Uncle Audley reviews Harman’s driving!

I’d given Uncle Audley a wide berth fearing he would be like a coiled spring over the Baroness Scotland case but when I called to see how he was he’d just read a piece about Harriet Harman that had re-stoked his boiler!

 “You know where to find me, ….know where to find me, well I ask you is this the sort of behaviour we should expect from our Government ministers?”

 “But it was in the Paper Uncle,” I said, “and they are not always accurate in their reporting” Big error on my part!

 “Now look here this was The Times (Harriet Harman faces quiz over prang)not some red top rag. And it suggests that it was an accident caused whilst driving using a mobile. What an example. The woman has never been able to stick to the speed limit and now drives away from a car she has hit. It makes you wonder whether she would have stopped if no one had seen her?  No doubt the book won’t be thrown at her by the Prime Minister just like the Baroness Scotland who I cannot fathom why remains in her post as our Attorney General.”

 “Oh dear,” I thought, “now I’m for it!”

 “Why someone in such high office would take into employment an illegal immigrant beggars belief. And what we don’t yet know is whether we as the tax payer have picked up the cost as part of an expenses claim? Granted she was fined the maximum sum of £5,000 but surely she and the Prime Minister have to accept that if you cannot set the right example and having failed so badly resignation is the only answer. What would happen if you acted for a large company with a decent sized board and the one responsible for employing the staff stepped out of line so badly. He would probably get the sack and the company would have to pay the fines. Am I wrong or have things changed so much from my day?”

I had to accept that Uncle was probably right – unless the Board had taken the risks together – but I kept that thought to myself for fear of another tirade.

“Unfortunately, it was the same with the Tories. The third term leads to all manner of misdemeanours and a failure to do the right thing. At least in May the Country decides – if we have the energy to vote for one or other of them when we get there!” and with a click he was gone. I hadn’t got as far as asking after his health but concluded that he was his normal self and therefore OK. Having dealt with my family duty I returned to the garden to prepare for the autumn.

Lambert Chapman LLP’s John Smith-Daye says, “I am not a gambling man but……”

As anyone who knows me will tell you, I am a typical male chartered accountant – I have been called “tight fisted”, “mean”, even “boring and unadventurous” – I prefer to call myself “prudent” and “cautious”, two words much used by our beloved (?) Prime Minister, particularly during his stint as Chancellor of the Exchequer.

However, there is an opportunity coming up that may to some be considered a gamble, but to me is all but a dead cert. I am willing to bet my monthly pocket money – yes, up to £2.50 – on the VAT rate remaining at 15% beyond the end of the year. I have heard rumours that the temporary reduction might be extended by a few days to help the retail industry with the January sales.

But – Lo! What is that on the horizon? Do I see an election in the very near future? And do I perhaps feel that the Government may try to win votes by currying favour with the Electorate At Large? And am I really a cynic?

Answers on a postcard please, with the usual £10 note stuck to it with sticky tape, to me at our Maldon office. Don’t send them to my home address, please – my wife might get hold of them.

So will John be right? If you haven’t got a postcard handy leave him a note below:

Paul Short looks at Take Home Pay

At little while ago I did an article for the web site trying to demonstrate that take home pay was not always a good indicator of someone’s pay package. It all depends on the extras. Since then, we have had the furore over MP’s expenses (cue my web article of 15 January 2007).

MP’s have been at it for a long time. Their base salary does not look anything super duper. But then add on the expenses and gross these up at their marginal rate of tax because they are tax free and then add on the copper plated pensions, provided out of the public purse, plus a few other perks and you have a formidable pay package, which if maximum allowances were claimed could be in the region of £355,000 a year.

Now there is something of a witch hunt on MP’s at the moment. We should remember that many of the expenses are authentic and justifiable and should not be regarded as part of their pay package but some are not. Even so, some MP’s pay package will come to a tidy sum. It is, of course, hugely tax efficient. All the benefits within and outside of Westminster are tax free, leaving some modest exposure to 40% tax on the top slice of their Parliamentary salary.

Now let us compare their situation with that of one of the purported high earners whom I shall call Gordon. I am still frustrated that MP’s define the rich and wealthy in terms of their income. They do not seem to be able to grasp that wealth and riches are a consequence of having capital. This takes me back to a web article I wrote in February 2006, comparing family A (zero income but huge capital) with family B (high income but no capital), with family A qualifying for all Brown’s welfare handouts. Anyway, back to Gordon. Gordon has an income of £200,000 a year and is reviled for being rich and wealthy. Gordon is self-employed, though. Out of his £200,000 a year (which he has only really been earning in the last year of so) he has to start funding for his retirement in around 10 years time.

To make up for lost time, Gordon is putting in £50,000 a year. It should give him a reasonable pension but nothing on the scale of an MP. Although Gordon has to pay tax on all of his earnings, the bulk of it at the current top rate of 40%, he has to retain at least £30,000 of post tax income in his business to help the continuing finance of its working capital. The alternative is to go to the Bank and become heavily geared.

Gordon is also having to finance his two children through university. They are in their first and second year respectively. It is expensive but Gordon doesn’t mind as he puts a premium on education and wants his children to graduate and have the best opportunity of securing a good job. Gordon lives in a reasonable four bedroomed house within commuting distance of London. It is very nice but far from a mansion. It was worth some £500,000 a year ago but Gordon thinks it might only be worth £425,000 now. He still has a mortgage of £150,000 on the property although he expects to clear this within the next 10 years. Nevertheless, it represents a significant monthly out going.

Gordon has always been strong on protection and having adequate insurance in place to safeguard his family and his house. That is another heavy out going. Gordon’s family run three modest cars and they do like to have one foreign holiday a year with possibly another in the UK. Gordon finds that all these commitments means that he does not have that much disposable cash left at the end of the year.

Gordon works 50 to 60 hours a week on average on his business and feels he needs the holidays to re-charge and refresh himself. Do you or I go and tell Gordon that he is rich and wealthy and that is why he is going to be paying three times as much tax as his struggling local MP?