Wednesday, August 20, 2014

Wage Price Crash

Income for self-employed crashes 22%

The number of people who are self-employed has increased by over 730,000 in the past six years, but average income has slumped by 22 per cent, a new study has revealed. Around 4.6 million people now work for themselves, more than at any time in the past 40 years, according to the Office for National Statistics.

Posted by khards @ 08:05 PM (5708 views)
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11 thoughts on “Wage Price Crash

  • stillthinking says:

    Khards, I was about to post this when it said duplicate post. And also that place near Clacton-on-Sea gets tidal warnings, I could have drowned (but with a tiny mortgage!)…..

    Anyway, the reason why this is happening is, IMO, because when you are self-employed you get way more options to reduce your tax. For me tax and rent are my financial problems. So -even if- your money goes down, you get more of it, and also I think this is similar to Gordon Browns disastrous mistake with the doctors, by giving them a large pay rise and pushing them into the highest band, it made more sense for them to cut their working months down to 8, coincidentally pushing their demand up.

    I see this happening, and its what I intend to do. I live in London, I am in the 40% band and I know that by the time I have paid my rent, travel and tax at 40%, the last few months are not worth it, and of course I can’t afford anywhere decent to live, and there is certainly going to be shortages of public provision of teaching and healthcare for my son.

    So, I don’t see this as the income collapse story that the independent makes it out to be, I see this as people going round the houses to increase their take home. Income tax is only part of it, your contribution from your VAT payments are about half of that. This all breaks down when people start having their families in the EU and they fly over and rent a room for the week (yes it is common and also for the people who downsized out of London). When Dianne Abbott states that whichever party takes power they will have to raise taxes, no. Its too high already. I don’t think there is anyway to increase tax revenue now only reduce it.

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  • If you ever do want a mortgage be careful with tax avoidance. Under MMR the bank will look at your tiny earnings of £5400 and disregard your ‘other’ income.

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  • Increase in numbers self-employed and a decrease in their earnings. Why? Because most of the newly self-employed became such out of desperation. They are likely to employ no-one apart from themselves, to have insufficient work, to have no pension provision and not to regard themselves as ‘entrepreneurs’. Self-employment has grown most in areas where the number of employee jobs is in decline. And somebody on two or three zero-hours contracts is ‘self-employed’.

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  • wages might be dropping but….you can still borrow ALL YOU WANT!!

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  • The problem with self employment, at that economy of scale, the 20% VAT rate IS the margin you WOULD HAVE lived on.

    Also, small businesses tend to be part of complex supply chains where VAT is chargeable and a drag on every step, all of which do not exist in a large corporation, where the same transactions are internal to the company. VAT and business rates are DESTROYING small business. In addition, they cannot afford National Insurance and yet they are the source of new employment.

    We need to slash taxes not only for corporations but also for the self employed and small businesses.

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  • I don’t think the “self-employed” – which in today’s Conspeak means those scratching a living as icarus says – have many opportunities to reduce their income tax, other than by paying none because they earn so little. Taxation is only too high in the sense that it is regressive – most is paid by low earners. Tax on the wealthy needs to be higher, including corporations, especially the tax fiddlers.

    I don’t see that doctors only work 8 months a year. The ones I see work all year round.

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  • 1. Stillthinking ,

    In order to prosper one would pretty well have to have dodgy offshore arrangements , for instance have your own Bahama’s registered company which sells you all your materials at a price which means you never make a taxable profit in the UK .

    You say “I don’t think there is anyway to increase tax revenue now only reduce it.”

    I think you are right – there is next to no scope for increasing taxes on employment including self employment and SME’s .

    Somehow I think our politicians are going to have to learn the hard way that you cannot get blood out of a stone – even with the full force of the law behind you .

    People aren’t treading water anymore , they are drowning .

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  • I think Libertas is making a wonderful case for the tax shift, off of VAT and wages and to Land Value Taxation and other natural resources and monopolies taxes, which would solve all the stated issues and create many more benefits.

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  • No, Pete, you completely put words in my mouth. My believe is that if those taxes I mentioned were slashed, that the economy would boom, creating more tax receipts from other taxes that are retained. Corporation and income tax receipts would soar, taking up the slack.

    You know full well that I am against any new taxes. Taxes are the problem, not the solution, and those we have should not be limiting employment and entrepreneurship, but that is what these taxes target, and they are not scalable for small business operations.

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  • a friend owned a chippy, when he found out vat would be going up to 20% he sold up and left country the chippy under new ownership is struggling since the vat increase, 2.5% increase doesn’t sound much I believe it killed many small businesses

    As for self employment the tax system is becoming too complex for anyone who is sane or not gordon brown

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  • I employed about ten people for a day. Was shocked to find out that I would pay folk £85 for a day’s work, and it would cost me around £140 all said and done, after the taxes and payroll costs. Just awful, and they just made it worse by requiring monthly payroll returns. Urgh.

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