The bar of public opinion boos Hammond’s attack on the self-employed
SIR – I regularly take refreshment in a very ordinary country pub in a Tory/ Lib Dem marginal constituency. Just listening there has been an unfailingly accurate barometer and predictor of public opinion and political events.
The pasty-tax Budget nonsense was sniggered at; the 2015 Tory victory and the Brexit vote were both accurately predictable. The evening after the Budget, dare I say it, there was once again mention of voting Labour.
Philip Hammond should stick his campaign against self-employment back in the Treasury bottom drawer whence it came. If he does not, a wise Prime Minister would do it for him. David Raynes Bath SIR – Mr Hammond was “guided in his approach by a review commissioned from Matthew Taylor, a former Labour strategist who was head of Tony Blair’s policy unit” (Leading article, March 9).
Heaven help us! B F Hunt Broadstone, Dorset SIR – It is indefensible that legitimate tax plans made on the actions of one Chancellor are turned on their head less than two years later by a different Chancellor from the same Government.
The about-turn on the tax allowance for dividends from £5,000 to £2,000 demonstrates why it is hard to trust anything a Chancellor says. This is yet another politically inept decision compounded by the broken promise on National Insurance. Charles Macfarlane London SW11 SIR – Corporation tax was invented by the socialist administration of Harold Wilson in the 1960s. Before Wilson, a company that increased its bank balance did not have to pay tax until the shareholders had decided what to do with it. They could invest it or distribute it as a dividend, in which case shareholders would pay tax on it as income.
Wilson, and his Chancellor, James Callaghan, on the theory that the man in Whitehall knows best, demanded a slice of it at the end of the company year. Anything left for shareholders was taxed again when they received it.
The Heath government of 1970-74 did not repeal this measure. Instead, to avoid double taxation, they made dividends (on tax-paid profits) tax-free. This created a loophole. Because corporation tax rates were lower than personal tax rates, some people reinvented themselves as companies. In spite of complications, the rates are now, in effect, the same.
Last year George Osborne reinvented the Callaghan double taxation wheeze. In the Budget, Mr Hammond strengthened it. Why? Philip Roe St Albans, Hertfordshire SIR – After the National Insurance disaster, what on earth will happen when the demands of the Government initiative “Making Tax Digital” become clear to the self-employed? Bea Martin Ferring, West Sussex