The level of understanding among the Powers That Be as to tax incidence is woeful.
Case Study
I am both self employed and an employer, as are an awful lot of self employed. (BTW, It would be correct to include the owners of small businesses who chose to trade through a limited company as 'self employed').
I pay my own NIC's
I also pay all my employees NICs.
How come?
There are two market clearing prices for employees.
From their perspective that price is the pay that they actually are motivated to turn up for. That is their net take home pay.
From my perspective the market clearing price for their services is the total cost of employment. That is the sum of their net pay, their PAYE and their NICs and my employers NIC.
NICs and PAYE are a tax on employment. And if you put high taxes on things you get less of it.
Someone point this out to the witless wankers in Spreadshit amd Tessa's government - and the state bureaucracy. Please.
Update
As Shiney says in the comments:
You need to add employers workplace pension contributions, non reclaimable SSP, SMP and statutory holiday pay as well. Plus the cost of ruinning the bloody payroll and dealing with attachment of earnings orders and shit requests from HMRC. If I could just pay all my people their gross pay and say 'your problem' that would be great. Seconded.
Friday, 10 March 2017
More on 'Spreadshit Phil's' NIC Changes
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7 comments:
@L
"From my perspective the market clearing price for their services is the total cost of employment. That is the sum of their net pay, their PAYE and their NICs and my employers NIC."
You need to add employers workplace pension contributions, non reclaimable SSP, SMP and statutory holiday pay as well. Plus the cost of ruinning the bloody payroll and dealing with attachment of earnings orders and shit requests from HMRC. If I could just pay all my people their gross pay and say 'your problem' that would be great.
@S I'd thought of those. I will update..
@S v good points. Auto-enrolment is slightly less bad than other payroll taxes in that you get something for it. Although of course your pension pot is subject to raids in future...
@M
Well no not really as the tax 'benefit' is hoovered by the pensions industry. Would be better just to get employees to stick it in an ISA - or let them decide what to do with it.
Yes it is that simple. That's 90% of what's wrong with our tax system right there.
@S. A lot of that tax benefit hoovering is done by the reg-yew-lay-tors.
Its possible that the whitehall mandarins do know this but in the short term ,four years, decisions made in the budget do affect tax contributions in the way they claim to, in the short term.
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