Dividends beyond £5k taxed wef 2016!!

[NorthWestPerm2Contr]

After 5 years as a contractor this is the worst news I have come up against. Damn those tories, they have hammered everybody except the rich.

The only hope is that people will be put off going contracting now and rates will rise to compensate.

Really peeved

[tractor]

...

Businesses where 100% of the workers take the majority of their income as dividends are very much not the norm.
It's just another reminder that the Ltd company setup for contractors is unwieldy... like trying to write a modern web-application in HTML/CSS/JS, they just weren't intended to be used that way

Jesus/Mohammed/Dalai Lama Almighty.

CUKer discovers the old 'unintended consequences' thing.

This is a consequence of legislation enacted in a bid to stop VAT and Tax scams by typically building/engineering tradespeople in the 70's.

You are only a real business if you start with £x,0000 capital and employ more than how many people?

Branson started in a phone box and record listening booth. No I don't want to be Branson. But why should anyone be denied the opportunity by a lying, snake oil selling government that says it's on the side of small business but really, could give a flying fig really as long as they can carry on doing it but the ordinary person is effectively dissuaded from doing so?

And having taken the plunge, why should anyone who is up for the risk be less advantaged than any other business person?

[Unix]

After 5 years as a contractor this is the worst news I have come up against. Damn those tories, they have hammered everybody except the rich.

The only hope is that people will be put off going contracting now and rates will rise to compensate.

Really peeved

Yep there is no way round this one, go you over a barrel. I feel bad for my future clients most as my 10% rate rise will impact them hard .

[SimonMac]

But he fecked up everybody, including those who get dividends from FTSE shares - that won't be good for stock market as effective after tax yields will drop next year.

85% of the people who take dividends will be ok on the £5k, as those who are invested via SIPPS or ISAs will be protected anyway, of the rest the number of people, you would need to be invested in £125,000+ worth of shares to go over the £5,000 limit, and if its at that stage you would have looked to mitigated your tax implications anyway

[Platypus]

[copied from budget thread]

I've paid myself divs up to the higher rate threshold already this year 2015-16. Since the new rates come in in April 2016 then AFAICT I'd be better off taking more this year and paying 22.5% personally than taking it in a later year and paying more. Unless I leave it in MyCo until such time as I'm benched. or retire and apply for entrepreneurs relief when closing the company down.

Views? Opinions?

[NorthWestPerm2Contr]

Yep there is no way round this one, go you over a barrel. I feel bad for my future clients most as my 10% rate rise will impact them hard .

I'm not expecting to go up in rate to be honest, I think I've hit the ceiling for my skillset in this region. So government has effectively raped me.

I'm going to consider switzerland as an option now since their tax system for employees is a lot better and has just swung it in their balance following this announcement.

[Zero Liability]

Jesus/Mohammed/Dalai Lama Almighty.

CUKer discovers the old 'unintended consequences' thing.

This is a consequence of legislation enacted in a bid to stop VAT and Tax scams by typically building/engineering tradespeople in the 70's.

You are only a real business if you start with £x,0000 capital and employ more than how many people?

Branson started in a phone box and record listening booth. No I don't want to be Branson. But why should anyone be denied the opportunity by a lying, snake oil selling government that says it's on the side of small business but really, could give a flying fig really as long as they can carry on doing it but the ordinary person is effectively dissuaded from doing so?

And having taken the plunge, why should anyone who is up for the risk be less advantaged than any other business person?

Plus, the government's rather arbitrary take on this neglects all the downsides a contractor might face, when it pontificates on 'fairness'.

[jamesbrown]

[copied from budget thread]

I've paid myself divs up to the higher rate threshold already this year 2015-16. Since the new rates come in in April 2016 then AFAICT I'd be better off taking more this year and paying 22.5% personally than taking it in a later year and paying more. Unless I leave it in MyCo until such time as I'm benched. or retire and apply for entrepreneurs relief when closing the company down.

Views? Opinions?

Unfortunately, it's a case of string measuring (be we can't fully see the string yet). Certainly, you'd be better off taking divis above the higher rate threshold this year than next (up to a point). Whether you'd be better off overall (over an unspecified timeframe) is difficult to know, but I wouldn't assume that ER will be available indefinitely (for us).

[mudskipper]

I'm not expecting to go up in rate to be honest, I think I've hit the ceiling for my skillset in this region. So government has effectively screwed me.

I'm going to consider switzerland as an option now since their tax system for employees is a lot better and has just swung it in their balance following this announcement.

FTFY.

[AtW]

85% of the people who take dividends will be ok on the £5k

And what %-tage of the stock market is owned by those 15%? I reckon 85%.