Spring Budget 2017

[Waldorf]

This is it in a nutshell. Its not about an extra £225 a year in tax. Its about the rhetoric and the suspicion that this is just the beginning of the governments attack on small businesses (self employed and incorporated businesses).

I don't see it as an attack on small businesses. It is part of an ongoing attack, started with IR35 in 2000, on tax motivated incorporation. There is a very reasonable question, why should a contractor be able to pay very little tax, compared to an employed person?

The methods add, or added up: flat rate VAT, paying dividends, paying dividends to a spouse, claiming travel expenses for home to work commuting, building a war chest and only paying 10% tax upon closure, not paying NIC, and these and only the 'vanilla' measures. Some will take some other measures to reduce any tax payable even more.

So any government, faced with pressures to make fewer cuts and spend more on the NHS, social care etc is clearly going to look at our sector. An ever increasing number of contractors will only sound a louder alarm bell in the Treasury.

The direction of travel looks clear, a greater equalisation of the tax payable between employees and those working through a PSC. I think we need to get used to it and prepare to pay more tax than we have been used to. It's been good while it lasted.

[jamesbrown]

I think the small biz being demonised is not so much about the amount of tax but about the rhetoric.

Exactly. The tone was all wrong, and he's going to pay for that. The headlines tomorrow are abysmal. I foresee a (partial) U-turn on the horizon, which could've been avoided. He's dug a big hole with the BS rhetoric and the lies about the manifesto commitment - "not that NIC, the other one". It will only take ~20 backbenchers to force a partial U-turn, although it will probably be a fairly minor one (bringing forward more "rights"). The dividend tax is also going down very badly on the Tory backbenches; Osborne's change was actually much worse but it was politically far more expedient, being wrapped as a "reform", whereas this one is a straightforward tax rise. This budget has been an abject lesson on the difference between economics and politics. Despite the sum total of measures being pretty moderate (albeit with a theme that is becoming increasingly tedious), it has gone down like a bag of sick.

[SueEllen]

This is it in a nutshell. Its not about an extra £225 a year in tax. Its about the rhetoric and the suspicion that this is just the beginning of the governments attack on small businesses (self employed and incorporated businesses).

Interesting that The Telegraph and The Guardian have very similar headlines on their front page.

When you unite the right and left of the press in condemnation you have really screwed up as a chancellor.

[teapot418]

I don't see it as an attack on small businesses. It is part of an ongoing attack, started with IR35 in 2000, on tax motivated incorporation. There is a very reasonable question, why should a contractor be able to pay very little tax, compared to an employed person?

The methods add, or added up: flat rate VAT, paying dividends, paying dividends to a spouse, claiming travel expenses for home to work commuting, building a war chest and only paying 10% tax upon closure, not paying NIC, and these and only the 'vanilla' measures. Some will take some other measures to reduce any tax payable even more.

So any government, faced with pressures to make fewer cuts and spend more on the NHS, social care etc is clearly going to look at our sector. An ever increasing number of contractors will only sound a louder alarm bell in the Treasury.

The direction of travel looks clear, a greater equalisation of the tax payable between employees and those working through a PSC. I think we need to get used to it and prepare to pay more tax than we have been used to. It's been good while it lasted.

I agree with much of what you say. But the rhetoric is anti-1 man companies (or whatever they're called). The reason I incorporated was not to reduce my tax bill - that was a happy side effect. Personally speaking, if I have to pay a bit more tax I'm not going to be devastated. If I have to operate IR35, and cannot keep reserves in myCo for periods of bench time, illness etc, then I'm going to get cross.

If you tell me you appreciate what I'm doing, the flexibility I offer to the market, acknowledge the risks and expenses I incur, but explain that tax has to increase, then I'll swallow it a lot more happily than if you tell me I've only incorporated to avoid tax in the first place.

[youngguy]

, why should a contractor be able to pay very little tax, compared to an employed person?.

This is not about contractors, it is about small businesses.

The Q is, if you want a flexible workforce with small businesses and entrepreneurship, is aligning tax a disincentive for the risks those small businesses have to take?

[CornishYarg]

It might look OK from where you are sitting, but I imagine many of the more thinking contractors are seriously considering their options.

What options are there - assuming you don't want to become a full time employee? From my limited understanding, we're no better off headquartering in Dublin as we're taxed at the same rate when bringing our earnings back into the country. We could move to another country, but the commuting back to clients would be unattractive.

[Maslins]

I think the small biz being demonised is not so much about the amount of tax but about the rhetoric.

Perhaps...but I'd far prefer he rant and rave whilst doing something trivial than say lots of fluffy nice things whilst screwing us.

Public sector IR35 - looking like it'll be devastating, though admittedly more due to uncertainty and risk averse-ness rather than anything else.
"Dividend tax" last year - a couple of grand extra personal tax for most.
FRS changes - perhaps a grand or two loss for many.

In comparison the changes announced yesterday are utterly trivial. £225 extra personal tax for most Ltd Co owners, but at the same time as corporation tax is trickling downwards which will more than compensate.

There's the separate argument about how contractors have been gradually screwed for a decade or two...but that's all history now. "Sunk costs" and all that.

Yes maybe the gold rush is behind you all (some would say 5-10+ years behind), but the changes announced yesterday will make naff all difference IMHO.

[PartOfTheUnion]

I don't see it as an attack on small businesses. It is part of an ongoing attack, started with IR35 in 2000, on tax motivated incorporation. There is a very reasonable question, why should a contractor be able to pay very little tax, compared to an employed person?

Why should a small, family-run company's shareholders pay more tax because they work to earn that company's profits than the shareholders of larger companies who send employees out earn their profits while paying those employees much less than the company's fees for their work? And then those large companies set up very much more efficient ways of reducing their corporation tax and other dues than we ever could. 'Fairness' depends on your starting assumption - are we to be compared with 'other' employees or other companies?

[teapot418]

Why should a small, family-run company's shareholders pay more tax because they work to earn that company's profits than the shareholders of larger companies who send employees out earn their profits while paying those employees much less than the company's fees for their work? And then those large companies set up very much more efficient ways of reducing their corporation tax and other dues than we ever could. 'Fairness' depends on your starting assumption - are we to be compared with 'other' employees or other companies?

Dividend tax will affect all shareholders, regardless of company size.

[PartOfTheUnion]

Dividend tax will affect all shareholders, regardless of company size.

I was referring to the public sector rules, not the budget.