Will Boris Johnson will break his manifesto pledge not to increase National Insurance in order to pay for social care in England?

“Self Employed” covers a very wide range of businesses from Taxi drivers and market stall owners, to Barristers and Lawyers.
Not declaring cash income is possible although increasingly difficult due to card payments being used widely. At the bottom end no way of stopping it, further up with integrated tax systems you are not likely to get away with evasion and accountants are very careful to make sure clients don’t break the rules.

A lot of women are self employed, taking responsibility for their own affairs, you get more flexibility but you find your own clients, invest your own money, pay NI and your own pension, it can be very insecure certainly not an easy life. In a great many cases its an easier life to get a “proper job”.

WWM2 You are absolutely right. Income tax should be increased and not NI.

Dinahmo

Doodledog If you are referring to the worriedwell's comment about an IFA I think she was saying that her relative's house was sold and the money was invested so that the income earned went towards funding her residential care.

Yes that is what happened, her house sold, her savings put in the same pot as the house money and the income has paid the balance of her care on top of her state pension, a widows pension from her late husband's employer plus attendance allowance that I claimed for her. As none of her care is funded she is entitled to the attendance allowance. I just wanted to put it out there as people always talk as if every penny from a house sale goes on care costs but if the house is worth a certain amount, and I know if some parts of the country houses are much cheaper, then you can generate alot of the money by investment.

If there is to be an increase in taxation it should be on tax not NI.

GrannyGravy13

If there is to be an increase in taxation it should be on tax not NI.

Yep, and not just on PAYE. Otherwise unearned income isn’t accounted for etc.

Income tax would be an 'even' tax. They need to get income from somewhere. We are over 2trillion in debt. A very sobering amount indeed!

Dinahmo

foxie48 I'm not sure what you mean by saying that many self employed people are able to legally avoid taxation. Do you have examples?

Business owners paying themselves with a combination of salary + dividends means they can pay less income tax than they would if they had the same income on PAYE.
Being able to buy cars etc through the business which reduces their liability for tax whilst those of us on PAYE buy cars with taxed income etc.
I certainly don't have it in for the self employed, when my husband took redundancy at 50 he continued to work as a SE freelancer and was able to claim quite legally for costs that he had had to pay for with taxed income when he was employed.
A good accountant can save self employed people a lot of money but I am agreement that increasing the rate of income tax is fairer overall than increasing NI, however, I would make NI payable to everyone who continues to work post retirement age

I don't think anyone on this thread has argued that funding should come out of NI, have they?

I'm not at all convinced that it will happen like that, anyway. The announcement is not until tomorrow (I think), and the 'leak' happened in time for the government to test the water. As NI is also paid for by employers there will be resistance, and that could trigger a change in policy.

Whereas I do think that tax would be a better way to raise money, I wonder how many over 66s are still working and paying NI - I can't help feeling that the fact that that age group is exempt is a bit of a red herring, as the numbers must be relatively small.

It will be interesting to see what happens, but the fact that the narrative has already been steered to 'the young paying for the old' makes me uneasy. My guess is that there has been something else planned all along, and that the inevitable arguments over NI will pave the way to bringing in something unpalatable (no idea what, but worst case scenario could be some sort of ring-fenced insurance scheme that won't pay out for 20 years).

As an (irrelevant) aside - I've never been self-employed, but I have friends who are, and some are definitely 'creative' when it comes to accounting - everything from keeping receipts for petrol and social lunches and putting them down to 'business expenses', to forgetting to put cash customers through the books, plus whatever their accountants could find. I think a lot regretted it when it came to claiming money during Covid.

Even Jacob Rees Mogg doesn’t seem in favour. I think Boris has problems with his own party here but they will have to come up with something.

I cannot understand why anyone would see "Social Care" as not part of the Health Service. It is the separation of that, and to some extent not treating Mental Health as simply "Health", that allow for them be underfunded.

We seem to have learned nothing from Florence Nightingale's time when she ensured cleanliness, etc. You cannot be as healthy as you might be if you cannot clean yourself or feed yourself and get no, or inappropriate, help to do these things.

We need an upgraded our "Health" Service. If this needs a combination of increased NI and all inheritance treated as income, so be it. Please let us stop treating sections of people as if their health issues do not count.

….the narrative has already been steered to ‘the young paying for the old’ makes me uneasy…….

Me too Doodledog, it makes me very uneasy. I don’t like the way that the young have been pitched against the old in recent years. We are all part of society and we all pay taxes, and also NI contributions until we claim, or become eligible to claim, out state pension. Everyone benefits from this with the provision of everything from roads and education to the NHS and defence spending. The old have paid for children to go to school and the NHS when they mostly didn’t need to use it very much. Now the young are taking their turn to pay for schools and the NHS. It’s how it works. I dislike this idea of pitting young against old immensely.

Members of the government seem to by trying to balance that this morning. There has been a repeat of the idea that the "working" pay for old and disabled and that this has now got out of balance.

In return the working can expect to be cared for by the next generation of "working" when they are old/disabled. The chap I saw (switched on too late to see who he was but he may have been a minister) deliberately talked of "working", not young.

I just heard another interview on Sky News where they were saying that the older contingent are two thirds of the numbers needing care but cost half of the budget.

That sounds possible.

The amount of dividend that can be taken tax free for business owners, providing a profit was made, has been gradually reduced over the past few years and is now £2000 per person.

I am disturbed by the setting of one generation against another, and this is just another example. It is blatantly obvious, even to a non economist like myself, that increases need to be made in income tax, not NIC, and I say that as someone who pays the former and not the latter. I am not sure what people mean by unearned income as I certainly pay tax on mine. ie the rental from my flat. It would also be fairer to raise the tax threshold at the same time as raising the percentage rate.

Smileless2012

The amount of dividend that can be taken tax free for business owners, providing a profit was made, has been gradually reduced over the past few years and is now £2000 per person.

Yes, that's right, and apart from the cash in hand people, there is really little to be claimed as a self employed person, certainly not the purchase of and running costs of a car, other than legitimate client visits. When I had my own business, I bought my car from my own income, and claimed a certain percentage of petrol for visiting clients, it covered my fuel costs but there was still the additional insurance and increased mileage. Sorry, slightly off topic, but there are a lot of myths about how much self employed people or directors 'get away with'. Honest ones anyway!

GillT57

I am disturbed by the setting of one generation against another, and this is just another example. It is blatantly obvious, even to a non economist like myself, that increases need to be made in income tax, not NIC, and I say that as someone who pays the former and not the latter. I am not sure what people mean by unearned income as I certainly pay tax on mine. ie the rental from my flat. It would also be fairer to raise the tax threshold at the same time as raising the percentage rate.

Unearned income is income from ownership, profit or interest, so rent would come under 'ownership', and other forms would be dividends, interest on savings, trust funds things like that.

Whilst income tax is the easiest way to raise funds, possibly the fairest way would be to increase capital gains tax, and to reduce the level at which wealth tax is paid. I think it kicks in at £10million, which seems insanely high.

Whitewavemark2

GrannyGravy13

If there is to be an increase in taxation it should be on tax not NI.

Yep, and not just on PAYE. Otherwise unearned income isn’t accounted for etc.

It couldn't just be on PAYE. If they chose to increase the rate of income tax it would affect each taxpayer.

Laura Kuenssberg has just said that it's likely to be 1.25% on NI and, as a sop to the workers, at the same time the triple lock on pensions will be cancelled.

Dinahmo

Laura Kuenssberg has just said that it's likely to be 1.25% on NI and, as a sop to the workers, at the same time the triple lock on pensions will be cancelled.

Ha! The sting in the tail.

I just knew there would be a catch. So pensions will reduce in real terms over time, and nobody will shout, as it'a apparently being done to increase intergenerational fairness.

Do they think we are all stupid? We know the money has to come from somewhere, and most are willing to pay it, if this thread is any barometer. Why not just use taxation, and leave pensions alone? For those with no other pension, this will be a blow, and they won't be paying tax anyway, so it's 'lose/lose'.

Doodledog Petrol and other car expenses are allowed for travelling between one's base and the place where you are working. ie a painter and decorator travelling from his home to his client's house. Social lunches are not allowed but you can claim for the subsistence costs if you are working away from your base. Most accountants would be checking their clients' expenses and excluding those that aren't allowed from the accounts and tax return. They may or may not tell them but most self employed people have no idea what there profits are going to be.

PippaZ "Of course, they will explain that this is NI in the hope that enough people do not realise that NI is a tax like any other."

In fact their 2019 manifesto mentioned NI explicitly - "We will not raise the rate of income tax, VAT or National Insurance." Not that I think they won't try to play the 'this is not tax' card.

But they also promised to sort out the social care situation. So which promise do they break? The one on social care or the NI one? It seems to me that they would have to break one or the other. Maybe they should do what previous governments, from Tony Blair to Theresa May did, and shelve the social care problem! Some people will be unhappy whatever they do, that’s why previous governments, having promised to sort out social care, reneged on their promises, and did nothing.

Good point maddyone.

The material point is that if Boris knew that in order to improve social care he would have to raise taxes (of whatever kind) he should have said so in the manifesto surely, rather than knowing he would have to break one of his pledges or the other?