State of the Market

[escapeUK]

News to me. I have a Telegraph subscription and monitor that site and the comments daily, though I suspect it's something this scumbag government will be looking at.

It said something like its been leaked they are doing 45% tax on dividends. I Googled and found nothing, but Google is pretty crap of late. The search "budget leak 45% tax dividends" gives HMRC as top result! Then loads of accountants, and FT.

I could see the evil bs doing this, as they will say that income has two lots of NI and tax applied, so therefore its applying the same level of tax to this other "income" that is mostly rich people, so therefore fair.

As Seagull says it also solves the IR35 issue too, no more fighting in court as the taxes are the same.

Would feel sorry for investors though, all the risk but only 55% of the divis!

[jamesbrown]

As Seagull says it also solves the IR35 issue too, no more fighting in court as the taxes are the same.

It wouldn't. Even going forward, it would only mitigate it. You only pay dividend tax on dividends declared. However, it would likely mean that moneyboxing becomes the last frontier in the war against the perceived underpayment of tax by contracting businesses. Obviously, this is largely a falsehood after successive budgets have eroded the gap, and the only material difference now between full employment and contracting w/r to tax is the ErNI. Also, the October budget is just the beginning, not only of Labour budgets, but there's the thorny question of worker status that they are likely to "address" within the next year or two.

Addressing the self-employment tax gap will be the next thing, but much harder because that contains a group on lower incomes, typically, and with much greater public support (you can imagine the Sun headlines etc., pretty much the same as when any increase in fuel duty is proposed).

[oliverson]

Any significant rise in tax on dividends begins to make the IR35 debate increasingly moot.

Currently sat on my roof terrace in Southern Spain, contemplating whether i could move here full time. Any tax rise on dividends, no matter how significant, would probably tip the balance. Digital Nomad Visa for me and my US client. 24% flat rate tax. Bye bye broken Britain.

[SussexSeagull]

It wouldn't. Even going forward, it would only mitigate it. You only pay dividend tax on dividends declared. However, it would likely mean that moneyboxing becomes the last frontier in the war against the perceived underpayment of tax by contracting businesses. Obviously, this is largely a falsehood after successive budgets have eroded the gap, and the only material difference now between full employment and contracting w/r to tax is the ErNI. Also, the October budget is just the beginning, not only of Labour budgets, but there's the thorny question of worker status that they are likely to "address" within the next year or two.

Addressing the self-employment tax gap will be the next thing, but much harder because that contains a group on lower incomes, typically, and with much greater public support (you can imagine the Sun headlines etc., pretty much the same as when any increase in fuel duty is proposed).

I said it reduces the upside of being outside of IR35, not eliminate it entirely. For one thing expenses would still very much remain an advantage of being outside.

I am sympathetic to any attempt to sort out worker status as frankly it is a dog's dinner at the moment. Back in the day we were essentially paid more money to buy us out of things like paid holidays and sick pay (although decent sick pay seems to be disappearing in permanent employment as well) but since Inside IR35 came into vogue in more and more places we don't get any upside for a decreasing financial premium.

More broadly the cost of Social Care for an ageing population has been ignored for about 30 years, with the exception of Theresa May and it cost her a majority, so I really don't see an alternative to higher tax take over the upcoming years.

[SussexSeagull]

Currently sat on my roof terrace in Southern Spain, contemplating whether i could move here full time. Any tax rise on dividends, no matter how significant, would probably tip the balance. Digital Nomad Visa for me and my US client. 24% flat rate tax. Bye bye broken Britain.

Since 2010 the UK economy has grown more than Germany, France, Italy and Japan but less than the US and Canada. Do what is right for you but the west does have long term problems with the likes of China and India wanting more and more of the pie.

[oliverson]

Since 2010 the UK economy has grown more than Germany, France, Italy and Japan but less than the US and Canada. Do what is right for you but the west does have long term problems with the likes of China and India wanting more and more of the pie.

It's not the growth that concerns me, it's the levels of taxation, immigration, criminality, lack of opportunity, social destruction, oh and dividend tax! It's everything really. Not the country I grew up in. This century has proved to be a disaster!

I have anything from now until maybe 25 years left on this planet before I end up in it. What I don't have time for is another decade plus of austerity to 'fix the NHS' (and the rest).

[jamesbrown]

I said it reduces the upside of being outside of IR35, not eliminate it entirely. For one thing expenses would still very much remain an advantage of being outside.

I am sympathetic to any attempt to sort out worker status as frankly it is a dog's dinner at the moment. Back in the day we were essentially paid more money to buy us out of things like paid holidays and sick pay (although decent sick pay seems to be disappearing in permanent employment as well) but since Inside IR35 came into vogue in more and more places we don't get any upside for a decreasing financial premium.

More broadly the cost of Social Care for an ageing population has been ignored for about 30 years, with the exception of Theresa May and it cost her a majority, so I really don't see an alternative to higher tax take over the upcoming years.

Sure, it mitigates, but HMRC won't be happy until there is parity or worse, in their view and, since the benefits of "flexibility" afforded by contractors to the wider economy are hard to quantify (but, no doubt, real), ministers - particularly Labour ministers - will tend to listen to HMRC w/r to the "tax gap" and focus on that.

Sorting out employment status is very, very hard - which is why it hasn't been done - and there will most likely be some severe downstream consequences. For example, if they go with strict deeming criteria, like other jurisdictions, you will get most of the downsides w/r to loss of flexibility, while the expected extra tax may be lower than expected if it becomes easier to game the criteria. One of the problems with employment status is that you cannot really address it independently of tax, but they are nevertheless distinct bodies of legislation, presently.

[sadkingbilly]

Currently sat on my roof terrace in Southern Spain, contemplating whether i could move here full time. Any tax rise on dividends, no matter how significant, would probably tip the balance. Digital Nomad Visa for me and my US client. 24% flat rate tax. Bye bye broken Britain.

take that other whiner eUK with you, please? - i doubt you'll be missed.

[oliverson]

take that other whiner eUK with you, please? - i doubt you'll be missed.

No problem. Enjoy paying your taxes!

[escapeUK]

It's not the growth that concerns me, it's the levels of taxation, immigration, criminality, lack of opportunity, social destruction, oh and dividend tax! It's everything really. Not the country I grew up in. This century has proved to be a disaster!

I have anything from now until maybe 25 years left on this planet before I end up in it. What I don't have time for is another decade plus of austerity to 'fix the NHS' (and the rest).

Truer words were never spoken. From first world to third world since just 2000.