Income tax.
Should be used as a way to encourage people to put less pressure on the state to provide for them through tax insentives.
It should also be simplified. Removing the various tax bands etc.
I see people as taking control of their own money. Maybe through an app. Since HMRC and payroll companies hold everybody responsible anyway then we should have that level of direct control. Once people setup there own ‘profile’, it should be little different to pur current PAYE system but with the bureaucracy removed.
Increase thresholds before tax:
Employed - £20000
Self employed - £25000.
National Insurance.
National insurance as we know it should be abolished. Instead have personal savings payments.
This should be directly tied to the individual and not payed to a government pot. I envisage that at points through a persons life they can take a percentage from their pot.
The money will need to be paid into some form of investment program. In this day an age it should be possible for most people to manage a simple low risk investment port folio. This could either be a government run one or some other approved scheme.
Tax on savings will be payable on the same basis as normal income tax. Since the money is deducted before tax then tax will only be payable once, instead of our current system.
No threshold for payment. Individual pays 10% and employer pays 10%. Deductions applied on total salary before tax.
Anybody can pay upto 25% into their account to be applied before tax calculation.
If you die then a percentage of your pot is paid out to your descendents.
The rates below apply to people born in the country. Until our immigration system is reformed i would hesitate to say who else it could be applied to. Maybe it could be a combination of minimum earnings and a reduced personal allowance for a period of time.
Tax relief:
Dependents:
Men - 25% for children under 18 or over 80 in your household.
Women - 25% per child under 18 upto 4 children or 25% for over 80’s in your household.
Private medical/ Dental/ School fees etc - 50% of the value deductable against tax.
Example calculation. You’ll have to forgive me if my maths is wrong but hopefully it illustrates the concept:
Man employed earning £45000
- Personal savings plan: 10% statutory plus extra 5% voluntary contribution applied before tax - £6750
- Leaves £38250 to be considered for tax purposes.
- Less £20000 personal allowance
- Leaves £18250 to be considered for tax purposes.
- Children under 18 reduces liability by 25%
- Leaves £13687.50 to be considered for tax purposes.
- £10000 a year in private medical insurance and school fees can be offset at a rate of 50%.
- Leaves £8687.50 to be considered for tax purposes.
Single tax rate of 32% leaves a tax bill of £2780
My concept is to encourage people to take responsibility for themseles and their own future.
Alongside these reforms would be the withdrawal of child benefits, working tax credit etc. The system won’t work in isolation without significant reform elsewhere.
Hopefully this mostly makes sense to people.
