I am of course talking about Boris Johnson’s new Health and Social Care Levy – which is not just a tax but a gateway tax!
It turns out that the long foreseen problems of increasing costs of an ageing population have come to the top of the PM’s to do list and the fairest way to solve this problem is to make the people who are least likely to benefit pay for the cost. The 1.25% tax rise on personal and 1.25% tax rise on company NI contributions is paid for by those in work. At least the triple lock was rescinded – but there is an intergenerational divide and if you are 40 under – you are on the losing side.
Of all the options open to the government; raising income tax, raising NI rates, making pensioners pay NI, raising VAT, increasing corporation tax, raising CGT, introducing a LVT or taxing property wealth (or any wealth for that matter), raising National Insurance has to be distinctly, calculatedly and almost callously mean-spirited.
I’ll not go through the numbers on who will pay what and how much it’ll cost or raise – but let’s just say that if you are on the side of work – as in, you work for your money – you’ll pay more. If on the other hand you don’t work for your money and your money works for you – you’ve nothing to worry about.
It goes against the BS of how capitalism is best for economic growth. Here, the tax is on business activity and not paid for by the holders of capital. It’s almost as if capitalism is about making the rich richer and the workers work harder…
On the one hand, on principle, I don’t agree with what was done. But on the other, you’ve got to play the hand that you are dealt. This is actually not too bad for me personally. I’ve earned most of my lifetime income already, so the tax isn’t a big hit. Also, as I’m sure you’ve already worked out – you can have a million pounds in ISAs, savings & Pensions, live in a million pound house and pay no tax or NI at all*, whilst someone on the (just about) living wage will not only pay more tax than you but will now pay more tax. Not to mention how being on the side of wealth has been a more comfortable ride than being on the side of work over the last few (or any number) of years. If you save your money, invest it wisely and sit back – you can relax knowing that you’ll be fine without breaking a sweat. Isn’t that what Financial Independence is all about?
*There is council tax, but when you million pound house is increasing in value by 10% a year – you don’t have to worry about which Band you are in.
If I was 10 years younger, I’d be drawing up a list of places to emigrate to. The current government had a chance to tax the wealthy but didn’t do it. I’m grateful and saddened at the same time. I’m almost 40 with kids, I’m FI already – work is optional – this doesn’t affect me as much as others. It will be interesting to know if you can salary sacrifice yourself out of this tax rise – that would be my solution to this taxing problem. The tax increase on dividends is also a concern but you’d be probably best to move all of your money away from companies that pay dividends anyway – if a company can’t think of a better way to invest its money than to pay it back to shareholders, it’ll probably go extinct.
But it’s shocking that they’ve done this and will get away with it because pensioners vote and the liberal vote is split between Labour, the LibDems and the Greens, also the next election is years from now.
This new tax rise won’t be the last and it’ll increase and expand – but be under no misunderstanding, the beneficiaries will not be the ones paying for it.