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Dividends beyond £5k taxed wef 2016!!

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    I'm so glad I'm full time on my plan b.

    If plan b goes tits up, I would go the route of money into a SIPP rather than pay the extra tax. I don't do contracts that involve travelling so that doesn't really affect me, although I can see for those that do travel this is a crippling change.

    I like the hit on BTL for those paying higher rate tax. Shares in builders fell 5% on the news.

    I bet the permies are laughing today too.

    Comment


      Originally posted by WordIsBond View Post
      That can have some disadvantages, too.

      If you end up IR35 caught, and you have money in the company, they can take it.

      If the company gets sued, the money in the company is vulnerable, if you've taken it out first it isn't.

      Georgie isn't done, and someone else comes after him, too. If you leave money in the company, it may be even more expensive to get it out in future.

      It's still probably the way to go for most people, but it may not work out well.
      IR35 works on a contract by contract basis. They can only "take" money under IR35 earned through the caught contract, anything else is safe as is anything that has been put into a pension. So yes, there is some risk, but not as bad as it might sound.

      Getting sued should be covered by your PI/PL insurances, and frankly I have never heard of anyone who has ever had to use them.

      By using ER and taking money out when you have enough to cover a years living you can close the company paying minimal tax and avoid any of these issues from that point onwards until you decide to go back to contracting. Your level of risk depends on how quickly you can get to that point.
      "Being nice costs nothing and sometimes gets you extra bacon" - Pondlife.

      Comment


        Originally posted by cojak View Post
        This on the day that I just happen to have an interview for a permie role.

        I might play it somewhat differently to what I expected on Monday :/
        Good luck!
        "He's actually ripped" - Jared Padalecki

        https://youtu.be/l-PUnsCL590?list=PL...dNeCyi9a&t=615

        Comment


          Originally posted by DaveB View Post
          IR35 works on a contract by contract basis. They can only "take" money under IR35 earned through the caught contract, anything else is safe as is anything that has been put into a pension. So yes, there is some risk, but not as bad as it might sound.
          Tax on the deemed payment, plus interest, plus penalties. If there's nothing in the company, they can't take anything even if they win the case. If there is money, they can take all of that.
          Originally posted by DaveB View Post
          Getting sued should be covered by your PI/PL insurances, and frankly I have never heard of anyone who has ever had to use them.
          Probably true, but depending on what you do, you could incur liability beyond those insurances in some cases.
          Originally posted by DaveB View Post
          By using ER and taking money out when you have enough to cover a years living you can close the company paying minimal tax and avoid any of these issues from that point onwards until you decide to go back to contracting. Your level of risk depends on how quickly you can get to that point.
          ER is going to be targeted very soon for exactly this reason. It would be a mistake to assume today's rules on this will be in force by the end of this parliament. We're on notice, anything that keeps us from paying what George deems to be "fair" is going to be change.

          Comment


            Originally posted by cojak View Post
            This on the day that I just happen to have an interview for a permie role.

            I might play it somewhat differently to what I expected on Monday :/
            Current client (not for the first time) asked me about going perm with them the other week; at the time I said 'no, sorry not really interested in that' ...might need to revisit that conversation...
            Clarity is everything

            Comment


              Many of us who are IPSE members will have been receiving IPSE's rag magazines, in which IPSE's chair has been praising the Conservative victory as a victory for contractors, the last magazine being stuffed with pages of how wonderful the Conservative party is and how they stand up for contractors. This budget shows how irrelevant IPSE is, I'll be looking to cancel my membership. We need a non-partisan group that actually represents contractors, not a Tory rag branch. Even Labour wouldn't have been so bold to put through these kind of changes in their budget.

              Comment


                Serves you all right for not voting UKIP.

                Comment


                  Originally posted by NorthWestPerm2Contr View Post
                  Well done George, you just encouraged all our entrepreneurs and talent to leave the UK.
                  Most of the talent is in permie jobs.

                  I'm not sure if it will affect entrepreneurs much or not - many take minimal/zero salary when trying to get their business off the ground and I don't know if they commonly take salary or dividends once their companies grow?

                  I do wonder why people think this is targeted at PSCs though, because wouldn't it equally impact anyone running a business regardless of size - someone running a 20-man software dev company for instance?
                  Originally posted by MaryPoppins
                  I'd still not breastfeed a nazi
                  Originally posted by vetran
                  Urine is quite nourishing

                  Comment


                    Originally posted by d000hg View Post
                    I do wonder why people think this is targeted at PSCs though, because wouldn't it equally impact anyone running a business regardless of size - someone running a 20-man software dev company for instance?
                    He specifically said the purpose is to change the equation on dividend vs salary. So it is targeted at anyone who runs a business and compensates themselves extensively through dividends.

                    But he's also heavily targeted PSCs on other provisions, so it's doubtful we were accidentally hit on this.

                    The message is clear -- employment is good, and we want to push everyone into that model of compensation. That does remove a lot of the incentive to entrepreneurship, especially since only a fool would believe the trend is not going to continue.

                    7.5% will become 10%, then maybe 15%. Give it ten years and see where we are. Why take the risk of entrepreneurship when you don't have any idea how much this chancellor or the next are going to hammer you?

                    Comment


                      It's not good news but not that bad either, and not particularly unfair. A contractor paying 10k sal and 50k dividends might pay 5k more tax, but this will be reduced by the drop in corp tax and the tax free allowance increase. And you can still avoid it by paying into a pension rather than paying a dividend.

                      I'd be happy to pay more tax and have IR35 properly clarified or binned.

                      Comment

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