Tag Archives: self assessment

The taxless recovery – Flip Chart Fairy Tales

This is no ordinary recovery, according to Flip Chart Fairy Tales. Not only has it taken a hell of a long time to do not very much, it’s seen collapsing productivity and very little wage growth, even for those who appear to be highly skilled. As a result of all this, even though the economy grew at over 3 percent, tax revenues didn’t increase at the same rate.

As Ben Chu’s chart shows, most of the rise in tax revenue since the recession is due to VAT.

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Record numbers of people in employment, it seems, hasn’t led to record levels of income tax.

When you break out the figures for income tax, as Michael O’Connor did earlier this week, there is a marked difference between receipts from those on PAYE and those on self-assessment.

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Falling self-assessment receipts are, for the most part, a symptom of falling self-employment incomes. Around three-quarters of the employment growth since the recession has come from self employment yet between them, the self-employed are still delivering a lot less tax. We won’t see the final 2013 HMRC figures for self-employment incomes until January but these charts suggest that the spectacular fall in self-employment earnings between 2008 and 2012 hasn’t improved by much. Probably the closest estimate we have for self-employed pay since 2012 is by Laura Gardiner at the Resolution Foundation. The low tax receipts indicate that self-employed earnings may have continued to fall or are, at best, stagnating.

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Things might be about to get worse for some of the self-employed. As Ben Dellot explains, the new Universal Credit system could leave many of them worse off. According to the RSA’s calculations, 37 percent of the self-employed earn less than the minimum income floor, which is set at around the full-time minimum wage. (That sounds about right. A study by the IFS found that 40 percent of the self-employed earn less than the minimum wage.) Not all the self-employed currently claim tax credits but those who do, and who fall below the income floor under the new system, will find their benefits cut. The self-employed now account for almost a fifth of tax credit claimants so this is likely to affect a lot of people.

Read the rest of the article on Flip Chart Fairy Tales.

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The self-employment deception will leave Osborne wrong-footed over tax returns

Not the whole story: But it seems unemployed people claiming they are self-employed may still be part of it.

Not the whole story: But it seems unemployed people claiming they are self-employed may still be part of it. [Image: Ros Asquith in The Guardian]

It seems a surge in the number of people who say they are self-employed is not (solely) due to a DWP wheeze that gets people off the unemployment statistics after all.

Instead, Flip Chart Fairy Tales warns that a lot of people are staying in self-employment rather than becoming employees again or retiring.

This suggests that either they have not been able to reach their target in terms of pensions, or there are no jobs available for people of their particular expertise or experience. The latter seems likely to Yr Obdt Srvt, who is currently trying to make Vox Political a workable concern in order to make a buck or two.

FCFT warns that “this is old-timers seeing their business shrink, rather than newbies trying to find their feet, under-charging and messing things up”.

The figures also show an increase in the number of self-employed tax credit claimants, lending credence to Vox Political‘s long-held belief that Job Centre Plus advisors have been telling jobseekers to pretend they are self-employed in order to get them off the books – let’s not write off that idea too quickly.

And a steady rise in non-VAT-paying businesses not only tells us “a lot of low-profit and low-turnover businesses are hanging on in there, or a lot more of them have become low-profit and low-turnover businesses since 2008”, it tells us that George Osborne will have a nasty surprise in January, when their tax returns come in.

If they are not paying VAT, they are not clearing the earnings threshold that would make such payments necessary. This mitigates against their earnings having increased significantly since the disasters of 2008-2012, when self-employed earnings fell by £8 billion.

So it seems our dancing Chancellor (see yesterday’s post) will find that either the music stops or the tune will change significantly…

Less ‘Gold’ by Spandau Ballet; more ‘I Don’t Need This Pressure On’.

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