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"Thinking about this more: why is the answer always taxes? " Because...populism. Telling people that we are going to tax the ones richer than them always works for some reason. | |||
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"I think it's better to wait and critique his plans, when he unveils his strategy. Not that he's PM yet. There's likely to be good and not so good, if he gets the job but media peddling of hints, etc isn't much use. I'd prefer the full force of appropriate criticism, at the right time, if and when it's due. " Shouldn’t that have happened before he was anointed as the new saviour? | |||
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"I think it's better to wait and critique his plans, when he unveils his strategy. Not that he's PM yet. There's likely to be good and not so good, if he gets the job but media peddling of hints, etc isn't much use. I'd prefer the full force of appropriate criticism, at the right time, if and when it's due. " Politicians leak their plans to test the reaction. It's our job to react. | |||
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"Huge spending plans; social housing, finishing hs2, increasing welfare costs, increasing military spending, homes and welfare for Mamood’s proposed safe immigration scheme. Somewhere they’ve got to find the money. Taxing savers more, farmers iht, winter fuel, school fee vat and isa income tax has not raised enough. And if Milliband is chancellor some extra green taxes likely. " What part do you disagree with apart from raising money to pay for the projects? | |||
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"Burnham is already making Starmer look better " Told ya 🤷♂️ | |||
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"Burnham is already making Starmer look better Told ya 🤷♂️" I have also been saying the same. Starmer, in spite of his faults, is probably the best candidate labour has. Anyone to his left was going to do lot worse. | |||
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"So private companies that are not giving all their profits straight out to shareholders but have decided to keep some for a rainy day in case bad things happen (it’s not like we have ever had a financial crisis or a global pandemic) are now going to be penalised? How is this even remotely a good idea?" Shouldn't the shareholders be a bit miffed if the company is indeed hoarding money (their money) and not paying a bigger dividend to the shareholders ? | |||
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"So private companies that are not giving all their profits straight out to shareholders but have decided to keep some for a rainy day in case bad things happen (it’s not like we have ever had a financial crisis or a global pandemic) are now going to be penalised? How is this even remotely a good idea? Shouldn't the shareholders be a bit miffed if the company is indeed hoarding money (their money) and not paying a bigger dividend to the shareholders ?" No, that's not how companies work. They have a board that will agree a financial strategy, and that might include retaining surplus for investment or risk management. Outside of private companies, charities and educational organisations are required to do this by law, any smart company will also do it. Shareholders will have their say through voting rights, if they hold the right class of shares that allows them to vote. The money does not belong to the shareholders, or any other individuals it belongs to the legal entity that is the company, and the legal entity decides what to do with it using the structures it has created for decision-making | |||
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"Rumoured that Andy Burnham is considering introducing a tax on private limited companies on their undistributed profits. " | |||
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"There is absolutely no published evidence or policy statement published suggesting this. Rumoured that Andy Burnham is considering introducing a tax on private limited companies on their undistributed profits. " OP did say it was a rumour and to be fair I've also heard that rumour (although it might have been here), but either way he's not wrong. | |||
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"So private companies that are not giving all their profits straight out to shareholders but have decided to keep some for a rainy day in case bad things happen (it’s not like we have ever had a financial crisis or a global pandemic) are now going to be penalised? How is this even remotely a good idea? Shouldn't the shareholders be a bit miffed if the company is indeed hoarding money (their money) and not paying a bigger dividend to the shareholders ? No, that's not how companies work. They have a board that will agree a financial strategy, and that might include retaining surplus for investment or risk management. Outside of private companies, charities and educational organisations are required to do this by law, any smart company will also do it. Shareholders will have their say through voting rights, if they hold the right class of shares that allows them to vote. The money does not belong to the shareholders, or any other individuals it belongs to the legal entity that is the company, and the legal entity decides what to do with it using the structures it has created for decision-making" . I did not know this, and something doesn't feel right to me. If I invested say, 200K in "Johnson's Widgets", then it was my understanding that a) I have 200K of my money in Johnsons Widgets and b) I also receive a return or dividend based on the number of shares I hold. If JW go pop tomorrow, then I'm getting my original sum invested back. I wouldn't expect anything for the shares as they have probably tanked by that point. But I still get my investment back, surely ? Otherwise, what's the point ? I get the fact that the share price might go higher (so I get a bigger dividend), but my 200K is still "on loan" to the company isn't it ? That's my money, not theirs. | |||
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" I did not know this, and something doesn't feel right to me. If I invested say, 200K in "Johnson's Widgets", then it was my understanding that a) I have 200K of my money in Johnsons Widgets and b) I also receive a return or dividend based on the number of shares I hold. If JW go pop tomorrow, then I'm getting my original sum invested back. I wouldn't expect anything for the shares as they have probably tanked by that point. But I still get my investment back, surely ? Otherwise, what's the point ? I get the fact that the share price might go higher (so I get a bigger dividend), but my 200K is still "on loan" to the company isn't it ? That's my money, not theirs." If you buy a company's shares and the company goes bust, you get nothing out of it  I have lost small sums like this.
When you buy a share, you buy a part of the company. The company's valuation goes up as the share price goes up, thereby increasing the value of the share you own. Some companies, not all, pay dividends to share holders. This usually happens when the company is mature and doesn't expect massive growth in revenue or the share price. Dividends are paid to keep the shareholders happy as share price will remain the same.
When the share price goes down, the value of your share in the company also goes down. If the company goes bankrupt, your share price goes close to zero. They might sell their remaining assets and give what remains to the shareholders. But you usually get nothing from it. | |||
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" I did not know this, and something doesn't feel right to me. If I invested say, 200K in "Johnson's Widgets", then it was my understanding that a) I have 200K of my money in Johnsons Widgets and b) I also receive a return or dividend based on the number of shares I hold. If JW go pop tomorrow, then I'm getting my original sum invested back. I wouldn't expect anything for the shares as they have probably tanked by that point. But I still get my investment back, surely ? Otherwise, what's the point ? I get the fact that the share price might go higher (so I get a bigger dividend), but my 200K is still "on loan" to the company isn't it ? That's my money, not theirs. If you buy a company's shares and the company goes bust, you get nothing out of it I have lost small sums like this.
When you buy a share, you buy a part of the company. The company's valuation goes up as the share price goes up, thereby increasing the value of the share you own. Some companies, not all, pay dividends to share holders. This usually happens when the company is mature and doesn't expect massive growth in revenue or the share price. Dividends are paid to keep the shareholders happy as share price will remain the same.
When the share price goes down, the value of your share in the company also goes down. If the company goes bankrupt, your share price goes close to zero. They might sell their remaining assets and give what remains to the shareholders. But you usually get nothing from it."Thank you kindly for the explanation. | |||
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" If I invested say, 200K in "Johnson's Widgets", then it was my understanding that a) I have 200K of my money in Johnsons Widgets and b) I also receive a return or dividend based on the number of shares I hold. If JW go pop tomorrow, then I'm getting my original sum invested back. I wouldn't expect anything for the shares as they have probably tanked by that point. But I still get my investment back, surely ? Otherwise, what's the point ? I get the fact that the share price might go higher (so I get a bigger dividend), but my 200K is still "on loan" to the company isn't it ? That's my money, not theirs." No. When you buy a share, you are actually buying a thing. The money goes to whatever entity you bought it from and is not "in the company" (except, arguably, at the IPO, sometimes). You money then is "gone". Like buying an artwork or burger or house. What you get for that money is usually one or more of: 1. A discretionary payment per share (dividend) 2. The opportunity to sell it whenever you want, hopefully for a profit 3. Control of the company through voting rights, proportional to the number of shares you have (useful if you want to take over, absorb into another company, change the CEO, etc.) Shares are "equity" (owning a bit of the company). There are bonds, which are "debt" - this is a loan, and your money is technically "in" the company, in that the company needs to pay that money back to you on an agreed schedule, at an agreed rate of interest. But bonds give you no ownership, voting rights or dividends (usually). Equity and debt are the two most common ways of investing in a company. Both are instruments that can be traded, but are very different things. | |||
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" If I invested say, 200K in "Johnson's Widgets", then it was my understanding that a) I have 200K of my money in Johnsons Widgets and b) I also receive a return or dividend based on the number of shares I hold. If JW go pop tomorrow, then I'm getting my original sum invested back. I wouldn't expect anything for the shares as they have probably tanked by that point. But I still get my investment back, surely ? Otherwise, what's the point ? I get the fact that the share price might go higher (so I get a bigger dividend), but my 200K is still "on loan" to the company isn't it ? That's my money, not theirs. No. When you buy a share, you are actually buying a thing. The money goes to whatever entity you bought it from and is not "in the company" (except, arguably, at the IPO, sometimes). You money then is "gone". Like buying an artwork or burger or house. What you get for that money is usually one or more of: 1. A discretionary payment per share (dividend) 2. The opportunity to sell it whenever you want, hopefully for a profit 3. Control of the company through voting rights, proportional to the number of shares you have (useful if you want to take over, absorb into another company, change the CEO, etc.) Shares are "equity" (owning a bit of the company). There are bonds, which are "debt" - this is a loan, and your money is technically "in" the company, in that the company needs to pay that money back to you on an agreed schedule, at an agreed rate of interest. But bonds give you no ownership, voting rights or dividends (usually). Equity and debt are the two most common ways of investing in a company. Both are instruments that can be traded, but are very different things." The Ltd in a company name stands for limited liability. That means that if the company is sued or goes bust then the maximum liability that the company and its owners (the shareholders) can be held to is the money in the company. It didn’t use to be this way. Before the idea of limited liability then anyone doing business was personally liable for all their debts. This meant very people took risks and so the overall level of trade was low. By creating the idea of a company as an entity in its own right and solely liable for its debts the economy boomed. Owning shares is risky because you could lose all your money if things go wrong. The company needs a buffer (just like you need a savings pot at home) hence why the original hoarding tax idea is so misguided. | |||
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" Owning shares is risky because you could lose all your money if things go wrong. The company needs a buffer (just like you need a savings pot at home) hence why the original hoarding tax idea is so misguided." To be fair, there are many small operators who do this as a tax workaround. The goal should be to eradicate this as a tax avoidance strategy, whilst not telling hedge funds that they cannot hold a hoard of cash in anticipation of a well-timed buying spree. | |||
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" Owning shares is risky because you could lose all your money if things go wrong. The company needs a buffer (just like you need a savings pot at home) hence why the original hoarding tax idea is so misguided. To be fair, there are many small operators who do this as a tax workaround. The goal should be to eradicate this as a tax avoidance strategy, whilst not telling hedge funds that they cannot hold a hoard of cash in anticipation of a well-timed buying spree." I 100% agree and I really despise this. The classic combo was IR35 and furlough payments. Historically a lot of IT workers set themselves up as private ltd companies to avoid tax and NI. They were totally employees - they took no delivery risk, worked standard hours and took direction from their client. The government rolled out iR35 that basically said if you look like and employee and work like an employee then you are an employee and will be taxed accordingly. All these contractors went mad and spent the next five years “proving” to the government that they weren’t employees and they were actually independent companies and should be treated accordingly. COVID then hit and the government rolled out furlough payments to _employees_. These contractors obviously weren’t included because they had fought for years to prove they weren’t employees. They immediately had a change of heart and decided that actually they were employees and the government was just being heartless by excluding them. What a bunch of hypocrites. I bet the Treasury was absolutely rolling on the floor with laughter when that happened. I certainly was. | |||
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" Owning shares is risky because you could lose all your money if things go wrong. The company needs a buffer (just like you need a savings pot at home) hence why the original hoarding tax idea is so misguided. To be fair, there are many small operators who do this as a tax workaround. The goal should be to eradicate this as a tax avoidance strategy, whilst not telling hedge funds that they cannot hold a hoard of cash in anticipation of a well-timed buying spree. I 100% agree and I really despise this. The classic combo was IR35 and furlough payments. Historically a lot of IT workers set themselves up as private ltd companies to avoid tax and NI. They were totally employees - they took no delivery risk, worked standard hours and took direction from their client. The government rolled out iR35 that basically said if you look like and employee and work like an employee then you are an employee and will be taxed accordingly. All these contractors went mad and spent the next five years “proving” to the government that they weren’t employees and they were actually independent companies and should be treated accordingly. COVID then hit and the government rolled out furlough payments to _employees_. These contractors obviously weren’t included because they had fought for years to prove they weren’t employees. They immediately had a change of heart and decided that actually they were employees and the government was just being heartless by excluding them. What a bunch of hypocrites. I bet the Treasury was absolutely rolling on the floor with laughter when that happened. I certainly was. " You are conflating some issues here. Loan schemes were available to companies during COVID . Unfortunately these were abused by criminals who took advantage of the weak controls operated by government | |||
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" Owning shares is risky because you could lose all your money if things go wrong. The company needs a buffer (just like you need a savings pot at home) hence why the original hoarding tax idea is so misguided. To be fair, there are many small operators who do this as a tax workaround. The goal should be to eradicate this as a tax avoidance strategy, whilst not telling hedge funds that they cannot hold a hoard of cash in anticipation of a well-timed buying spree. I 100% agree and I really despise this. The classic combo was IR35 and furlough payments. Historically a lot of IT workers set themselves up as private ltd companies to avoid tax and NI. They were totally employees - they took no delivery risk, worked standard hours and took direction from their client. The government rolled out iR35 that basically said if you look like and employee and work like an employee then you are an employee and will be taxed accordingly. All these contractors went mad and spent the next five years “proving” to the government that they weren’t employees and they were actually independent companies and should be treated accordingly. COVID then hit and the government rolled out furlough payments to _employees_. These contractors obviously weren’t included because they had fought for years to prove they weren’t employees. They immediately had a change of heart and decided that actually they were employees and the government was just being heartless by excluding them. What a bunch of hypocrites. I bet the Treasury was absolutely rolling on the floor with laughter when that happened. I certainly was. " Project work outside of IR35 was how most large businesses were offering contracts of work and a person needed to be a Ltd company to be awarded that contract. They normally paid themselves the minimum wage as an employee of that company which is and was perfectly legal to do so. There is of course sick pay, holiday pay, corporation tax, PAYE, dividend tax, and so on that come out of both the company and employee. When covid came along many of those contractors lost their contracts and were not entitled to claim support for the full sum they were earning as a ltd company, they could be supplemented to the minimum wage, but the many contractors I know didn't do this. I'm not sure why you would find their situation amusing during covid, they were going about their business with short term contracts that were on offer in the market, mainly to avoid the politics of direct employment, the lower salary for being perm, honing their skills to a particular delivery, and often faced gaps in between contracts that meant they were not earning. Swings and roundabouts, with all the risk on the contractor which they faced into during covid. | |||
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" Project work outside of IR35 was how most large businesses were offering contracts of work and a person needed to be a Ltd company to be awarded that contract. They normally paid themselves the minimum wage as an employee of that company which is and was perfectly legal to do so. There is of course sick pay, holiday pay, corporation tax, PAYE, dividend tax, and so on that come out of both the company and employee. When covid came along many of those contractors lost their contracts and were not entitled to claim support for the full sum they were earning as a ltd company, they could be supplemented to the minimum wage, but the many contractors I know didn't do this. I'm not sure why you would find their situation amusing during covid, they were going about their business with short term contracts that were on offer in the market, mainly to avoid the politics of direct employment, the lower salary for being perm, honing their skills to a particular delivery, and often faced gaps in between contracts that meant they were not earning. Swings and roundabouts, with all the risk on the contractor which they faced into during covid. " I guess the point is about them treating themselves as a minimum wage employee. It's legal, yes. But that means they can't expect the government to help them out in situations like it, if they chose to do that to avoid taxes. They can't have the cake and eat it too. | |||
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" Project work outside of IR35 was how most large businesses were offering contracts of work and a person needed to be a Ltd company to be awarded that contract. They normally paid themselves the minimum wage as an employee of that company which is and was perfectly legal to do so. There is of course sick pay, holiday pay, corporation tax, PAYE, dividend tax, and so on that come out of both the company and employee. When covid came along many of those contractors lost their contracts and were not entitled to claim support for the full sum they were earning as a ltd company, they could be supplemented to the minimum wage, but the many contractors I know didn't do this. I'm not sure why you would find their situation amusing during covid, they were going about their business with short term contracts that were on offer in the market, mainly to avoid the politics of direct employment, the lower salary for being perm, honing their skills to a particular delivery, and often faced gaps in between contracts that meant they were not earning. Swings and roundabouts, with all the risk on the contractor which they faced into during covid. I guess the point is about them treating themselves as a minimum wage employee. It's legal, yes. But that means they can't expect the government to help them out in situations like it, if they chose to do that to avoid taxes. They can't have the cake and eat it too." I understand the point that was trying to be made, but they didn't have their cake and eat it the system didn't allow for it. My point is through eyes only on the day rate oof outside IR35, contractors appear to be earning significantly more and paying less tax. However, once all the outgoings, insurances, taxes, sickness, holidays and gaps in employment etc are added up the gulf is not that wide. | |||
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