Whats your views on Budget 2015?

[BolshieBastard]

You could always ask for a higher day rate to cover the short fall?! Hang on....

With a solid, long term tax plan the new tax rates can be mitigated. Get on the phone to your accountant now and request a meeting.

Yes if you want a knee jerk reaction to the budget which was just published a few hours ago.

Alternatively, give your accountancy practice time to digest the budget and the inevitable clarifications and anouncements that will follow over the next few days, wait a couple of weeks then arrange a meet.

[PerfectStorm]

I suppose there's no point changing anything until the new tax year anyway is there, so not much point in panicing now - your income between now and start of April 2016 surely is unaffected?

[WordIsBond]

The new dividend tax for higher rate taxpayers still requires 20% corporation tax, which on the example above is £20,000, plus an extra 7.5% on the net profit which is £6,000, equalling a 6% increase in overall taxation. Contractors in the higher rate band will pay 46% tax on pre-corporation tax profit, and employees on these earnings are only paying an additional 2%, by way of NI.

We now have a tax system where by small business owners will be paying higher marginal rates of tax than employees.

This ignores employer NI. Contractors in the higher rate band will pay 46% on pre-CT profit, true. Employees in the higher rate band pay 42%, true. But for the employees, their employer pays 13.8% NI as well. So HMRC grabs 55.8% of the employee's salary.

Contracting is still better, if your rate is high enough to include ALL the costs a company would have had to pay for an employee. It's just that the marginal difference between the two is now small enough that the risk / reward equation is a lot less appealing.

I suppose there's no point changing anything until the new tax year anyway is there, so not much point in panicing now - your income between now and start of April 2016 surely is unaffected?

It could have a significant effect on how much dividend you should take in March next year.

[TestMangler]

Excuse my stupidity, but I can't find a clear answer. is this 'dividend tax' for so called PSC's or all incorporated LTDs ??????

[jamesbrown]

Excuse my stupidity, but I can't find a clear answer. is this 'dividend tax' for so called PSC's or all incorporated LTDs ??????

It's for anyone that receives dividend income from shares.

[TestMangler]

It's for anyone that receives dividend income from shares.

So basically, all the whining contractors that reckon it is aimed at them are grossly underestimating what this budget change actually means in terms of costs on real business. Like your accountants, your plumber, local joiner etc ? In fact, every small LTD in the f***ing country !!

FFS. party of business indeed.

[stek]

So basically, all the whining contractors that reckon it is aimed at them are grossly underestimating what this budget change actually means in terms of costs on real business. Like your accountants, your plumber, local joiner etc ? In fact, every small LTD in the f***ing country !!

FFS. party of business indeed.

But those sectors are usually sole traders or partnerships - no dividends.....

[TestMangler]

But those sectors are usually sole traders or partnerships - no dividends.....

Not in my experience. I'm sure you'll find there are literally thousands of incorporated plumbers in the country.

[Zero Liability]

So basically, all the whining contractors that reckon it is aimed at them are grossly underestimating what this budget change actually means in terms of costs on real business. Like your accountants, your plumber, local joiner etc ? In fact, every small LTD in the f***ing country !!

FFS. party of business indeed.

I did point that out in general. I think this was a pretty "populist" (i.e. designed to cater to the average voter) budget by Osborne.

[stek]

Not in my experience. I'm sure you'll find there are literally thousands of incorporated plumbers in the country.

Even so - they can unincorporate, we can't....