Having made policy decisions effectively abandoning +3 million taxpayers without meaningful financial support since the beginning of the pandemic, ExcludedUK is astounded that the Chancellor now expects them to finance the recently announced increases in tax and National Insurance (NI). Far from the 1.25% rise that has been widely reported, the increase is actually a 1.25 percentage point rise. This sounds like a technicality, but it’s an important distinction; anyone currently paying NI at a rate of 12% will pay at 13.25% instead. So a 1.25 percentage point rise to your tax rate could be about ten times larger than a 1.25% rise on your tax bill.
Similarly, the increase in dividend taxation by 1.25 percentage points will hit limited company directors who rely on income from share dividends.
The tax and NI increase is a double whammy for the self-employed and limited company directors – and some are being taxed as both employers and employees. These are people who do not have piles of spare cash from which to fund these tax hikes, and many have had to use whatever savings they had during the pandemic, having been left without any meaningful Government Covid-19 support.
Sunak’s assertion concerning the projected revenue that will be generated by these tax increases belies his claim that these calculations were ‘too difficult’ to work out when COVID-19 financial support schemes were being discussed.
The Treasury has had over 18 months to work out a solution for the people ExcludedUK represents – but +3 million UK taxpayers continue to be left out in the cold. This is not an oversight. It is down to active and arbitrary policy decisions on the part of the Treasury.
The Government’s lack of understanding of small limited company directors and implications of the ‘fat cat’ image of being high earners is very misleading. These are people who are hairdressers, beauticians, plumbers, electricians, dog groomers, charity workers, teachers, arts professionals and creatives, so often referred to as the backbone of the UK economy. Furthermore, the repeated insinuation that any scheme proposed to cater for limited company directors was vulnerable to fraud is unfounded and incredibly damaging.
Despite ExcludedUK’s repeated calls to the Treasury to address the issue, +3 million taxpayers will continue to face severe financial hardship for years to come.
To add further insult to injury, Sunak claims he wants the UK to be “a nation of entrepreneurs”. We already are a nation of entrepreneurs – but thousands of them have been brought to their knees financially, have been abandoned and excluded from meaningful support.
Time and time again, policy decisions show us that The Treasury is only interested in big business, but when there is a shortfall to be met, the ordinary working person must find the money to bolster the empty coffers. This is a bitter pill to swallow.
Jennifer Griffiths – Director of Member Welfare
Case studies available on request
Notes to editors:
1. ExcludedUK is a grassroots volunteer-run not-for-profit organisation established in response to the financial challenges faced by individuals and businesses entirely or largely excluded from government Covid-19 financial support.
2. ExcludedUK estimates at least 3 million have been excluded from meaningful government Covid-19 financial support. National Audit Office estimated 2.9 million were excluded from the schemes. A Standard Life Foundation survey published in February 2021 estimated 3.8 million are affected.