The 2022/23 tax year is drawing to a close, there are some simple tax planning…
“Given the limited time to gather thoughts and present them properly whilst having questions fired at you without warning just after waking up and barely aware of your surroundings whilst on the Radio (…!), I thought it would be useful to put these in a more coherent form.
Do tax cuts lead to economic growth? This is very difficult to measure. Tax changes and policies certainly do impact on people’s decision making and we directly experience that: for years, we gave advice to non-UK domiciled individuals coming to the UK; since Brexit, we are advising more and more on non-doms leaving the UK. Margaret Thatcher made considerable tax cuts and, although the gap between the rich and the poor has grown in the interim, probably as a result, it is also very clear that the standard of living for the vast majority of people in the UK has improved considerably.
As for the removal of the limit on banker’s bonuses, this is a red herring: the point is that it never actually did what was intended. Perhaps the better policy would have been to make it fit for purpose. However, the real story is the lifting of regulations in the financial services industry. On the one hand, we all know what happened the last time the industry was not properly regulated. On the other, it is perhaps over regulated, which is certainly the experience of advisors and their clients. But why lift them? The aim is to attract more people to work in financial services, and there is a huge need here: all of the IFAs we speak to have a ridiculous amount of work to do. It is a well paid profession and therefore a greater number of people working in it with high incomes will lead to more tax being collected. It also makes sense for the Government to push this industry: it has been very successful in the past, and the UK – with its limited land mass, particularly compared to China and India – means it is better suited to service industries, where all you need is a desk and a laptop, rather than goods industries, requiring large factories.
Unfortunately, the media do not seem to focus on the above and would prefer to focus on bankers’ bonuses and the rich getting richer. Not that the politicians help themselves with their continuous political spin and concern about saying the right thing.
That said, I was Team Rishi anyway.”
Ben Gander, 6th October 2022