Official Summer 2015 Budget Thread

[jamesbrown]

I don't think PSCs are the main target of the move, given how broad a move this is and how small a subset of the total population of companies they are. It just will make it much easier for them to do what they've so far failed to do and that is no doubt a happy bonus to them.

Not sure about that. I don't recall the precise language, but there were a couple of places in the speech where he specifically mentioned the risks created by incorporation for tax purposes (e.g. w/r to corporation tax reductions, so the dividend changes were a backhand to that). There's also extensive analysis in the OBR report about how much this will impact incorporation for tax purposes, based on some likely speculative assumptions, so I think they were fully aware of the potential implications, and PSCs were indeed an important target (IIRC, he also explicitly mentioned PSCs once or twice). This wasn't aimed at regular investors, hence the 5k allowance.

[AtW]

I really don't see how this one is going to do anything

It means that he can cut tax credits and those people still be paid, probably about the same or maybe even less in total, but in any case burden will be shifted from taxpayers to companies who had cheap taxpayer subsidized labour for way too long.

I don't think PSCs are the main target of the move, given how broad a move this is and how small a subset of the total population of companies they are. It just will make it much easier for them to do what they've so far failed to do and that is no doubt a happy bonus to them.

Well, for sure, somebody suggested to remove that "archaic" tax credit thingy, and thus deal with PSC _and_ get nice tax grab that would yield really good results NOW. There are lots of companies that sit on cash which was waiting for the time when 45% becomes 40%, so now Nu Nu Liebor give strong hint to pay out now before 45% becomes 50%+ again. Token reduction in corp tax by 2% (by 2020 FFS) is BS.

What will happen with PSCs? I reckon people will start closing down companies to claim ER at 10%, so the end result would be that they feck ER in some way very soon.

[jamesbrown]

feck ER in some way very soon.

Bank on it, at least as far as we're concerned.

[AtW]

Bank on it, at least as far as we're concerned.

btw, ER was not referring to Elizabeth Regina

[WordIsBond]

I don't think PSCs are the main target of the move, given how broad a move this is and how small a subset of the total population of companies they are.

I agree. But PSCs WERE the target on the IR35 review, on the NIC Employment Allowance, and on the travel expenses.

I really appreciate that there is a "self-employment ambassador." It's really helped. Can't wait to see what David Morris MP has to say.

It's as if they sat down and said, "How many things can we come up with to really make this segment of society angry?" Did they even stop to think about the cumulative effect of all of this on contractors? Or was this a case of, "Oh, that's a good idea, oh, that is too, oh, that is too!" A contractor pulling in £60K a year in fees could be £5K or more worse off when all is done. Is that really what they intended, to make this a "stick the contractors" budget, or where they just trying to share the pain and incompetently managed to bash a lot of it onto one group?

[AtW]

Turns out Tories are not “Intensely relaxed about people getting filthy rich”

[Zero Liability]

Turns out Tories are not “Intensely relaxed about people getting filthy rich”

Only the 'right kind' of people.

Not sure about that. I don't recall the precise language, but there were a couple of places in the speech where he specifically mentioned the risks created by incorporation for tax purposes (e.g. w/r to corporation tax reductions, so the dividend changes were a backhand to that). There's also extensive analysis in the OBR report about how much this will impact incorporation for tax purposes, based on some likely speculative assumptions, so I think they were fully aware of the potential implications, and PSCs were indeed an important target (IIRC, he also explicitly mentioned PSCs once or twice). This wasn't aimed at regular investors, hence the 5k allowance.

Well to clarify, I'm not saying that PSCs were not a target, as it does look as though it was very carefully orchestrated (and if you think about it, it could work very well indeed with the new agency reporting requirements), just that they do not appear to be the sole target of the move. My thinking is simply that whilst this will not impact "regular investors", as you put it, it certainly will impact those who have substantial holdings in shares. Coupled with a reduction in the CT, it does look as though it is an incentive to companies and their owners to reinvest the profits rather than draw them out. My assumption is predicated on the dividend drawdowns of contractors being dwarfed by those of investors with large holdings in shares, which may be wrong.

[darmstadt]

Turns out Tories couldn't really give a tulip about anyone else, including those that blindly believed in them and voted for them, except themselves. Now wait for the next MPs payrise and increase in expenses

FTFY, ROFL....

[WordIsBond]

Yes, but they are in effect at arms length, they are *not* relatives of the main director. That's the distinction.

A meaningless distinction. The point is that there is a going market rate for non-exec directors, and that you can pay market rate to your spouse and any other relatives.

If I asked someone else to serve as a director of my company, I would expect to pay them because they are taking on liabilities and other responsibilities. How much would I pay? I suppose it depends on how big the company is, how much liability they incur, etc.

But I'd be surprised if any legally-aware, business-savvy person would be willing to do it for less than £5K. That's a floor, might take more. Add in bookkeeping and you are already at £8K.

[WordIsBond]

Looks like I might need a risk committee and a remuneration committee that the wife can head up.

LOL. Risk committee, maybe, but no way I'm giving up the remuneration committee to her.