What will the home office announce tomorrow?

[Hernancortes]

"Can you not leave?"

Yeah. I'm seriously considering it. The Orwellian ID card scheme should make everybody very afraid. I

[OL7MAX]

"Can you not leave?"

Yeah. I'm seriously considering it. The Orwellian ID card scheme should make everybody very afraid.

If my wife wasn't born and brought up in the UK and my children weren't settled in school here I'd leave before you could say ID Card Database. It's still a possibility and I'm working on convincing the wife that while millions of people want to come here this country is actually going down the pan and it's time we bailed. 90% (effective) tax, an ID Card Database that's a charter for identity thieves, a criminal justice system that's in meltdown (no, it won't improve under Reid), and even a sneaky database on my kids and how well or badly I'm bringing them up. And that's just the beginning.

Over the last few years you've lost
- the right to trial by jury
- an Upper House that wasn't ideal but at least wasn't filled with Tony's Cronies
- the presumption of innocence (until proven guilty)
- the ability to conduct peaceful demonstrations outside Parliament (most applications are turned down)
- the right to not be extradited / the right to be tried in this country for alleged crimes against UK companies or individuals
- the ability to go about your daily business free from constant government spying
- the moral high ground on issues like not invading other sovereign countries to protect your oil supplies
- the confidentiality you enjoyed with your professional advisors (lawyers, accountants etc.) They are now required to snitch on you!

There are other things I need to get on with... or I'd have continued with my list. Maybe the most effective form of immigration control is publicity: Tell immigrants what the UK is really, really like.

Sorry for going off-topic.

[John]

OL7MAX, I totally agree with you on ID cards but can you explain "90% (effective) tax"?

[OL7MAX]

I run a business. It grosses a few hundred thousand every year. See tax breakdown below.

Notes: Business Rates vary widely but about 5% for most businesses. The govt doesn't like me taking no salary and paying myself a big chunk in dividends so I HAVE to pay myself a big salary. National Insurance figures below include both employer and employee's contributions

In percentages

VAT ========17.5
Bus. Rates=====5.0
Corporation Tax=20.0
================
Total======== 42.5%

On the rest I pay

National Insurance 23.8%
PAYE 40%
=================
Total 63.8% of what's left

In addition to all of those, and out of the remaining income, I pay tax on petrol, I pay thousands in London congestion charges, and on millions of other things. If I sell any of my business assets I then also pay capital gains tax on that and stamp duty on premises I buy. What I get to take home is then taxed in a variety of novel ways from TV tax to road tax to council tax. And, if tax drives me to suicide my family will pay Death Tax.

OK, there are small figures like personal allowances - and not all income is taxed at 40% - but in total it does work out to more than 90%. And that's not including all the additional costs I have as a result of red tape (from DPR registration to managing the tax credits system on behalf of the government to hiring more accountants than any small business should.)

[John]

The govt doesn't like me taking no salary and paying myself a big chunk in dividends so I HAVE to pay myself a big salary.

Taking no salary would not be a good idea but there is absolutely no need for you to take a big salary unless you might have IR35 problems.

As regards your figures, you can't just add percentages together like that and get a meaningful conclusion. And by the way, what is 20% Corporation Tax?

And "on the rest" you don't pay 40% PAYE, given that you are failing to take account of your Personal Allowance, the 10% band and the 22% band.

Also any salary, and employer's NI, is no doubt a business expense and thus reduces the profit liable to Corporation Tax.

I am not saying taxes are low, but let's not exaggerate here.

[OL7MAX]

but let's not exaggerate here

I don't believe it's an exaggeration. The London Congestion Charge alone can exceed the tax "savings" via the personal allowance, the 10% band and the 22% band.

you can't just add percentages together like that and get a meaningful conclusion

I agree, you can't. 42.5 + 63.8 gives 106.3% which is obviously flawed. The total of those five taxes and all the others is circa 90% in real terms after allowances.

What you do is take the gross earnings and work out how much has gone in tax. Your annual accounts won't give you the true picture because it's leaves VAT out, it counts other taxes under "expenses" in your Profit and Loss Account etc. It's cleverly designed so you don't feel the squeeze.

You've got to strip VAT from your (personal) petrol bill, add council tax, work out what part of your airline ticket went directly to the government, add up your parking charges at government car parks - you won't believe how clever the tax system is. If you pay child maintenance (I don't) a portion is skimmed off to run the CSA - that's tax. Have you ever paid a "prescription charge"? That's tax. Renewed your passport recently? I could go on.

If you work backwards, count every penny you've paid anywhere that went directly to the government, and work it out as a percentage of your income, then it exceeds 90%. I know it sounds incredible and my accountant didn't believe me till I sat down with him and proved it.

But maybe we can agree to disagree on this (till we meet and do some accounts together).

[EJ]

Dear OL7MAX,

Could you please explain why you cannot just pay yourself dividends as a director of your company? I know the tax saving wouldn't be much as you would pay 35% tax on dividends received if you are a higher rate tax payer. I am just interested to know how the regulations force you to pay yourself a salary?

Thanks

EJ

[JAJ]

1. Foreign Nationals living in the UK would fund part of this process which I think is not fair. The immigration charges currently are already exhorbitant and I see a further increase which will make it more expensive. Canada has reduced is RPRF to make their country more attractive to immigrants and we are scarring them off!

But the United Kingdom is not Canada. Canada is quite relaxed about the idea of its population increasing by 10-15% over the next generation, but then it has the space to accommodate this.

Leaving aside some specific regional issues (eg Scotland), I cannot see mainstream British opinion tolerating immigration flows that could add 6-10 million to the United Kingdom population over a generation.

So there is no basis for the UK immigration system to be designed to "attract" migrants. Remember also, that under its EU obligations there is already plenty of scope for immigration into the UK from EU/EEA states, and that where dependents of such persons require visas, there is no possibility to charge for such permits (meaning that the cost must be spread across non-EEA applicants).

[John]

Could you please explain why you cannot just pay yourself dividends as a director of your company? I know the tax saving wouldn't be much as you would pay 35% tax on dividends received if you are a higher rate tax payer. I am just interested to know how the regulations force you to pay yourself a salary?

I shall also be fascinated by that explanation!

[*LINDA*]

Silly question, but why do you have to refer to them using a colour?

Because I am emphasising the dearly beloved overtones of British citizens' perceptions of illegal immigration.

And sadly that is not just over there but here (in US) as well!!! Good luck with getting rid of illegals. That same problem is happening here in California with millions of people coming from Central America.

My mind set is if they are working steadily and not depending on the government to support them financially, make them legals and have them pay taxes!

[OL7MAX]

EJ, we could argue the nitty gritty of how I've arranged my personal tax affairs, and why. But, the core of the argument remains undeniable - the tax you pay is far more than you think it is. You may organise your affairs to minimise tax but here's my contention: No (legal) business owner pays less than 70% of his gross (very rare exceptions - like if all your earnings are through an offshore company and you make no drawings). And in many cases it is over 90%. Like mine.

If you change house every five years many could add £10,000 (£2,000 per year) in stamp duty. Drive 10,000 miles a year? You're paying another £2,000 in various taxes there alone (without counting tolls, parking fees, and parking permit costs). Add a dollop of council tax at £1,500 and you've got over £5,000 - or more than 33% of what the average take home page is after NI and income tax - on just those. Paying at point of delivery for any other central or local government services - like planning applications, passports etc? That's all stuff that should come out of tax you've already paid but you pay again.

What I'm saying is that if you shed your traditional way of calculating tax and work out instead how much of your money reaches governments, quangos, councils etc. you'll likely agree my figures.

Linda, that's an enlightened view and I couldn't agree more. And it gets us back on topic. The fairness of tax is my driving argument. The government would need far less tax from the legal population if the II were taxed. An estimated £5 - £15 billion is waiting to be collected. I've no idea how many nurses or policemen that "buys" but if £5 billion went to the HO they could build a 50 ft high electrified wall across the entire land border between the UK and mainland Europe.... and still have 5,000 million pounds to spare.

[JAJ]

I've no idea how many nurses or policemen that "buys" but if £5 billion went to the HO they could build a 50 ft high electrified wall across the entire land border between the UK and mainland Europe.... and still have 5,000 million pounds to spare.

Not sure what you mean by "land border with mainland Europe".

[OL7MAX]

It was meant as a joke. £5 billion - £0 = £5 billion? Maybe it was a bit obtuse. Sorry.

[marianne001]

Not so easy to see how this fits in with the assertion that "most immigrants are from Australia, Canada and the US".

Sorry, you're right. I actually read that in the "Life in the UK" book but after looking at it again it refers to the 1980s! Well..that's what it says.