Official Summer 2015 Budget Thread

[sal]

20% CT + 7.5% Dividend = 29.375% (over 5K and upto 40% tax threshold)
20% CT + 32.5% Dividend = 60% (between 40% and 45% threshold)
20% CT + 38.1% Dividend = 67.6% (over 45% threshold)

Note dividend tax is on 80% of the total after paying the 20% CT, so multiply by 1.25 to get effect on the total

Treasury may get a huge bonus this year as people empty their companies coffers before it takes effect.

epic math fail...

[tractor]

.....

epic math fail...

It is fun watching knowledge workers try to count

[TheFaQQer]

What do you mean?

Read the section from the Treasury document headed "Employment Taxes" I quoted above. The government will "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."

A few tweaks to the dividend rates will pale into insignificance if they get their way.

[SpontaneousOrder]

Nonsense, even if I only worked 6 months on my rate I would still take home more than the average permie.

You must be on a very good rate, or in an area where the permie roles pay tulipe.

A decent Java dev in London, 10 years experience, can get 80/90K.

[SimonMac]

I'm still paying into a SIPP as one part of the future planning. Keeping money in the company is another, investments elsewhere another still.

Do the sums work in favour of paying a pension personally now? It was always a bit 50/50 before. Paying personally now and getting the tax credit personally to reduce your (dividend) Income Tax rather than pay it out of the company?

They have cut the relief you get on pension contributions to 20% now instead of 40% for higher earners, not sure what the sums are like now

[DaveB]

They have cut the relief you get on pension contributions to 20% now instead of 40% for higher earners, not sure what the sums are like now

MIssed that bit, all I found was a reference to limiting tax relief on pension contributions to £10k pa.

[SimonMac]

MIssed that bit, all I found was a reference to limiting tax relief on pension contributions to £10k pa.

I think that is the same think, £50k limit into a pension will only give £10k relief @ 20%

[FarmerPalmer]

MIssed that bit, all I found was a reference to limiting tax relief on pension contributions to £10k pa.

Don't worry there won't be any tax relief soon, they'll be just like ISAs according to George

[PurpleGorilla]

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

It certainly happens, but I don't think it's anywhere near as common as is made out - and the overall cost to the tax payer is not very high in the grand scheme of things.

It's just the flip-side of cracking down on "aggressive avoidance" - a fairly minor issue which is great PR.

I've seen it first hand. It is not a myth it is a fact. Sky tv, nice car, benefits lifers. Real aggressive types. Totally a moral. Take a trip to Edmonton... [emoji102] seriously there are thousands of proles...

[expat]

They have cut the relief you get on pension contributions to 20% now instead of 40% for higher earners, not sure what the sums are like now

What about company contributions?