Poll: How did the dividend tax reform of 2016 affect your day rate?

[davidbieder]

The next tax reform is already on its way ("promising" a dividend allowance cut from 2018).

I am curious:

How did the dividend tax reform of 2016 affect your day rate?

a) My day rate decreased.
b) My day rate stayed about the same.
c) My day rate increased and my take-home is about the same.
d) My day rate increased and my take-home increased as well.

[northernladuk]

How would a change in tax legislation affect your day rate? You mean did we go back to our client and demand more money to cover? How do you know other factors didn't affect your rate, like the fact agents do less work so should be taking a smaller chunk of your money? How do you attribute that change to the divi changes?

[WordIsBond]

Poll fail.

I increased my rates marginally, because I wasn't sure my clients would absorb the entire cost all at once. On average, I'm charging about 4% more, which after inflation is about a 2% real terms increase.

So, my answer would be that my day rate increased and my take home decreased, and you don't have an option for that on the poll. I'll probably up my rates by around 3% this year, another 1% in real terms, to grab back more of what I lost last year.

The dividend allowance change is not enough to justify a change to my rates.

Brexit is creating some pain / fear for some of my clients, and lots of lovely currency volatility and need for hedging strategies and extra modeling and adjustments to existing models and all that stuff, all of which is creating opportunity/demand for me, so I could end up increasing my rates significantly in the next year. Or, I might just stop contracting entirely and develop some products to help these people out.

But for now, I'm in the "small increase in rates, small decrease in take home" category.

[radish2008]

I went for a 10% increase but ... I was on a low rate (ish), had the crazy additional furlough to factor in. Should be slightly worse off I think when FRS kicks in.

Now I feel sad :-(

[northernladuk]

Poll fail.

Indeed.

I increased my rates marginally, because I wasn't sure my clients would absorb the entire cost all at once. On average, I'm charging about 4% more, which after inflation is about a 2% real terms increase.

So you we need some options that say 'I increased my day rate but I would have done this anyway'

[PurpleGorilla]

My rate varies depending on role, location, client, and duration. But generally I look to charge as much as I can for each fresh piece of work.

[WordIsBond]

So you we need some options that say 'I increased my day rate but I would have done this anyway'

Well, I would have probably only increased by 2%. (I use hourly rates rather than day rates, makes more sense with the way I work, but that's a side issue.)

To be specific, I was at £83.50 / hr, would have probably gone to £85, went to £86 with two existing clients and £87 with new ones. Probably go to £89 for everybody after April, probably would have been £87 if not for the dividend tax.

But it is still a cut in take-home after the dividend tax changes.

[TheCyclingProgrammer]

I've put my rate up a bit almost every year since I started my business and last year was no different.

Despite increase in personal tax, the removal of the tax credit and increased tax bands means I'm technically taking home more than before (as in, in my pocket after income tax, not what I leave in the company).

[davidbieder]

Poll fail.

I increased my rates marginally, because I wasn't sure my clients would absorb the entire cost all at once. On average, I'm charging about 4% more, which after inflation is about a 2% real terms increase.

So, my answer would be that my day rate increased and my take home decreased, and you don't have an option for that on the poll. I'll probably up my rates by around 3% this year, another 1% in real terms, to grab back more of what I lost last year.

I did indeed not think about that case. Thanks for pointing out.

@All
Is there any way to add this option to the poll?

[davidbieder]

That's all good stuff guys. Thank you. It's interesting to see how many different reasons there are for adjusting the day rate (or not).

Apart from other factors did you consider the dividend tax increase in your day rate adjustments?