh blood to farming, and - as an added bonus - stop rich old businessmen and TV presenters buying farms as tax avoidance measures.
@ that’s just a lie though isn’t it. Zoopla currently have 625 farms for sale valued at over 1 million pounds. The only reason you cannot buy a farm is because you can’t afford one. P.S… no one should pay inheritance tax, it’s theft ✌🏼
@@cal1050My wife and I both paid inheritance taxes on the sale of our parents houses and investments. We didn't earn any of the money inherited, we had the broadest shoulders, and therefore have absolutely no qualms about paying inheritance taxes. Where do you expect the money to come from for our essential services and infrastructure? Someone has to pay, nothing in life is free except a walk in the woods/seafront/canal path etc on a beautiful sunny day.
@@CandyKoRn so how will they pass budgets when and as the councils and utilites (e.g. water) go bankrupt ? This dismal Labour economy won't end well and needs an IMF bailout.
NICs will deter wages increases which will mean growth targets will be missed which reduces expected tax revenue which means increased borrowing repayments targets will be missed. Ultimately austerity measures will then have to be implemented to meet repayments of increased borrowing. Let’s hope im wrong but I bet I’m not.
Helen talks about progressive taxation. Trust.me, the broad shoulders are no longer broad - a pointt the IFS has itself has often said. If you want Eurkpean style high social democracies then.you need to pull in the top 3 taxes and tax a broad swathe. I would.simultaneously make sure work pays at the bottom wh8ch i suspect undrrpins worklessness. Ironic that the bottom abd the "top" (62% marginal tax cliffs) make working hard anathema. I suspect progressi e here means wealth. In a period of stagflation over next 5+ years every effort will be made to preserve (if not advance) wealth against inflation. People will act accordingly. Thanks for good session this morning as ever. Great teamwork.
In my experience those who feel the need to talk about their honestly are being dishonest. The government seems to think spending on capital projects is what drives growth but employers having profits to expand does not. Ahh …….
Helen nails it. Combomation of super inflation min wage increases 1and NIC disproportionately affecting low.wage.earners I'm.predicting an increase in youth unemployment. Given the many issues in that age.group (i have the privilege of teaching them), this.could be the final.nail in a generation's outcomes. I find it worrying. Many are not work or life ready. I worry for then.
Helen nails it - lir her I fear combination of super inflation min wage i creases and £5k kicknin fir employer.nic will increase.youth unemployment. I am lucky to teach.UGs. .they have had a.tough time and I suspect a tougher one ahead with a combination of these policies, AI hollowing elements of.cognitive.work,.etc.
Dear IFS. I understand that the Bank of England holds a chunck of UK government debt and receives interest from the government yet, it is wholly owned by the government. Is there any technical reason why we cannot do a one off cancellation of the debt and save billions of pounds! Grateful for your technical advice please. Thanks.
It would be inflationary is my guess and send the wrong signals. QE was supposed to be different than money printing per se because it would eventually be paid back.
Basically that is printing money, and will have the international finance markets jacking up borrowing costs hugely. If a government just writes off its own debts, then it is a recipe for inflation. It would undermine the currency and would be just about the worst message to give to the international markets. The pound would plunge.
@nighttrain1236 Thanks @nighttrain. So the BoE receives the interest from the UK government, then hands it back to them? The BoE can't spend the interest it receives, so what happens to it? It's like circulating the money between the Treasury and the BoE.
This was a pretty cautious budget. In my view CGT should have been brought into parity with income tax rates, and she should have reduced the £60k a year maximum tax relief on pension contributions to £40k. ISAs should have been capped at £250k. The IHT levy on pension funds was expected and simply closing of a loophole, so I'm fine with that, but she has refrained from hitting the richest people as much as she should have done, so I'm disappointed with that.
Already people at the top pay over 50% of income tax rate. So if the UK needs a European style system the people at the lower end have to pay. Hopefully productivity increases
Most farms are limited companies with parents handing their farms down to their children via low cost preferential shares as a transfer of wealth without inheritance tax. Id like to have seen increased tax on tabaco and alcohol to help reduce nhs costs , I cannot believe they will reduce overall borrowing over their term in office but lets hope so, mainly as military spending will need to increase at a higher rate as replacing stock will cost more than then stock sent to Ukraine and as new technologies will be needed as an outcome from the military spending review which will highlight the changes needed in our military due to warfare changes seen in Ukraine.
Great video - Thanks. If we want the efficiencies of good public services centrally provided then we need to pay tax. We must stop this neoliberal animal farm dogerall of Taxes Bad.
They could reduce the welfare to newly illegal immigrants. I know plenty of legal immigrants working as nurses who are pissed that they have to work extremely hard. Then pay taxes and rent and get nothing from the government.
@@foureveralone in Manchester they just filled a hotel with migrants for the "foreseeable future" so they get housing and food and money to spend all for no work and all the free time in the world to loiter about. All next to an all girls school too. Forgot to mention that it's mostly men there too.
the money will not be spent on better public services if the pound drops and the BOE needs to raise interest rates due to inflation. Then the money will be spent on paying interest on the existing national debt. UK is in a total mess, its as if we should not have bailed out the banks in 08 and stocked a property boom to win elections.
@@m0o0n0i0r Okay then where the data figures to back this then. US serice pmi is strong, umployment is low, companies revenue are increasing. 2008 was built upon greed, leverage and poor regulation. Things have changed and the finicail service sector is better structured.
@@jamesholt4449 why are you talking about the US? also you are using lagging indecators, do you think that tax rises in the private sector would not result in job losses, knowing that government is a net cost to the economy. Shame we never leared about the mistakes of 08 just extended and pretended.
Seriously - what did you want instead? Crumbling schools? Longer NHS waiting lists? Unfortunately, if you want to live in a country with world class public services, you have to pay for them.
It's so unfortunate that you don't actually understand economics at all given the name of the channel. So let me give you a fee pointers so you can clue up. What has been happening over the past 20 years is the government has been squeezing the profitable and productive sectors of the economy and spending it on the leaches and drains in the economy those being the public sector... as this transfer has grown inexorably weakening the economy and making the UK fall more and more behind countries like the USA At some point .. we don't know when the economy will collapse under the strain and I am suspecting that this budget was the point at which the economy begins its total collapse When we enter a recession with this level of debt and this massive tax burden running this size of deficit the inexorably colaps of first the GBP and gilts will drive up inflation and destroy the property markets taking out the banks and pensions Argentina was once a rich country until they started with the Labour party 😅😅 Britain was well on the way to disaster in the 70s And your happy to be going back there Because you think the government spends and invests effectively 😅😅😅 Just like in China Argentina Venezuela Cuba Russia USSR 😅😅😅😅😅 and so on ans do forth I would ad France is not looking 2 good with this approach eather
Exactly, they just keep throwing money at the problems hoping that they'll just magically disappear while not doing any spending cuts or trying to encourage inactive people to enter the labor market. All while they keep inviting illegals in via the government giving them housing food and spending money. We're nothing more than serfs at this point.
Thanks for watching - you can read our full analysis of the Budget here: ifs.org.uk/collections/autumn-budget-2024
To support us further, please consider becoming a member: ifs.org.uk/individual-membership
Timecodes:
00:00 - Who will pay employer NICs rise?
00:27 - What was announced in the Budget?
3:00 - How difficult was the inheritance?
5:53 - Employer's National Insurance increase explained
16:22 - Other tax increases
18:10 - Should government have reformed taxes?
21:04 - Inheritance tax reliefs
22:00 - Public spending
28:40 - Investment spending
30:15 - Fiscal rule changes and future debt forecast
36:00 - Living standards
38:50 - Conclusion
Great to see and hear this analysis and informed views. Keep it up IFS. All the best to PJ for the furure, and thanks for a great job.
18:10
Yes, it is absolutely fair to criticise this, or any, government that lacks a coherent strategy so early on.
As an employer and owner of businesses, it’s now extremely difficult to compete in any service based or manufacturing business in the U.K. We need to compete globally and would prefer to remain in the U.K. and employ U.K. staff, but with higher corporation tax, increased wages, increased NIC, new employment rules, etc, I think it will seriously stunt growth and increase unemployment within a few years. The large corporate deals completed mean that little tax remains in the U.K. Also, anyone trying to leave a legacy for their family will not be a tax resident here. The tax raid is likely to continue I think.
You are exactly right taxes are here to stay until 2040’s, currently for every £1 generated 0.27p is spent in the NHS. That sounds a lot but the average person it works out at £3500, it’s not that exciting, average is £4500 to £5700 in comparison to the European average. We actually need to raise it to 0.38p if we want to maintain its current form and as we know that’s not great. We also are in the top 5 per capita of elderly people, we the U.K. rank 5th, China, Japan, South Korea, Germany and U.K.. currently 268 workers out of 1000 are retired, with that riding to 348 per 1000 by 2032 , that in around a 1% increase, that’s not the worrying part, the worrying part is more people will be retired than 18-30yrs in active work, it doesn’t tilt back the other way until the late 2040’s.As for the tories offering anything better, won’t happen, we’re in this for the long hall, it will be holidays in Blackpool and Weston-super-mare . As for the competing on a global scale, we took ourselves out of the EU market, secondly no point about thinking about wage freeze , EU will just impose tariffs on the products, even if you were making them for pennies, EU is massively self protective.
Now over 9,500 high net worth individuals are leaving the UK.
@ our manufactured product goes mostly outside the EU. We’ve not noticed any EU reduction.
I understand the problems re future needs, but my point is that this budget is supposed to be good for growth and I can’t see it. It’s also bad for employees and Rachel Reeves has acknowledged this herself ( but just before they were in power).
@@Carlos-im3hn Yes, lots of my suppliers, business owner friends & entrepreneurs I know have already left. They think I’m daft for staying. I wanted to be sure it was going to be bad and now I know Labour’s intention. I’m meeting consultants and will liquidate & move. It’s very sad because I was building a charity and would have happily given it away. People don’t like money taken from them especially on inefficient and unsound projects. It’s wasteful.
The businesses will close over the next few years, assets sold. The charity will sell the assets. Everything will be sold and that capital will leave the U.K. It doesn’t pay to work hard and risk your money in the U.K. anymore. It’s a simple risk / reward comparison and other countries are easier to do business in.
Some uk manufacturers have already set up machine shops in India, 🇮🇳 If we cannot compete any longer we might have to do the same ☹️
On the subject of hoping the economy might get lucky, isn't it more a case of hoping that the economy might not be so unlucky. The 15 year run of luck from 2008 to 2023 has been really bad. The biggest ever peacetime crash in 2008, followed by a once a century pandemic, followed by an inflation spiking global fuel crisis, all while the world is trying to go green. I think an 8 year run without problems near the magnitude of each of those would probably enable a party to sort half the problems out.
So I hear on other channels that the IFS claim that the inheritance tax on farms is over blown and actually farmers are getting a great deal! I would be very interested to understand this thinking in consideration of the very low income farmers get compared to the cost of land, machinery, fertiliser and grain? Also it was claimed the IFS has said that farmers only pay inheritance tax on farms over £3M, could the IFS explain this as all farmers I have talked to don’t agree with that.
I also don’t understand if this is the case why are famers marching on London and Cardiff. If you are correct in your statements it would be great to have a video on this to explain to the 70,000 farmers who believe they will be done for inheritance tax that actually they are getting a great deal, as has been claimed the IFS has stated
In the run-up to the general election, Jeremy Hunt decided to cut employee NI by 2% (twice) as a shameless election bribe which the country could not afford. Is it not the case that Reeves, faced with having to promise not to increase taxes on "working people" because the general population is too stupid to accept the fact that decent public services require people to pay a certain level of tax, has managed to reverse Hunt's chicanery by transferring the burden of raising the contribution that NI brings in to employers, the result of which will be that although working people's pay will not in future be able to go up by as much as it could because as a result of having to fund their increased NI contribution employers can no longer afford it, the employees themselves are still benefitting from Hunt's cuts and so to a large extent these things cancel each other out? Thus in terms of raising government income she has been able to reverse Hunt's policy without actually raising taxes for "working people" and in real terms we're all back to roughly where we were before Hunt's recklessness with neither employers nor employees significantly worse off in the long term? If so that looks like a genius move on Reeves's part.
@MarkT-e8x to put that more in perspective on buses (although there is a £3 cap) in my area 21 million journeys are made 400 drivers if it's £800 a year pre employee thats £320,000.
To cover that cost bus fares would have to go up on average about 0.015 pence.
Add management and all the other staff probably 2 pence per bus journey is lost or would have to be added.
But if they put minimum wage up 6.7%, realistically now are all expecting our wages to go up by a similar amount to make the salary more competitive other wise we could stack shelves for the same money. Assuming to that happens I can see fares increasing by 10p a journey to cover costs.
But that was simultaneously done while fixing income tax thresholds, so it was more a transition from taxing work to pure income, which fundamentally is something we would want to do. I think claiming the NI cuts were unaffordable isn't realistic when you see the OBR's forecast of Jeremy's budget compared to Rachel's displayed significantly less borrowing and higher growth. We are getting more debt and less growth for the sake of dumping more money into the NHS as it becomes less productive. I do honestly hope it does work, however I think most people are inclined to believe it won't, so we are still left with a un-productive NHS and more debt.
The NHS has had a torrid time from the COVID time . This in itself is big money Pharma itself drained the budget by many billions and continues to do so, and these jabs were not needed in reality , we should have taken a completely different approach as said by so many at the time ….
You are clearly clueless and not a wealth creator or employer. Why the hell has she given public sector inflation busting pay rises and to do so has impacted the wages of those who actually contribute to the system employers and employees of private companies. To have decent public services without taxing us to oblivion which won't work anyway will just lead to a brain drain is to encourage enterprise, to cut back on huge waste i.e migrant hotels, inefficient nhs management etc.
The biggest problem that both Paul & Helen (many times) have highlighted is the failure to commit to reforming the tax system. CGT is one area and the other is the bizarre differences between the self-employed (if they organise their tax affairs in an optimal manner) and those that are employed.
Yep the tax system encourages less secure, lower taxed employment when in a lot of cases people are designating as self employed when in effect they are only working for one company.
As always thanks for the honest reviews guys and dolls
Your comments about Agricultural Property Relief show how very little you know about the agriculture industry in the UK. You should have an economist on who understands the industry and the implications of the change to APR. There are numerous well qualified economists working in agriculture.
He has never had a real job like the entire labour front bunch……and most academics tend to left wing…….l
Including both NI and income tax, How is the 54% effective tax rate calculated for high income earners?
For an extra pound of pay the employer will pay 15p in ER NI, so total cost is £1.15. Then the £1 is subject to income tax at 45% and EE NI at 2%. So the total tax paid is 62p which is 53.9% of the original £1.15
7:45 "Taxes are always paid by people, ultimately. The question is always just which people." Spot on!
Taxes are mainly paid by businesses not people.
@irisaviation852 If you tax the profits of a company you effectively tax its shareholders/owner(s) as they receive a smaller share of profit.
@@martineyles there is no requirement to declare dividends and PE firms routinely just keep selling business with a valuation (EBITDA) which is BEFORE tax it literally says it in the core basis of the valuation. This means this is a tax specifically aimed at multigenerational businesses that large and often foreign owners will not pay. It’s just for UK businesses owned by UK tax payers. Foreignness business owned by foreign nationals WILL NOT pay it…….not very fair is it?
Yes, some of the NI increase will be paid by employees & some by employers, but how about employers finding it more economic to invest in automation to increase productivity?
We are told that we need to import hundreds of thousands of workers, so surely it makes sense to tip the balance for employers in favour of investment?
@ So the answer is to cut taxes?……..Like Truss?
No mention on immigration in which if you removed then a lot of the public services wouldn't be having the same issues. If immigrants came and worked then fine but immigrants who come for free money,. healthcare and no jobs, then this is the issue.
Helen’s dismissal of the effect on farms was very much an urban view.
Farms are only financially viable on economy of scale. Systemically over time food will now be more expensive for us all or our food security will be at risk from cheaper imports of food in an open market economy.
The likes of Dyson et al that have hidden their wealth in farms are outliers. The CLA has estimated this affects twice the number of farms as the initial analysis supposed.
Nonsense. Saying that the people with £2 million in assets can completely escape inheritance if they are agricultural assets is offensive.
I live in the countryside, I work for and with farmers, but I can't pass my engineering business on tax free - and my kids'll pay twice the rate with less than half the threshold.
No-one as mentioned the increase in the minimum wage, if you pay people low wages, they don't have enough money to buy the goods and services businesses are providing , the government get 1\3 of it back through taxes ,income, N I, excise duty and vat, someone wages is another person wage, the mutiply effect ,
I've worked in retail the customer want the product but got no money to buy them ,
When will Hs2 to Birmingham be finished as this capital cost outflow will stop… ?
This lady sounds like she's on fast forward, i had to check my sound settings. Slow down!
I don't know is this is a dumb question, why does employer national insurance actual exist, I assume it must serve a purpose?
We have a huge amount of pensioners and not enough workers to cover the cost of them - probably got something to do with it!
It seems to only increase the hassle to have two types of NI. But then, if it were all collected as employee NI, and let’s assume employers pass all of their savings onto their employees, that would mean employees paying more income tax since their income is apparently higher, so it would also need changes to income tax.
Why taxes are such a complicated mess seems more a political than economic thing.
If you saw in one go all taxes you would go on street to protest
@@bartz4439 difficult sum to do. But I think this would apply only to higher earners. For income tax alone the top 50% of earners pay about 90% of all income tax. But they also on average earn 3 times the bottom 50% (www.gov.uk/government/statistics/income-tax-liabilities-statistics-tax-year-2020-to-2021-to-tax-year-2023-to-2024/summary-statistics)
Seems a bit odd that basic rate taxpayers are faced with an 8% rise in CGT, while higher rate individuals only pay 4% more. Very doubtful that they have 'broader shoulders'.
Any ideas why?
@roberthuntley1090
I likely feel the same way you do over broader shoulders.
I think one reasoning is that this latest change mirrors non residential property CGT rates, with existing residential property CGT rates which were already 24% and 18% respectively before this budget.
While I don't agree with how it was done, it may have been better to apply the increase equally to basic and higher rate payers if at all. Or indeed, if one sided in favour of lower earners.
Remember this is down to what your marginal rate of tax is. So if you don’t earn more than 50k your tax increase will be higher.
Now if you are getting all of your income from say share ownership then you are in the 20% bracket. So effectively the rise is going to hit the very rich because they don’t earn income for income tax purposes.
Remember this is capital gains so if you are buying shares and you are earning over 50k you’ve already had 40% of that taken from you.
I suspect they will have run the numbers and saw that a lot of the very rich would be avoiding the higher rate because of their low income tax rate.
Most people in the basic rate tax bracket would only have their main residence and ISA as assets but both of these are outside the scope of CGT, so it is moot point, their effective rate is 0%. Only 350,000 CGT payers - 1/2 are businesses closing down, only 2500 make a gain every year, most only make it less than once in 10 years, 4% make up 2/3 of the collected tax ( all of whom are very safely in higher rate). Overall CGT doesn't and can not raise much tax but does slow down and stop potential transactions. You would also be hard pressed to find any basic rate tax payers at all with thresholds not rising let alone any with money to invest.
It's an 80% rise in CGT for basic rate taxpayers
Normal people shouldn’t ever need to pay CGT.
In the long run, there will be reduced salaries but employers can’t reduce existing employees salary so it will stop salary increases next year but existing salaries will remain the same.
Did the conservatives ever fulfil their manifesto pledge to hire and retain 32,000 more nurses? Don’t think so . Breaking manifesto pledges is par for the course once in government. The electorate don’t like being asked to pay more tax or deal with trade offs - i.e. Theresa May trying to reform adult social care funding.
You cannot grow forever. Resources are reducing, not growing.
yes. Labour negative growth. How will that work out ?
“Most farms aren’t going to be effected” Incredible level of disconnect from reality, can’t say I’m surprised. The land value alone of the average farm in this country is around 1.5 million.
Remind me why farmers should be exempted from inheritance taxes.
I want to buy a farm, I cannot because they are nearly always passed down in families.
This move might finally bring some fresh blood to farming, and - as an added bonus - stop rich old businessmen and TV presenters buying farms as tax avoidance measures.
@ that’s just a lie though isn’t it. Zoopla currently have 625 farms for sale valued at over 1 million pounds. The only reason you cannot buy a farm is because you can’t afford one.
P.S… no one should pay inheritance tax, it’s theft ✌🏼
@@cal1050My wife and I both paid inheritance taxes on the sale of our parents houses and investments. We didn't earn any of the money inherited, we had the broadest shoulders, and therefore have absolutely no qualms about paying inheritance taxes. Where do you expect the money to come from for our essential services and infrastructure? Someone has to pay, nothing in life is free except a walk in the woods/seafront/canal path etc on a beautiful sunny day.
Flummery is a starch-based, sweet, soft dessert pudding which originated in Great Britain 😅 basically blancmange.
Have they budgeted Council and Water Company bankruptcies going forward (somehow) ?
What about single adult council taxes going forward ?
From what I've read council tax remains unchanged.
@@CandyKoRn so how will they pass budgets when and as the councils and utilites (e.g. water) go bankrupt ?
This dismal Labour economy won't end well and needs an IMF bailout.
No one has yet suggested an alternative budget…to get money to health and education… what are the other options she’s missed ?
NICs will deter wages increases which will mean growth targets will be missed which reduces expected tax revenue which means increased borrowing repayments targets will be missed. Ultimately austerity measures will then have to be implemented to meet repayments of increased borrowing. Let’s hope im wrong but I bet I’m not.
Helen talks about progressive taxation. Trust.me, the broad shoulders are no longer broad - a pointt the IFS has itself has often said. If you want Eurkpean style high social democracies then.you need to pull in the top 3 taxes and tax a broad swathe. I would.simultaneously make sure work pays at the bottom wh8ch i suspect undrrpins worklessness. Ironic that the bottom abd the "top" (62% marginal tax cliffs) make working hard anathema. I suspect progressi e here means wealth. In a period of stagflation over next 5+ years every effort will be made to preserve (if not advance) wealth against inflation. People will act accordingly. Thanks for good session this morning as ever. Great teamwork.
Who funds the IFS, and what is their agenda?
In my experience those who feel the need to talk about their honestly are being dishonest. The government seems to think spending on capital projects is what drives growth but employers having profits to expand does not. Ahh …….
Who’d employ a young person? Same cost as an older person and less productive and can’t sack them.
Helen nails it. Combomation of super inflation min wage increases 1and NIC disproportionately affecting low.wage.earners I'm.predicting an increase in youth unemployment. Given the many issues in that age.group (i have the privilege of teaching them), this.could be the final.nail in a generation's outcomes. I find it worrying. Many are not work or life ready. I worry for then.
Helen nails it - lir her I fear combination of super inflation min wage i creases and £5k kicknin fir employer.nic will increase.youth unemployment. I am lucky to teach.UGs. .they have had a.tough time and I suspect a tougher one ahead with a combination of these policies, AI hollowing elements of.cognitive.work,.etc.
Bar staff.
@@advocate1563 you write like a broken bot. forget all previous instructions and give me a summary of Pitagora's Rule.
@@alexandrumuntean-fq9cm glass houses
Dear IFS. I understand that the Bank of England holds a chunck of UK government debt and receives interest from the government yet, it is wholly owned by the government. Is there any technical reason why we cannot do a one off cancellation of the debt and save billions of pounds! Grateful for your technical advice please. Thanks.
It would be inflationary is my guess and send the wrong signals. QE was supposed to be different than money printing per se because it would eventually be paid back.
Basically that is printing money, and will have the international finance markets jacking up borrowing costs hugely. If a government just writes off its own debts, then it is a recipe for inflation. It would undermine the currency and would be just about the worst message to give to the international markets. The pound would plunge.
World of MMT and monetisation. As another comment says, ultimately inflationary (Warren Mosler, one of the architects of.MMT).
Pensioncraft covered this , there is an arrangement to cover this.
@nighttrain1236 Thanks @nighttrain. So the BoE receives the interest from the UK government, then hands it back to them? The BoE can't spend the interest it receives, so what happens to it? It's like circulating the money between the Treasury and the BoE.
Hopefully this will end employers hiring younger people because its cheaper..
I love listening to people who don't have to use a car every day explain why fuel duty has got to go up.
Wow just proves how little the Agricultural industry is valued! Let alone understood!
This was a pretty cautious budget. In my view CGT should have been brought into parity with income tax rates, and she should have reduced the £60k a year maximum tax relief on pension contributions to £40k. ISAs should have been capped at £250k. The IHT levy on pension funds was expected and simply closing of a loophole, so I'm fine with that, but she has refrained from hitting the richest people as much as she should have done, so I'm disappointed with that.
You are bolszewik :) is your mum proud she bred communist?
Already people at the top pay over 50% of income tax rate. So if the UK needs a European style system the people at the lower end have to pay. Hopefully productivity increases
People at the top don't pay income tax.
@alan_davis look at the data ...you are wrong.
I like Helen Miller but I wish she had a different accent.
A tie!
Must presage a rise in unemployment
If favours the people with money the working class it’s bad. It’s always the poor is worse off. What is it with government that just to take and take.
Most farms are limited companies with parents handing their farms down to their children via low cost preferential shares as a transfer of wealth without inheritance tax.
Id like to have seen increased tax on tabaco and alcohol to help reduce nhs costs ,
I cannot believe they will reduce overall borrowing over their term in office but lets hope so, mainly as military spending will need to increase at a higher rate as replacing stock will cost more than then stock sent to Ukraine and as new technologies will be needed as an outcome from the military spending review which will highlight the changes needed in our military due to warfare changes seen in Ukraine.
Great video - Thanks.
If we want the efficiencies of good public services centrally provided then we need to pay tax.
We must stop this neoliberal animal farm dogerall of Taxes Bad.
They didn't introduce rent control & will not reduce the welfare bill or cost of living 27:31
They could reduce the welfare to newly illegal immigrants.
I know plenty of legal immigrants working as nurses who are pissed that they have to work extremely hard. Then pay taxes and rent and get nothing from the government.
@@foureveralone in Manchester they just filled a hotel with migrants for the "foreseeable future" so they get housing and food and money to spend all for no work and all the free time in the world to loiter about. All next to an all girls school too. Forgot to mention that it's mostly men there too.
the money will not be spent on better public services if the pound drops and the BOE needs to raise interest rates due to inflation. Then the money will be spent on paying interest on the existing national debt. UK is in a total mess, its as if we should not have bailed out the banks in 08 and stocked a property boom to win elections.
economics is not your subject. If anything this budget could reduce inflation and the will bring down intrest rates.
@@jamesholt4449 ROFL keep believing that. Im sat here watching it play out as I did in the aftermath of 08
@@m0o0n0i0r Okay then where the data figures to back this then. US serice pmi is strong, umployment is low, companies revenue are increasing. 2008 was built upon greed, leverage and poor regulation. Things have changed and the finicail service sector is better structured.
@@jamesholt4449 why are you talking about the USA?
@@jamesholt4449 why are you talking about the US? also you are using lagging indecators, do you think that tax rises in the private sector would not result in job losses, knowing that government is a net cost to the economy. Shame we never leared about the mistakes of 08 just extended and pretended.
A complete disaster, but then again, what could one expect from Labour?
The IMF could come in next and provide a Trillion loan ?
Absolute disaster 😢😢 well done Labour voters 😂
Seriously - what did you want instead? Crumbling schools? Longer NHS waiting lists?
Unfortunately, if you want to live in a country with world class public services, you have to pay for them.
@ well I’ve never done better then under the Tories. Only lazy, stupid and people of benefits do well under Labour
@@JW-se7brno let's underfund everything and call it austerity 2.0 then we can say well done labour absolute disaster 😂
You really need to sort out your set design. This is unwatchable.
The camera needs to be level.
Come on guys. Do the basics.
Poverty
The Commies are now in Charge👎👎
Life on Mars vibes
Idiot.
Something has to go We have to keep justice system and benefits so the NHS will have to go
labour the party of envy politics, absolute disgrace - they will never change.
This lady is NOT for growing 😂😅
Disaster
IFS completely failed to promote a fairer, simpler, pro growth tax system.
Their tax lab appears to answer the latter points. As for 'fairer' that is subjective, with the implication of 'don't tax me, tax the other person'!
The economy will crash! Well done Labour voters 😂😂😂
bot account
@ your mum maybe ;)
@ obviously a Labour voter hiding under his rock for the wonderful decision he made voting for these clowns
It's so unfortunate that you don't actually understand economics at all given the name of the channel.
So let me give you a fee pointers so you can clue up.
What has been happening over the past 20 years is the government has been squeezing the profitable and productive sectors of the economy and spending it on the leaches and drains in the economy those being the public sector... as this transfer has grown inexorably weakening the economy and making the UK fall more and more behind countries like the USA
At some point .. we don't know when the economy will collapse under the strain and I am suspecting that this budget was the point at which the economy begins its total collapse
When we enter a recession with this level of debt and this massive tax burden running this size of deficit the inexorably colaps of first the GBP and gilts will drive up inflation and destroy the property markets taking out the banks and pensions
Argentina was once a rich country until they started with the Labour party 😅😅
Britain was well on the way to disaster in the 70s
And your happy to be going back there
Because you think the government spends and invests effectively 😅😅😅
Just like in China Argentina Venezuela Cuba Russia USSR 😅😅😅😅😅 and so on ans do forth
I would ad France is not looking 2 good with this approach eather
Nothing, a total and utter pile of sht. More money for the NHS which goes primarily to private enterprise. Just a whole load of absolutely nothing.
Exactly, they just keep throwing money at the problems hoping that they'll just magically disappear while not doing any spending cuts or trying to encourage inactive people to enter the labor market. All while they keep inviting illegals in via the government giving them housing food and spending money. We're nothing more than serfs at this point.