The Tax Thread

kingstongraham

surrey_commuter said:

rjsterry said:

surrey_commuter said:

john80 said:

surrey_commuter said:

here is a part of a piece in today's Times that shows how Irelad has benefited from lowering corporation tax

Why do Pfizer, Apple, Google, Microsoft, Allergan, Facebook, Oracle, Merck, Boston Scientific, Ingersoll Rand, Dell, Medtronic and SanDisk base their international headquarters in Ireland or book revenues through the country? Presumably not the weather, nor Dublin’s extraordinary cultural endowment. The answer, of course, is tax.

The headline rate of Irish corporation tax is 12.5 per cent, one of the lowest in Europe. There is a lower rate of 6.5 per cent on research and development and intellectual property, which makes Ireland extremely attractive to American technology and life sciences companies. Plus Ireland has no thin capitalisation rules, which means that Irish corporates can be financed with 100 per cent debt, no equity. As a result many US companies based in Ireland pay an effective corporation tax rate somewhere between 0 per cent and 6 per cent.

The benefits to the Irish economy are legion. In 2016-17 foreign firms accounted for 80 per cent of Irish corporation tax and employed 25 per cent of the Irish labour force. Dublin employs a very effective strategy to attract inward investment and maximise benefits to its economy and tax base.

What happens when every country does this. What does Ireland do then. Seems to me this only works for a smaller country close to a larger country kind of thing

You can’t not do things because other countries may copy you.

Why are you so sure that if the CT rates had been reversed those companies would not be in the UK

Clearly there's a bit more to it than just the rate or they'd all be based in Sofia rather than Dublin. I'd suggest a well-educated anglophone workforce was also a consideration.

That has to be be the ultimate straw man argument, you introduced Sofia and then tell me I need to consider a well educated anglophone workforce.

We are talking about the UK rate of CT and looking at what lessons we can learn from Ireland. Am happy to listen to other advantages Ireland has over the UK because I can’t think of any

Has or had?

surrey_commuter

rick_chasey said:

Lol you're all talking higher taxes when the OBR is saying higher taxes or reduced spending is going to put the UK further in the hole.

This is what's going to ruin British democracy.

Most of these policies are inconsequential but are a multi year indication of the direction of travel to keep the markets happy.

Yes I would be cancelling long term vanity projects. If I did believe in counter cyclical spending then I would do it with things that could be turned on and off, not projects lasting decades that will involve expenditure at the wrong point in the cycle

Stevo_666

rick_chasey said:

Lol you're all talking higher taxes when the OBR is saying higher taxes or reduced spending is going to put the UK further in the hole.

This is what's going to ruin British democracy.

You're confusing headline rates of one tax (which accounts for less than 10% of tax revenues)with the total tax take. There is more to it than that - both in terms of other tax revenue streams and the tax base for any particular tax.

rick_chasey

Stevo_666 said:

rick_chasey said:

Lol you're all talking higher taxes when the OBR is saying higher taxes or reduced spending is going to put the UK further in the hole.

This is what's going to ruin British democracy.

You're confusing headline rates of one tax (which accounts for less than 10% of tax revenues)with the total tax take. There is more to it than that - both in terms of other tax revenue streams and the tax base for any particular tax.

I'm not. Where is anyone apart from me on this thread talking about fiscal expansion?

Stevo_666

rjsterry said:

surrey_commuter said:

john80 said:

surrey_commuter said:

here is a part of a piece in today's Times that shows how Irelad has benefited from lowering corporation tax

Why do Pfizer, Apple, Google, Microsoft, Allergan, Facebook, Oracle, Merck, Boston Scientific, Ingersoll Rand, Dell, Medtronic and SanDisk base their international headquarters in Ireland or book revenues through the country? Presumably not the weather, nor Dublin’s extraordinary cultural endowment. The answer, of course, is tax.

The headline rate of Irish corporation tax is 12.5 per cent, one of the lowest in Europe. There is a lower rate of 6.5 per cent on research and development and intellectual property, which makes Ireland extremely attractive to American technology and life sciences companies. Plus Ireland has no thin capitalisation rules, which means that Irish corporates can be financed with 100 per cent debt, no equity. As a result many US companies based in Ireland pay an effective corporation tax rate somewhere between 0 per cent and 6 per cent.

The benefits to the Irish economy are legion. In 2016-17 foreign firms accounted for 80 per cent of Irish corporation tax and employed 25 per cent of the Irish labour force. Dublin employs a very effective strategy to attract inward investment and maximise benefits to its economy and tax base.

What happens when every country does this. What does Ireland do then. Seems to me this only works for a smaller country close to a larger country kind of thing

You can’t not do things because other countries may copy you.

Why are you so sure that if the CT rates had been reversed those companies would not be in the UK

Clearly there's a bit more to it than just the rate or they'd all be based in Sofia rather than Dublin. I'd suggest a well-educated anglophone workforce was also a consideration.

I was just about to say that there are other factors, but you can't affect the local language or the weather for example, but you can change the tax rates and tax system. Ireland isn't too bad a place on the other fronts already, but clearly their tax environment has brought them considerable benefits.

rjsterry

surrey_commuter said:

rjsterry said:

surrey_commuter said:

john80 said:

surrey_commuter said:

here is a part of a piece in today's Times that shows how Irelad has benefited from lowering corporation tax

Why do Pfizer, Apple, Google, Microsoft, Allergan, Facebook, Oracle, Merck, Boston Scientific, Ingersoll Rand, Dell, Medtronic and SanDisk base their international headquarters in Ireland or book revenues through the country? Presumably not the weather, nor Dublin’s extraordinary cultural endowment. The answer, of course, is tax.

The headline rate of Irish corporation tax is 12.5 per cent, one of the lowest in Europe. There is a lower rate of 6.5 per cent on research and development and intellectual property, which makes Ireland extremely attractive to American technology and life sciences companies. Plus Ireland has no thin capitalisation rules, which means that Irish corporates can be financed with 100 per cent debt, no equity. As a result many US companies based in Ireland pay an effective corporation tax rate somewhere between 0 per cent and 6 per cent.

The benefits to the Irish economy are legion. In 2016-17 foreign firms accounted for 80 per cent of Irish corporation tax and employed 25 per cent of the Irish labour force. Dublin employs a very effective strategy to attract inward investment and maximise benefits to its economy and tax base.

What happens when every country does this. What does Ireland do then. Seems to me this only works for a smaller country close to a larger country kind of thing

You can’t not do things because other countries may copy you.

Why are you so sure that if the CT rates had been reversed those companies would not be in the UK

Clearly there's a bit more to it than just the rate or they'd all be based in Sofia rather than Dublin. I'd suggest a well-educated anglophone workforce was also a consideration.

That has to be be the ultimate straw man argument, you introduced Sofia and then tell me I need to consider a well educated anglophone workforce.

We are talking about the UK rate of CT and looking at what lessons we can learn from Ireland. Am happy to listen to other advantages Ireland has over the UK because I can’t think of any

Eh? I'm just suggesting why Apple, etc picked Ireland rather than one of the other low CT countries. Clearly the tax rate is a significant consideration; just not the *only* consideration. There's a fairly clear split between higher CT rates in the wealthier countries and lower rates in the less developed ones (with a couple of outliers like Liechtenstein) and it looks like we're already at the lower end of the wealthier group.

rjsterry

Stevo_666 said:

rjsterry said:

surrey_commuter said:

john80 said:

surrey_commuter said:

here is a part of a piece in today's Times that shows how Irelad has benefited from lowering corporation tax

Why do Pfizer, Apple, Google, Microsoft, Allergan, Facebook, Oracle, Merck, Boston Scientific, Ingersoll Rand, Dell, Medtronic and SanDisk base their international headquarters in Ireland or book revenues through the country? Presumably not the weather, nor Dublin’s extraordinary cultural endowment. The answer, of course, is tax.

The headline rate of Irish corporation tax is 12.5 per cent, one of the lowest in Europe. There is a lower rate of 6.5 per cent on research and development and intellectual property, which makes Ireland extremely attractive to American technology and life sciences companies. Plus Ireland has no thin capitalisation rules, which means that Irish corporates can be financed with 100 per cent debt, no equity. As a result many US companies based in Ireland pay an effective corporation tax rate somewhere between 0 per cent and 6 per cent.

The benefits to the Irish economy are legion. In 2016-17 foreign firms accounted for 80 per cent of Irish corporation tax and employed 25 per cent of the Irish labour force. Dublin employs a very effective strategy to attract inward investment and maximise benefits to its economy and tax base.

What happens when every country does this. What does Ireland do then. Seems to me this only works for a smaller country close to a larger country kind of thing

You can’t not do things because other countries may copy you.

Why are you so sure that if the CT rates had been reversed those companies would not be in the UK

Clearly there's a bit more to it than just the rate or they'd all be based in Sofia rather than Dublin. I'd suggest a well-educated anglophone workforce was also a consideration.

I was just about to say that there are other factors, but you can't affect the local language or the weather for example, but you can change the tax rates and tax system. Ireland isn't too bad a place on the other fronts already, but clearly their tax environment has brought them considerable benefits.

Yes, they have managed to hit the sweet spot in what they can offer larger businesses as a whole package.

rjsterry

Hmm, well that's a bit higher than was hinted at beforehand.

The rate will be tapered so that only businesses with profits of more than £250,000 will be taxed at the full 25% rate; that means only 10% of companies will pay the full higher rate. Companies with profits of less than £50,000 will remain at 19%.

Slightly surprised that only 10% of businesses make >£250K profit, but then there are a lot of one man band limited companies.

pblakeney

rjsterry said:

Hmm, well that's a bit higher than was hinted at beforehand.

The rate will be tapered so that only businesses with profits of more than £250,000 will be taxed at the full 25% rate; that means only 10% of companies will pay the full higher rate. Companies with profits of less than £50,000 will remain at 19%.

Slightly surprised that only 10% of businesses make >£250K profit, but then there are a lot of one man band limited companies.

Not after 6th April there won't.

surrey_commuter

rjsterry said:

Hmm, well that's a bit higher than was hinted at beforehand.

The rate will be tapered so that only businesses with profits of more than £250,000 will be taxed at the full 25% rate; that means only 10% of companies will pay the full higher rate. Companies with profits of less than £50,000 will remain at 19%.

Slightly surprised that only 10% of businesses make >£250K profit, but then there are a lot of one man band limited companies.

I am wondering why he is only raising taxes on those with the ways and means to avoid it

surrey_commuter

pblakeney said:

rjsterry said:

Hmm, well that's a bit higher than was hinted at beforehand.

The rate will be tapered so that only businesses with profits of more than £250,000 will be taxed at the full 25% rate; that means only 10% of companies will pay the full higher rate. Companies with profits of less than £50,000 will remain at 19%.

Slightly surprised that only 10% of businesses make >£250K profit, but then there are a lot of one man band limited companies.

Not after 6th April there won't.

What happens onApril 6th?

sungod

surrey_commuter said:

rjsterry said:

Hmm, well that's a bit higher than was hinted at beforehand.

The rate will be tapered so that only businesses with profits of more than £250,000 will be taxed at the full 25% rate; that means only 10% of companies will pay the full higher rate. Companies with profits of less than £50,000 will remain at 19%.

Slightly surprised that only 10% of businesses make >£250K profit, but then there are a lot of one man band limited companies.

I am wondering why he is only raising taxes on those with the ways and means to avoid it

because he knows they'll avoid it and the pipeline of party funding will continue unabated?

i.e. why he doesn't go after capital gains and carried interest taxes

Stevo_666

The corp tax rate rise isn't kicking in until 2023 anyway.

pblakeney

surrey_commuter said:

pblakeney said:

rjsterry said:

Hmm, well that's a bit higher than was hinted at beforehand.

The rate will be tapered so that only businesses with profits of more than £250,000 will be taxed at the full 25% rate; that means only 10% of companies will pay the full higher rate. Companies with profits of less than £50,000 will remain at 19%.

Slightly surprised that only 10% of businesses make >£250K profit, but then there are a lot of one man band limited companies.

Not after 6th April there won't.

What happens onApril 6th?

IR35. You either know and care, or don't.

Pross

pblakeney said:

surrey_commuter said:

pblakeney said:

rjsterry said:

Hmm, well that's a bit higher than was hinted at beforehand.

The rate will be tapered so that only businesses with profits of more than £250,000 will be taxed at the full 25% rate; that means only 10% of companies will pay the full higher rate. Companies with profits of less than £50,000 will remain at 19%.

Slightly surprised that only 10% of businesses make >£250K profit, but then there are a lot of one man band limited companies.

Not after 6th April there won't.

What happens onApril 6th?

IR35. You either know and care, or don't.

Been around for ages hasn't it and it's pretty simple to be able to avoid being "disguised" employment unless things are changing.

pblakeney

Pross said:

pblakeney said:

surrey_commuter said:

pblakeney said:

rjsterry said:

Hmm, well that's a bit higher than was hinted at beforehand.

The rate will be tapered so that only businesses with profits of more than £250,000 will be taxed at the full 25% rate; that means only 10% of companies will pay the full higher rate. Companies with profits of less than £50,000 will remain at 19%.

Slightly surprised that only 10% of businesses make >£250K profit, but then there are a lot of one man band limited companies.

Not after 6th April there won't.

What happens onApril 6th?

IR35. You either know and care, or don't.

Been around for ages hasn't it and it's pretty simple to be able to avoid being "disguised" employment unless things are changing.

Things have changed. Game over.
There are options but all are half baked that will satisfy nobody.

elbowloh

I'm currently working on a contract, inside IR35. First time I've ever worked contract, so didn't experience the heyday of not paying much tax.

I get paid a decent rate, get paid annual leave etc and pay a normal level of tax for the services that the government provides.

Pross

I suspect that most of the Ltd Contractors currently outside IR35 will just up their rates to cover the additional tax. It will still be a cheaper alternative than using their own staff and the market sets the rate.

pblakeney

Pross said:

I suspect that most of the Ltd Contractors currently outside IR35 will just up their rates to cover the additional tax. It will still be a cheaper alternative than using their own staff and the market sets the rate.

Not what I'm seeing. I know of one major bluechip company that have not increased rates in 12 years. They are struggling to recruit yet won't shift. There is always a supply of naive. Supply and demand in engineering has tipped towards a glut of supply aided by the crash of oil & gas and the rates in other fields appear to be similar.

Oh, and it assumes that the contractors have not already maxed out their rates within the market during negotiations.

rjsterry

Stevo_666 said:

The corp tax rate rise isn't kicking in until 2023 anyway.

Still somewhat counter to the points we were discussing yesterday. I find the idea that £250k or more profit is something only attainable for really large companies a bit odd.

Tim Montgomerie seems to have lost faith in Sunak.

https://twitter.com/montie/status/1367224967356637187?s=19

pblakeney

rjsterry said:

Stevo_666 said:

The corp tax rate rise isn't kicking in until 2023 anyway.

Still somewhat counter to the points we were discussing yesterday. I find the idea that £250k or more profit is something only attainable for really large companies a bit odd.

Tim Montgomerie seems to have lost faith in Sunak.

https://twitter.com/montie/status/1367224967356637187?s=19

Also not attractive to potential new international incomers.

rick_chasey

It’s moronic. The UK went through a decade of austerity for what exactly? To then cut overall spending as they try to overcome the pandemic and the cost of brexit.

I mean f@ck me.

kingstongraham

He seems to have been gung ho last September and cautious now.

secretsam

Pross said:

pblakeney said:

surrey_commuter said:

pblakeney said:

rjsterry said:

Hmm, well that's a bit higher than was hinted at beforehand.

The rate will be tapered so that only businesses with profits of more than £250,000 will be taxed at the full 25% rate; that means only 10% of companies will pay the full higher rate. Companies with profits of less than £50,000 will remain at 19%.

Slightly surprised that only 10% of businesses make >£250K profit, but then there are a lot of one man band limited companies.

Not after 6th April there won't.

What happens onApril 6th?

IR35. You either know and care, or don't.

Been around for ages hasn't it and it's pretty simple to be able to avoid being "disguised" employment unless things are changing.

Nope, they've tightened up the rules significantly; it used to be a joke, but in the last few years they are paying attention. It's still possible to get around it, but you can't take the p155 like you used to
Source: work in consultancy, know lots for whom IR35 is a thing!

secretsam

Has anyone else commented that the effective lowering of the tax thresholds is quite regressive? Over a million people will be dragged into paying tax. All because they made some long-forgotten promise in an election that happened before the world turned upside down.

kingstongraham

secretsam said:

Has anyone else commented that the effective lowering of the tax thresholds is quite regressive? Over a million people will be dragged into paying tax. All because they made some long-forgotten promise in an election that happened before the world turned upside down.

The whole budget is built around keeping the debt forecast to 99% of GDP instead of 100% while not breaking that promise.

I did a calculator and it said I'm going to be £49 better off as a result of the changes.

rick_chasey

kingstongraham said:

secretsam said:

Has anyone else commented that the effective lowering of the tax thresholds is quite regressive? Over a million people will be dragged into paying tax. All because they made some long-forgotten promise in an election that happened before the world turned upside down.

The whole budget is built around keeping the debt forecast to 99% of GDP instead of 100% while not breaking that promise.

I did a calculator and it said I'm going to be £49 better off as a result of the changes.

https://twitter.com/michaelujacobs/status/1367093448482975744?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1367093448482975744%7Ctwgr%5E%7Ctwcon%5Es1_&ref_url=https%3A%2F%2Fforum.bikeradar.com%2Fdiscussion%2F13100964%2Fleave-the-conservative-party-and-save-your-country%2Fp117

Pross

Didn't know where best to put this but I caught the end of an interview with a nurse and doctor about NHS pay and I'm sure the nurse said that any rise below 12.5% will be unacceptable. I can't help thinking if that is an expectation they will be disappointed. Do I think nurses are underpaid? Yes but a 12.5% rise is just not realistic (there was also the usual comment about "real terms paycuts" which always grates no matter who uses it).

rick_chasey

Pross said:

Didn't know where best to put this but I caught the end of an interview with a nurse and doctor about NHS pay and I'm sure the nurse said that any rise below 12.5% will be unacceptable. I can't help thinking if that is an expectation they will be disappointed. Do I think nurses are underpaid? Yes but a 12.5% rise is just not realistic (there was also the usual comment about "real terms paycuts" which always grates no matter who uses it).

In the context of the length of the freeze prior and the pandemic you can see why they'd anchor the negotiations that high.

I expect those kinds of rises in my job (which I appreciate is an entirely different context) as an absolute minimum and less I take as my firm telling me to leave.

kingstongraham

Pross said:

Didn't know where best to put this but I caught the end of an interview with a nurse and doctor about NHS pay and I'm sure the nurse said that any rise below 12.5% will be unacceptable. I can't help thinking if that is an expectation they will be disappointed. Do I think nurses are underpaid? Yes but a 12.5% rise is just not realistic (there was also the usual comment about "real terms paycuts" which always grates no matter who uses it).

Why does that grate when it accurately describes the situation?

If prices rise and pay doesn't, then you can buy less than you could before. That's a real terms pay cut.