Official Summer 2015 Budget Thread

[Unix]

Employment taxes
Employment taxes contribute over 40% of HMRC receipts. However, there are many different mechanisms that employers and individuals use to reduce taxes paid on earnings. This is not fair. Two individuals doing the same job, in the same way, can end up paying very different levels of tax. The government wants to take steps to address this.

The government recognises that many individuals choose to work through their own limited company. However, where people would have been employees if they were providing their services directly, anti-avoidance legislation commonly known as IR35 introduced in 2000 requires that they pay broadly the same tax and National Insurance as other employees. As highlighted by reports from the Office of Tax Simplification and the House of Lords, it is clear that IR35 is not effective enough. Non-compliance in this area is estimated to cost over £400 million a year.

The government has asked HMRC to start a dialogue with business on how to improve the effectiveness of existing IR35 legislation. The government wants to find a solution that protects the Exchequer and improves fairness in the system.

Scrap IR35 and create another corp tax band for one man band PSC a few percent higher then normal. Least you would know were you stood.

[tractor]

...

Scrap IR35 and create another corp tax band for one man band PSC a few percent higher then normal. Leas you would know were you stood.

Thanks but no thanks!

[TheFaQQer]

The dividend move seems like a more effective way of fixing the "IR35 Problem". Basically you will pay 18% corp. tax. Get a 5k allowance and then tax starting at 7.5% on all other dividends.

I think the bit about "Employment Taxes" is what's going to "fix" the IR35 problem.

[SimonMac]

I think the bit about "Employment Taxes" is what's going to "fix" the IR35 problem.

What do you mean?

[rl4engc]

Do you have direct experience of that or did you read it in the paper?

Direct experience. A lad I used to hang around with ~20 years ago, nothing wrong with him, no kids, no disability, quite intelligent, just doesn't like work. He has a flat provided for him and whilst he doesn't exactly live the "life of riley", he has enough to run an old banger and buy food and beer.

He's applied for a larger flat with off-street parking. I think he did a couple of days at a food factory but walked out as "wearing a hair net wasn't for him."

I use his case as a test; whilst it's possible for him to live like that, the benefits system is failing. It will be interesting to see what he's doing a year or so from now.

[administrator]

Full text of the speech now on the news section Summer Budget 2015 - chancellor's full speech :: Contractor UK

[tractor]

....

Employment taxes
Employment taxes contribute over 40% of HMRC receipts. However, there are many different mechanisms that employers and individuals use to reduce taxes paid on earnings. This is not fair. Two individuals doing the same job, in the same way, can end up paying very different levels of tax. The government wants to take steps to address this.

The government recognises that many individuals choose to work through their own limited company. However, where people would have been employees if they were providing their services directly, anti-avoidance legislation commonly known as IR35 introduced in 2000 requires that they pay broadly the same tax and National Insurance as other employees. As highlighted by reports from the Office of Tax Simplification and the House of Lords, it is clear that IR35 is not effective enough. Non-compliance in this area is estimated to cost over £400 million a year.

The government has asked HMRC to start a dialogue with business on how to improve the effectiveness of existing IR35 legislation. The government wants to find a solution that protects the Exchequer and improves fairness in the system.

Still trotting out the same old tosh that the select committee rubbished last year!

The crying shame is that we allow them to get away with it.

[SpontaneousOrder]

Direct experience. A lad I used to hang around with ~20 years ago, nothing wrong with him, no kids, no disability, quite intelligent, just doesn't like work. He has a flat provided for him and whilst he doesn't exactly live the "life of riley", he has enough to run an old banger and buy food and beer.

He's applied for a larger flat with off-street parking. I think he did a couple of days at a food factory but walked out as "wearing a hair net wasn't for him."

I use his case as a test; whilst it's possible for him to live like that, the benefits system is failing. It will be interesting to see what he's doing a year or so from now.

It's incredibly common. I know countless (not really countless) mothers who keep knocking out kids because it get cash for it and they don't like the alternative, which is getting a proper job. That is a lifestyle choice.

[sal]

Scrap IR35 and create another corp tax band for one man band PSC a few percent higher then normal. Least you would know were you stood.

Which will make people congregate in two man bands avoiding the "one man band" tax band....

[SpontaneousOrder]

So it sounds like, if we take out most of our money - not just up to the higher rate limit, then we're going to be very significantly worse off.