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Allow savers to have as many Isas as they like and hike dividend tax rates, propose Government tax gurus

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Just another tax grab on owning a company. May as well just pack up and work for some faceless Corp. They love you to be an entrepreneur but then don't give you anything for the efforts. 

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1 hour ago, thewig said:

What’s a saver? Is that like when I remortgage a load of props onto a teaser IO rate and save on interest?

😁😁😁

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1 hour ago, thewig said:

What’s a saver? Is that like when I remortgage a load of props onto a teaser IO rate and save on interest?

You sound more like a savvy investor mixed with the insight of an entrepreneurial genius, this nation needs more like you.

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Isa's are a joke now the limit is so high. Not sure who would need to save £20k+ a year and why the govt encorages such a high annual limit on a tax free wrapper...it's almost the average wage.

As far as dividends are concerned, 10 years I didn't know anyone who was self employed who wasn't a plumber ,electrician or practice accountant. Now 'grey' self employment is everywhere and at both ends of the spectrum. I know Uber, DPD etc 'force' their staff into self employment at the 'bottom' end of the spectrum but at the 'top' end I've seen businesses (mainly banks) where 75%+ of staff in some areas have been self employed through consultancies or personal service companies. People with 10+ years with one employer paying the base amount of tax and paying themselves dividends for the rest. In some areas it's endemic and both labour and the conservatives have made such a farce of ir35 that at this stage making self employment and PAYE employment tax equivalent is about the only way to deal with it.

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2 hours ago, regprentice said:

In some areas it's endemic and both labour and the conservatives have made such a farce of ir35 that at this stage making self employment and PAYE employment tax equivalent is about the only way to deal with it.

That change has already happened with dividend relief slashed.

Whatever you take from your company in dividends over £45k is taxed at 20% Corporation tax and then 40% income tax. 

I don't see a 60p in the £1 tax rate as not paying into society or getting away with anything really.

The offshore brigade are the problem.

IR35 is far too subjective. As a contractor I would be quite happy if they just slap a 24 month limit with a 6 month break in but I suspect keeping it a grey area is deliberate.

Edited by disenfranchised

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3 hours ago, disenfranchised said:

That change has already happened with dividend relief slashed.

Whatever you take from your company in dividends over £45k is taxed at 20% Corporation tax and then 40% income tax. 

I don't see a 60p in the £1 tax rate as not paying into society or getting away with anything really.

The offshore brigade are the problem.

IR35 is far too subjective. As a contractor I would be quite happy if they just slap a 24 month limit with a 6 month break in but I suspect keeping it a grey area is deliberate.

Don’t some get round this by having 2 directors e.g. husband and wife taking an income each to benefit from two lots £45k limits?  

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3 hours ago, WhyDoTaxPayersSubLtdCoLL said:

Don’t some get round this by having 2 directors e.g. husband and wife taking an income each to benefit from two lots £45k limits?  

You are right that it is possible, though I think there used to be another unwritten rule about the bigger beneficeries (paid an income or dividends) of a private services company having to perform real tasks in the company. You couldn't just put your whole family on the payroll.

Don't forget that the 20% Corporation tax levied on all profits, unlike personal earned income which has a generous tax free allowance of £11,850 currently. So that is a negative for working through a personal service company.

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9 hours ago, regprentice said:

As far as dividends are concerned, 10 years I didn't know anyone who was self employed who wasn't a plumber ,electrician or practice accountant. Now 'grey' self employment is everywhere and at both ends of the spectrum. I know Uber, DPD etc 'force' their staff into self employment at the 'bottom' end of the spectrum but at the 'top' end I've seen businesses (mainly banks) where 75%+ of staff in some areas have been self employed through consultancies or personal service companies. People with 10+ years with one employer paying the base amount of tax and paying themselves dividends for the rest. In some areas it's endemic and both labour and the conservatives have made such a farce of ir35 that at this stage making self employment and PAYE employment tax equivalent is about the only way to deal with it.

The nature of 'employment' is changing with many people working for different groups, at the same time, or sequentially. It is the basis of our flexible economy, and the tax system has to keep up. The IR35 rules IMHO are pretty clear and prescriptive. The problem is that HMRC has been for some reason very poor at enforcement and certain employers like the BBC have been complicit in trying to evade the rules for their own benefit.

At least the white collar self employed are unlikely to have been working for cash in hand, unlike the plumbers and electricians.

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5 hours ago, WhyDoTaxPayersSubLtdCoLL said:

Don’t some get round this by having 2 directors e.g. husband and wife taking an income each to benefit from two lots £45k limits?  

Only worthwhile if the partner earns little or no money themselves, plus you have give them a proportionate ownership of your company.

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7 hours ago, WhyDoTaxPayersSubLtdCoLL said:

Don’t some get round this by having 2 directors e.g. husband and wife taking an income each to benefit from two lots £45k limits?  

Yup...

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11 hours ago, disenfranchised said:

That change has already happened with dividend relief slashed.

Whatever you take from your company in dividends over £45k is taxed at 20% Corporation tax and then 40% income tax. 

I don't see a 60p in the £1 tax rate as not paying into society or getting away with anything really.

The offshore brigade are the problem.

IR35 is far too subjective. As a contractor I would be quite happy if they just slap a 24 month limit with a 6 month break in but I suspect keeping it a grey area is deliberate.

I think it's 32.5% after doing a quick check but still the point remains. 

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4 hours ago, onlooker said:

You are right that it is possible, though I think there used to be another unwritten rule about the bigger beneficeries (paid an income or dividends) of a private services company having to perform real tasks in the company. You couldn't just put your whole family on the payroll.

Don't forget that the 20% Corporation tax levied on all profits, unlike personal earned income which has a generous tax free allowance of £11,850 currently. So that is a negative for working through a personal service company.

Pay yourself a proper salary and you won’t have that problem.

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8 minutes ago, Castlevania said:

Pay yourself a proper salary and you won’t have that problem.

Quite so, though everyone has the right to legally minimize their tax bill, and you would be a fool not to.

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1 hour ago, onlooker said:

Quite so, though everyone has the right to legally minimize their tax bill, and you would be a fool not to.

Yeah, fair enough. I just thought moaning about all your taxes was well a bit rich ;)

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To clear this up, it's 19% corporation tax on everything. 7.5% dividend tax up to the higher rate (with the first £2K exempt) then 32.5% dividend tax above that. Minus your tax allowance, which is generally used for your wages.

So, 51.5% of anything in the higher bracket. Basically, working to pay the government.

 

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6 minutes ago, dpg50000 said:

To clear this up, it's 19% corporation tax on everything. 7.5% dividend tax up to the higher rate (with the first £2K exempt) then 32.5% dividend tax above that. Minus your tax allowance, which is generally used for your wages.

So, 51.5% of anything in the higher bracket. Basically, working to pay the government.

 

The maths is wrong. You pay dividends out of post tax income. 45.325% is what I make it. 

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15 minutes ago, dpg50000 said:

To clear this up, it's 19% corporation tax on everything. 7.5% dividend tax up to the higher rate (with the first £2K exempt) then 32.5% dividend tax above that. Minus your tax allowance, which is generally used for your wages.

So, 51.5% of anything in the higher bracket. Basically, working to pay the government.

Then there are those of us who see 62% (40% higher rate, loss of personal allowance and 2% NI)...

I'd be thankful for your 51.5% (which should actually be 45.3% I think) 😛

I can't wait until I don't have half the country hanging off my back.  Between taxes and rentiers it really has gone too far in the UK now.  Soon I'll be on the Med and my taxes on 'earnings' will drop to 0%.  I'm happy to pay for myself.  It's time for somebody else to pay for everyone else.  I'm out.

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1 hour ago, Castlevania said:

Yeah, fair enough. I just thought moaning about all your taxes was well a bit rich ;)

I believe the self employed/personal service company owner deserves a lower tax rate because:

1) they are unpaid VAT tax collectors for HMRC, with all the hassle and threats that involves

2) there are extra costs of Companies house and accountancy fees/returns etc

3) there is a chance, with a bit of encouragement, that the company might grow, employ and train more. However, with the hassle of employment laws, workplace pensions etc, it was all too much for me, and I just closed up shop.

 

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9 hours ago, onlooker said:

I believe the self employed/personal service company owner deserves a lower tax rate because:

1) they are unpaid VAT tax collectors for HMRC, with all the hassle and threats that involves

2) there are extra costs of Companies house and accountancy fees/returns etc

3) there is a chance, with a bit of encouragement, that the company might grow, employ and train more. However, with the hassle of employment laws, workplace pensions etc, it was all too much for me, and I just closed up shop.

 

My last contract ended 7 weeks ago. I'm paying myself. I'm also making 100% provision for my own retirement. When I get my next contract I'll probably be on 3 month terms with a 1 week notice clause. I paid my accountant £1500 last month. I collect and pay VAT every 3 months. I'm about to finish some qualifications I'll be paying for.

I was a permy for a long time, I don't see why I should be treated any differently to any other company owner for tax purposes now.

My availability and disposability is useful to larger companies and is really not that different to my friend who runs a company providing himself and a digger on contract to construction firms IMO.

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